In this article, we will take a look at the Top 10 Health Insurance Stocks To Buy.
The health insurance industry is constantly changing, driven by a movement towards consumer-driven healthcare, in which people actively control their own health and healthcare costs. In that sense, Fortune Business Insights projects that the global healthcare insurance market is estimated to be worth $2.14 trillion in 2024 and will grow from $2.32 trillion in 2025 to roughly $4.45 trillion by 2032, reflecting a 9.7% CAGR over the forecast period.
AI in Health Insurance
According to McKinsey, health insurers might benefit significantly from completely incorporating AI and automation into their business operations. The firm believes that for every $10 billion in revenue, insurers could save $150 million to $300 million in administrative costs and $380 million to $970 million in medical expenses. In addition, these technologies may create an additional $260 million to $1.24 billion in income.
That said, concerns regarding AI’s expanding role in health insurance, particularly around claim denials, have escalated in recent months, especially in light of the death of UnitedHealthcare CEO Brian Thompson. These concerns had previously pushed the Biden administration to establish optional operational agreements with insurers, payers, and providers in 2023. In 2024, an executive order was issued to create criteria and safeguards for AI implementation. However, in January of this year, the Trump administration revoked Biden’s AI mandate, proposing that a new action plan be developed by the middle of the year.
Commenting on the rising implementation of AI in health insurance, law firm Maynard Nexsen stated:
“The AI landscape continues to develop, and the regulations appear to be loosening — at least at the federal level. These changes have led to uncertainty among organizations using AI technology.”
Medicaid Concerns
Medicaid, the nation’s largest health insurance program, which covers more than 70 million people, could be slashed under House Republican proposals. Lawmakers are proposing cutbacks of up to $2.3 trillion over the next decade to help fund border security and extend President Trump’s 2017 tax cuts. As the government works to decrease federal debt while maintaining expenditure commitments, Medicaid remains a key priority. To further expand on the implications of such a move, it should be noted that the Affordable Care Act (ACA) has considerably expanded the program’s scope and expense, making it the principal provider of comprehensive health and long-term care for one in every five Americans and accounting for approximately $1 out of every $5 spent on healthcare.
Furthermore, House Republicans just passed a budget by a slim margin, requiring the Energy and Commerce Committee, in charge of federal healthcare, to reduce $880 billion in expenditures. The reductions are designed to help support Trump’s tax cuts, mass deportations, and defense spending.
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Our Methodology
For our list of the best health insurance stocks to buy, we started with a list of stocks pulled from ETFs, stock screeners, and web rankings. We then utilized Insider Monkey’s Q4 2024 database to discover the top ten stocks held by hedge funds. The list is organized in ascending order of hedge fund sentiment around each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 53
Chubb Limited (NYSE:CB) is a multinational insurance company that provides a wide range of insurance and reinsurance products to people, corporations, and other entities worldwide. Chubb Limited’s (NYSE:CB) Health Shield insurance coverage addresses primary health benefits and needs for both individuals and families.
On March 5, HSBC analyst Vikram Gandhi upgraded Chubb Limited (NYSE:CB) from Hold to Buy, increasing his price objective from $298 to $323. The improvement highlights Chubb’s strategic expansion in reinsurance over the last year, as well as its efforts to improve certain sectors of its North American commercial insurance portfolio. Gandhi also emphasized the company’s strong emphasis on the mid-market and SME segments in North America, as well as its development into foreign life insurance and retail property and casualty (P&C) offerings.
Moreover, Chubb Limited (NYSE:CB) reported strong financial results for the fourth quarter of 2024, with core operating income of $2.5 billion, or a 10.5% rise per share. The company achieved record performance in the property and casualty underwriting, investment income, and life insurance areas. In addition, Chubb announced its plan to buy Liberty Mutual’s property and casualty insurance operations in Thailand and Vietnam, with net premiums written totaling about $275 million in 2024.
The London Company Large Cap Strategy stated the following regarding Chubb Limited (NYSE:CB) in its Q3 2024 investor letter:
Initiated: Chubb Limited (NYSE:CB) – CB engages in the provision of commercial and personal property and casualty insurance, personal accident and health (A&H), reinsurance, and life insurance. While the company is headquartered outside the U.S., roughly 2/3 of its profits are generated in the U.S. with Asian markets representing another 20% of earnings. CB has a portfolio of top-performing, multibillion-dollar businesses that have substantial scale and yet potential for growth. CB has a culture of superior underwriting discipline, and management has a strong track record of expense control. CB also has a well-balanced mix of business by customer and product, with extensive distribution channels. We are attracted to CB’s globally diversified business model, superior underwriting and expense management, consistent and best-in-class profitability, upside potential from growth in Asia, and the potential to benefit from higher interest rates in its investment portfolio.
9. MetLife, Inc. (NYSE:MET)
Number of Hedge Fund Holders: 54
Metropolitan Life Insurance Company, often known as MetLife Inc. (NYSE:MET), is a leading global provider of insurance, annuities, and employee benefit programs, with over 90 million clients in more than 60 countries. The company recently unveiled its five-year growth plan, New Frontier, which is focused on accelerating growth and boosting returns.
The life insurer expects double-digit growth in adjusted profits per share and a 15-17% adjusted return on equity. The corporation also intends to reduce its expenditures and generate roughly $25 billion in FCF.
On February 28, Morgan Stanley boosted MetLife, Inc.’s (NYSE:MET) price target from $101 to $109 while maintaining an Overweight rating. The firm observes that life insurers are functioning in a stronger environment that has largely gone unnoticed, leading to an industry outlook upgrade to Attractive. In addition, it states that, compared to the pre-2008 financial crisis period, life insurers today have better capital positions, higher-quality product offerings, and higher profit potential.
8. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 64
Humana Inc. (NYSE:HUM) is focused on improving health and well-being by providing a variety of healthcare benefits to its medical and specialty members. These include fully insured medical and specialty health insurance that covers vision, dental, and supplemental health benefits, as well as administrative services only (ASO) packages for individuals and employers.
The fourth quarter of 2024 marked the end of a difficult year for Humana’s financial performance. However, the company’s fiscal year 2025 outlook shows a reversal, with adjusted EPS of at least $16.25, slightly below the average prediction of $16.78. Revenue predictions for FY25 range between $126 billion and $128 billion, significantly higher than the $120 billion average estimate.
Bernstein SocGen reduced Humana Inc.’s (NYSE:HUM) price objective from $322 to $313 on February 20, but maintained an Outperform rating on the healthcare company’s shares. Despite the lower price target, Bernstein SocGen analyst Lance Wilkes indicated ongoing optimism in Humana, predicting a possible 20+% upside. Wilkes emphasized Humana’s ability to gain from recovering Medicare Advantage (MA) and Medicaid margins, as well as a stabilization in usage rates, which are projected to return to normal levels.
7. The Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 71
The Allstate Corporation (NYSE:ALL) is an American insurance firm that provides a wide range of services, including car, home, and life insurance. The company’s portfolio also includes dental, disability, cancer, critical illness, and accident insurance. In 2024, the company’s individual health unit generated adjusted net income of $30 million.
Despite severe losses caused by natural disasters, the company recorded a 30% rise in net profits in the fourth quarter of 2024, totaling about $1.9 billion. EPS for Q4 was $7.07, up 28.1% over the previous year. Net investment income also increased significantly, gaining 37.9% year on year to $833 million.
On February 28, Piper Sandler analysts reiterated their Overweight rating and $248 price target on The Allstate Corporation (NYSE:ALL). The firm’s trust in Allstate stems from conversations at the company’s headquarters and comes ahead of the next annual AIFA insurance conference. Allstate has been under fire owing to worries about the drop in vehicle insurance policy-in-force (PIF) within its auto division. Piper Sandler, on the other hand, sees a bright future for the insurer, predicting that the company will reverse its downward trend this year.
6. Centene Corporation (NYSE:CNC)
Number of Hedge Fund Holders: 72
Centene Corporation (NYSE:CNC), based in St. Louis, Missouri, is a managed care company that acts as a middleman for government-sponsored and privately insured healthcare programs, primarily in the Medicaid market.
Cantor Fitzgerald reiterated its Overweight rating and $90 price target on Centene Corporation (NYSE:CNC) shares. Sarah James, the firm’s analyst, presented insights into Centene’s earnings per share and revenue risk from Medicaid expansion and states with trigger legislation. Centene reported an EPS of $0.13 on revenue of $17.8 billion, with high exposure to states that have implemented trigger legislation. The company’s total revenue in the past year were $147.29 billion, with a 14.65% gross profit margin.
Looking ahead, Centene Corporation (NYSE:CNC) has provided forecasts for 2025, with an estimated premium and service revenue between $158 billion and $160 billion, alongside an adjusted diluted EPS of more than $7.25.
Greenlight Capital stated the following regarding Centene Corporation (NYSE:CNC) in its Q4 2024 investor letter:
“We established a new medium-sized position in CNH Industrial (CNH) and a small position in Centene Corporation (NYSE:CNC). CNC is the largest Managed Medicaid company. Shares are trading at a historically low valuation despite the company currently significantly underearning in its Medicaid book. This valuation disconnect is driven by concerns about the impact of a likely non-extension of enhanced ACA exchange subsidies beyond 2025 on CNC’s exchange business, as well as potential attempts by the incoming Trump administration to make adverse changes to the Medicaid program. We think a repricing in the core Medicaid business over the next two years could more than offset some of these potential headwinds, which are not guaranteed to materialize. We acquired our shares at an average price of $60.54, or about 9x current earnings. Management and the board are taking advantage of the situation by sharply ramping up share repurchases, as well as making large personal stock purchases. CNC ended the year at $60.58.”
5. The Cigna Group (NYSE:CI)
Number of Hedge Fund Holders: 72
The Cigna Group (NYSE:CI) specializes in providing insurance and associated services in the United States, such as pharmaceutical benefits, home delivery pharmacy, and specialty pharmacy distribution. Under the Cigna Healthcare brand, the company offers a variety of government, employer-based, and private health plans.
On January 30, BofA Securities maintained a Buy rating on The Cigna Group (NYSE:CI) stock, with a price objective of $420. The adjustment occurred after the company announced an unexpected 13% drop in fourth-quarter earnings, recording $1.03 per share, and reduced its 2025 earnings forecast downward by $1.74, a 6% decline. In addition, investors have expressed worries over the company’s performance shortfalls, notably in the health plan industry and, to a lesser extent, in the pharmacy benefit management market. Despite these risks, BofA Securities believes that The Cigna Group (NYSE:CI) stock’s current value may restrict additional decline.
The Cigna Group (NYSE:CI) repurchased 20.9 million shares of common stock for about $7 billion in 2024, with intentions to continue repurchasing shares through 2025. The firm intends to spend the bulk of the profits from the sale of its Medicare businesses, which is expected to conclude in the first quarter of 2025.
4. Elevance Health Inc. (NYSE:ELV)
Number of Hedge Fund Holders: 73
Elevance Health, Inc. (NYSE:ELV), formerly known as Anthem, Inc., is a major health benefits provider in the United States. Anthem Blue Cross, Blue Shield, Wellpoint, and Carelon are among the names under which the firm provides a variety of services, including medical, pharmaceutical, dental, long-term care, disability, and behavioral health insurance.
On February 19, Sarah James of Cantor Fitzgerald confirmed Elevance Health, Inc.’s (NYSE:ELV) Overweight rating and price target of $485. James analyzed the company’s financial performance and its possible susceptibility to changes in Medicaid policy. According to the analyst, Elevance Health, Inc. (NYSE:ELV) operates in 26 states, with Medicaid extended in 18 of them. This expansion covers about 2,055,000 people, or 23% of Elevance’s Medicaid book. However, the potential danger posed by trigger legislation in some states might have an impact on the company’s financial viability, as a drop in Medicaid funding may result in a reversal of expansion benefits.
Artisan Select Equity Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q4 2024 investor letter:
“Elevance Health, Inc. (NYSE:ELV) took a couple of blows this quarter. First, it warned that its Medicaid earnings would come in below expectations this year. The Medicaid business has been in the spotlight as a result of COVID-19. Medicaid rolls filled up during the pandemic, but then rolls started to come down as enrollees lost eligibility when the economy began to normalize. This has made estimating the severity and health trends of the remaining population difficult. So far this year, cost trends have been much worse than expected and are out of line with Elevance’s approved rate structure. Margins in the Medicaid business, therefore, will be down this year, and overall profits are likely to be flat. We believe this is a temporary situation. State Medicaid programs are legally required to pay actuarially sound rates to the providers of Medicaid services, such as Elevance. Rates are expected, therefore, to moveupwardoverthenext12to18months,restoring Elevance’s margins to a more normal level.
The second issue for Elevance is investor sentiment. A mentally deranged young man murdered top executive of United Healthcare, the largest health insurer in the country. This led to an Internet frenzy of vicious, inaccurate and, frankly, deplorable criticisms of health insurance companies and their executives. Negative and controversial headlines tend to hurt share prices. This was true of Elevance’s stock in the aftermath of this heinous crime. The share price has fallen to extremely attractive levels, trading currently at about 11X earnings. We added to our position during this weakness.”
3. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 74
CVS Health Corporation (NYSE:CVS) is an American healthcare company that maintains a large network of retail pharmacies and clinics nationwide. Its main brands include CVS Pharmacy, a retail drugstore chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider. Aetna provides a variety of health insurance alternatives, including commercial coverage plans, Affordable Care Act (ACA) plans, Medicaid plans, Medicare plans, and vision and dental policies.
Bernstein SocGen Group raised its price target for CVS Health (NYSE:CVS) stock to $71 from $52, while maintaining a Market Perform rating on the shares. The revision comes after CVS Health released fourth-quarter profits for 2024, which were above consensus forecasts. Bernstein feels that, while CVS Health’s recent performance is solid, particularly with Aetna’s profits playing a crucial role, the company is currently well valued. According to the firm’s study, CVS Health is well-positioned to sustain its financial performance in the next years.
CVS Health posted better-than-expected fourth-quarter earnings for 2024, with adjusted EBIT of $2.73 billion, higher than the Street’s expectation of $2.30 billion. The company’s adjusted profits per share were also above forecasts, coming in at $1.19 vs the expected $0.91.
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q4 2024 investor letter:
“Lastly, American healthcare company, CVS Health Corporation (NYSE:CVS) underperformed in the period. The company preannounced a third-quarter preliminary profit estimate materially below consensus expectations and pulled its 2024 guidance due to continued medical cost pressures. Investor concerns around the recently proposed Pharmacy Benefit Management (PBM) legislation further weighed on shares. Despite these challenges, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage (MA). CVS believes the program can remain an attractive business for Aetna and CVS Health over time as it implements a multi-year repricing strategy across plan level benefits. Meanwhile, CVS continues to take actions to drive long-term success including the appointment of longtime company executive David Joyner as President and CEO as well as adding four new board members.
2. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 100
The Progressive Corporation (NYSE:PGR) is a major U.S. insurer recognized for its consumer and business car and home insurance products. Additionally, Progressive Health by eHealth provides health insurance options for individuals and families.
On February 25, Morgan Stanley boosted its profit projections for The Progressive Corporation (NYSE:PGR), noting an improved underwriting environment and improving margins as new regulatory pressures relax. The firm retained its Overweight rating and raised its price target to $317 from $307. Morgan Stanley now anticipates Progressive to record earnings of $16.60 per share in 2025, up from $14.81 before, with a combined ratio of over 90%.
The Progressive Corporation (NYSE:PGR) reported a large 18% rise in net premiums issued for January 2025, up from $5.496 billion to $6.481 billion over the previous year. The company’s net income also increased 59% to $1.117 billion while its EPS jumped by 61%.
The London Company Large Cap Strategy stated the following regarding The Progressive Corporation (NYSE:PGR) in its Q4 2024 investor letter:
“The Progressive Corporation (NYSE:PGR) – PGR was a weaker performer in 4Q after a strong start to the year. Policy growth continued to be strong, but expectations were high and growth decelerated slightly throughout the quarter. That said, retention has remained high, and share, gains continue. PGR’S best-in-class market segmentation gives preferred drivers lower rates, leaving competitors with worse drivers and more erratic pricing strategies. We remain attracted to its best-in-class operations, conservative underwriting, and shareholder friendly capital allocation philosophy.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) is a well-known US multinational firm that offers managed healthcare and insurance services. The company provides comprehensive health benefits to a wide spectrum of clients, including major corporations, small enterprises, and individuals.
Following developments in a long-running Department of Justice (DOJ) case, Deutsche Bank analysts maintained a Buy recommendation on UnitedHealth Group (NYSE:UNH) shares on March 5, with a $591 price objective. The healthcare behemoth is allegedly close to dismissing the case, which accuses it of overbilling Medicare by at least $2.1 billion.
Alongside its Q4 2024 results, UnitedHealth Group Incorporated (NYSE:UNH) reaffirmed its 2025 profit predictions, predicting solid full-year sales of $450 billion to $455 billion in 2025, or 12.4% to 13.7% increase. Despite recent setbacks, notably the industry’s issue with growing healthcare costs, the company retains an optimistic long-term perspective.
Bretton Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2024 investor letter:
“We invest in UnitedHealth Group Incorporated (NYSE:UNH) because we believe this revealed preference is real. The regulatory landscape changes constantly, there is plenty of noise in the system, and it is possible to imagine a world where health insurers would not be necessary. However, the massive healthcare system we’re in today structurally relies on private companies to play the crucial role of managing care and negotiating prices, and we don’t think the US government is prepared to take all that over. It was a bad year for our investment, as the stock returned a negative 2.4%, but it trades for a meaningful discount to the market despite consistently delivering double digit earnings growth for years, including 10% last year.
First, the elephant in the room. On December 4, Brian Thompson, who ran UnitedHealth’s insurance business, was assassinated in New York City. Shell casings had the words “deny” and “depose” written on them, a bullet was inscribed with “delay.” Five days later, Luigi Mangione was arrested in Pennsylvania with what appears to be the murder weapon and a manifesto criticizing the American healthcare system. Mangione has since become a cult celebrity.
Healthcare is not a normal market. Governments have decided that healthcare is worth intervening in to achieve noneconomic outcomes, most notably providing care for people who can’t afford it. Each country’s regulatory system designs its system and rations healthcare in its own way: the UK employs providers directly and attempts a central triage function to allocate care; continental European systems typically have private providers but some version of all-payer rate setting; and the US has a decentralized model where providers can charge whatever they want, but payers can choose not to pay it, plus government-run systems like Medicare and Medicaid that cover about 35% of Americans. Every system implements some type of brake on costs, usually a combination of the government and private companies, and the US system leans more on the private sector for this than others. Our system is not without its benefits. It is vastly more lucrative for providers like surgeons and medical device companies. It also allows for some measure of money signal; if you are a rich weekend warrior with an orthopedic issue, the American system will offer a dizzying array of cutting-edge specialists where the UK would suggest getting used to the feeling of aging and stiffening one’s upper lip. However, our system violates the social expectation of the word “insurance…” (Click here to read the full text)
While we acknowledge the potential of UNH as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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