4 Accident & Health Insurance Stocks to Watch as Exposure Increases

Industry Overview - The Zacks Accident and Health Insurance industry is expected to benefit from increased underwriting exposure and prudent underwriting standards, although a rise in claims frequency could offset these positives [1][3] - The industry has been experiencing soft pricing, which is not expected to change soon, but a rise in lower severity claims and the return to normal business activities may favor pricing [2][4] - The global workers' compensation insurance market is projected to grow significantly between 2024 and 2032, driven by increased awareness of the benefits of coverage [3] Pricing and Technology Trends - The workers' compensation industry has faced pricing pressure due to inflation and rising medical costs, with a projected 5-year CAGR of 5.3% for pricing from 2022 to 2026 [4] - The adoption of technology, including AI and cloud computing, is accelerating in the industry, potentially reducing claims expenses by about 45% [5] - The industry's current price-to-book (P/B) ratio is 1.94X, significantly lower than the S&P 500's 8.85X and the sector's 3.99X [10] Earnings and Growth Potential - Analysts are increasingly confident in the industry's earnings growth potential, with a collective earnings estimate for 2025 rising by 8.4% over the past year [7] - The Accident and Health Insurance industry has outperformed the Finance sector and the S&P 500, with a year-to-date gain of 30.6% compared to 18.7% and 27.7%, respectively [25] - The industry's Zacks Industry Rank is 29, placing it in the top 12% of 251 Zacks industries, indicating encouraging near-term prospects [6][23] Company Highlights - Employers Holdings (EIG) is the 19th largest provider of workers' compensation insurance, benefiting from a solid market presence and prudent underwriting [12] - Unum Group expects sales growth of 7-10% and premium growth of 5-7% in 2024, with a long-term earnings growth rate of 8.2% [14][15] - Aflac is focusing on strategic growth investments and digital solutions, with a projected 16.7% year-over-year increase in earnings for 2024 [16][32] - Trupanion operates in a $34.1 billion market and is well-positioned for growth due to its focus on pet health and well-being [33]