5 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 among key players like Aflac, Unum Group, Trupanion, Globe Life, and AMERISAFE [1] - The industry has maintained profitability due to solid reserves, prudent claims management, and stable loss trends, although a softer performance is predicted for 2025 [2] - The global workers' compensation insurance market is projected to grow significantly between 2024 and 2032, driven by rising awareness of the benefits of coverage [3] Trends Impacting the Industry - Pricing pressure is anticipated to continue due to inflation, rising medical costs, and demographic changes, with workers' compensation insurance pricing expected to increase at a CAGR of 5.3% from 2022 to 2026 [4] - Claims frequency is improving due to better safety measures and working conditions, with a notable increase in the number of workers aged 75 and older expected to rise by 96.5% over the next decade [5] - The adoption of technology, including AI and data analytics, is accelerating in the industry, potentially reducing workers' compensation claim expenses by about 45% [6] Industry Performance - The Zacks Accident and Health Insurance industry ranks 95, placing it in the top 39% of 251 Zacks industries, indicating positive near-term prospects [7][8] - The industry has outperformed the Finance sector and the Zacks S&P 500 composite, with a collective gain of 29.6% over the past year compared to 5.8% and 2.2% respectively [10] Current Valuation - The industry is currently trading at a trailing 12-month price-to-book (P/B) ratio of 1.84X, significantly lower than the Zacks S&P 500 composite's 7.89X and the sector's 4.17X [13] Company Highlights - Trupanion: Positioned for growth in the underpenetrated pet insurance market, with a projected earnings increase of 130.4% in 2025 [19][20] - Aflac: Focused on strategic growth investments and digital solutions, with a long-term earnings growth rate of 4.8% [23][24] - Unum Group: Expected to see sales growth of 5-10% in 2025, with a long-term earnings growth rate of 7.2% [27][29] - Globe Life: Positive revenue trends driven by premium growth, with expected earnings increases of 10% and 9.8% in 2025 and 2026 respectively [32][34] - AMERISAFE: Benefits from a niche focus and a strong balance sheet, with a consistent record of dividend payments since 2013 [36][37]