4 Dividend-Paying Stocks to Watch in the Insurance Space

Industry Overview - The Zacks Property and Casualty Insurance industry is facing challenges such as increased catastrophe events leading to reduced underwriting profit [1] - Estimated total economic losses in 2023 were $380 billion, with insured losses at $118 million [1] - The total net underwriting loss reached $38 billion in 2023, marking a 10-year high, primarily due to weather-related losses, high inflation, and reinsurance pricing pressure [1] - The combined ratio was reported at 103.7, with catastrophe losses contributing 780 basis points, and an expected combined ratio of 100.7 for 2024 [1] - Despite these challenges, the P&C insurance industry has gained 13.5% year-to-date, outperforming the S&P 500 Composite's growth of 6.9% and the Finance sector's 2.6% rise [1] Growth Prospects - Global commercial insurance prices have risen for 25 consecutive quarters, indicating a positive pricing environment [2] - Gross premiums are projected to increase sixfold to $722 billion by 2030, with a 5.5% growth forecast for 2024 [2] Interest Rate Environment - The insurance industry is sensitive to interest rates, with the Fed making four hikes in 2023, totaling 11 since March 2022 [3] - A stable interest rate environment is beneficial for insurers, particularly long-tail insurers [3] Company Highlights Axis Capital Holdings Limited (AXS) - Market capitalization of $5.19 billion, with a focus on specialty insurance and reinsurance products [6] - Current dividend yield of 2.8%, with a payout ratio of 18 and a five-year annualized dividend growth rate of 2.26% [6] - The company repurchased shares worth $17 million in 2023 and has $100 million remaining for share repurchases through December 2024 [6] Cincinnati Financial Corporation (CINF) - Market capitalization of $18.38 billion, focusing on property casualty insurance in the U.S. [7] - Dividend yield of 2.5%, with a payout ratio of 50 and a five-year annualized dividend growth rate of 7.22% [7] - The company has a history of increasing dividends for 64 consecutive years and approved an 8% hike in January 2024 [7] CNA Financial Corporation (CNA) - Market capitalization of $11.87 billion, offering commercial P&C insurance products [8] - Current dividend yield of 4%, with a payout ratio of 36 and a five-year annualized dividend growth rate of 4.35% [8] - The company announced a special dividend of $2 per share in February 2024 [8] American Financial Group (AFG) - Market capitalization of $10.83 billion, providing specialty P&C insurance products [10] - Dividend yield of 2.2%, with a payout ratio of 27 and a five-year annualized dividend growth rate of 12.08% [10] - The company repurchased shares for $213 million in 2023 and declared a special cash dividend of $2.50 per share in February 2024 [11]