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4 Insurance Stocks That Have Outperformed the S&P 500 in a Year

  • June 3, 2025

Better pricing, prudent underwriting and exposure growth have helped the insurance industry perform well. Redesigning and repricing of products and services to maintain sales and profitability, increased automation, prudent underwriting standards, and an improving rate environment are expected to drive premium growth and boost the industry’s efficiency.

Price Performance

The insurance industry has outperformed the Zacks S&P 500 composite and the Finance sector in the past year. The insurance industry has rallied 21.9% in the past year compared with the Zacks S&P 500 composite’s return of 11.9% and the Finance sector’s growth of 18%.
Here are four insurance stocks that have performed well over the past year, riding on strong fundamentals. HCI Group, Inc. HCI, Heritage Insurance Holdings, Inc. HRTG, Horace Mann Educators Corporation HMN and The Travelers Companies, Inc . TRV have outperformed the industry, the sector and the S&P 500 composite in the past year. These stocks are poised to maintain the rally, given their solid prospects.

4 Insurance Stocks That Have Outperformed the S&P 500 in a Year


Image Source: Zacks Investment Research

Driving Forces

Non-life insurers are exposed to catastrophe losses and their profitability is vulnerable to the same. According to CoreLogic, the estimate for insurance market losses across residential and commercial exposures for the Eaton and Palisades Fires in Los Angeles is between $35 billion and $45 billion. Per Moody’s RMS Event Response, the insured losses for the January 2025 Los Angeles firestorm events are projected between $20 billion and $30 billion.

Higher catastrophe losses continue to provide impetus to policy renewal rates. MarketScout’s Market Barometer reports a 3% rise in commercial insurance rates and a 4.9% increase in personal lines in the first quarter of 2025. Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030.

Multiline insurers benefit from a diversified portfolio that lowers concentration risk. While higher demand for protection products benefits sales and premiums of life insurance operations, better pricing and increased exposure to intangibles and cyber threats support premium growth of non-life insurance operations. Per the 2024 global insurance outlook published in Financial Services, U.S. demand for catastrophe reinsurance is expected to grow, putting upward pressure on prices.

The insurance industry is rate-sensitive. An improving rate environment is a boon for insurers, especially long-tail insurers. The Fed kept the funds rate at 4.25-4.50% for a third consecutive meeting held in May 2025. With a large invested asset base, investment income should remain healthy, even if the Fed cuts rates later this year. Also, the insurance players are investing heavily in technology to improve scale and efficiency. This should help them generate higher margins and improve profitability.

The industry is also witnessing accelerated digitalization to improve scale and efficiency. While a solid policyholders’ surplus helps the industry absorb losses, a sturdy capital level supports inorganic expansion, investment in growth initiatives and distribution of wealth to shareholders.

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