Insurance industry has been categorised as one of the oldest industry in the world. During its inception, the sector used to deal with business cargo and gave traders a safety buffer during accidental losses. However, as this industry continues to evolve, it comes in different forms and sizes, and for all types of users i.e., private individuals, businesses, and governments. Modern-day financial industry invests billions of dollars, and a significant reduction in value might have negative consequences. As a result of such impacts, there is a huge requirement of insurance as a backup. Such principles are even applicable to healthcare in most modern economies. It goes without saying that the insurance industry globally is quite sizeable and best and leading insurance companies are expected to benefit from increased government support and higher use of modern technology.
For example, only the health insurance sector, that deals with clients paying for basic and advanced medical procedures, can touch as much as ~$5.28 trillion by 2030 end. This exhibits that the industry should be able to compound at ~9.9% between 2022-2030. If we talk about total insurance premiums which were written in 2022, you’d be amazed. Insights from the recruitment firm Zippia exhibits that insurance premiums which were written all over the world surpassed ~$7 trillion, and the US made up ~20% or ~$1.4 trillion. In this number, significant portion was catered by the best and leading insurance companies.
For comparison, let us consider that America makes up for less than 20% of the global population. Now, it is clear that insurance continues to be a big business and big money-making opportunities prevail in the US.
With this in mind, we will now have a look at some of the best and leading insurance companies which are undervalued and should be considered.
1. Ryan Specialty Holdings, Inc.
The company, which was formerly known as Ryan Specialty Group Holdings Inc, has been categorised as a leading service provider of specialty products and solutions for the insurance brokers and agents.
It announced its results for 3Q ended September 30, 2023, with its revenues increasing ~21.8% year-over-year to $501.9 million in comparison to $412.0 million in the previous-year period. Organic revenue growth rate of the company came in at ~14.7% for the quarter against ~13.7% in the prior-year period.
Adjusted EBITDAC went up by ~25.8% to $147.0 million in comparison to $116.8 million in the prior-year period.
The company delivered strong quarter of healthy double-digit organic revenue growth, saw valuable contributions as a result of recent acquisitions, and posted impressive adjusted EBITDAC growth.
Organic revenue growth stemmed from new client wins and expanded relationships with its present clients. Apart from these factors, continued expansion of E&S market, revenue due to acquisitions higher fiduciary investment income are some of the factors that supported the organic revenue growth.
Net income of the company for 3Q fell ~46.4% to $15.7 million in comparison to $29.3 million in the previous-year period. Decline was mainly because of increased income tax expenses associated with legal entity reorganization related to and subsequent to Socius acquisition, partially mitigated by stronger year-over-year revenue growth and decline in IPO related charges.
Organic revenue growth rate for FY23 is expected to be between ~13.5% – ~14.5% against its prior guidance of ~13.0% – ~14.5%. Adjusted EBITDAC margin should be in the range of ~29.5% – ~30.0% in comparison to its prior guidance of 29.0% – 30.0%.
2. AXIS Capital Holdings Limited
It is a property and casualty insurance company, engaged in providing numerous products and services to clients and distribution partners.
Annualized return on average common equity of the company in 3Q23 came in at ~16.1% and annualized operating ROACE was 18.0%. The company saw improvement of ~11.6 points in the combined ratio to 92.7%.
Continued positive momentum in the company’s performance exhibits progress it has made in enhancing integrated underwriting strategy to provide a helping hand to outstanding cycle management, post consistent profitable results and build increased book value per share. During 3Q, the company grew in its chosen markets throughout both its insurance and reinsurance businesses, while capitalizing on healthy market conditions across its lines of business.
For 3Q, the company saw net investment income of $154 million in comparison to $88 million for 3Q22. This rise was because of higher income from its fixed maturities portfolio as a result of increased yields.
3. Kinsale Capital Group, Inc.
The company is an insurance holding company, which offers property, casualty, and specialty insurance products.
It saw net income of $76.1 million, $3.26 per diluted share, for 3Q23 in comparison to $33.0 million, $1.43 per diluted share, for 3Q22. Net income of the company came in at $204.7 million for the first nine months of 2023 against $91.9 million for the first nine months of 2022. Net income of the company went up by 130.8% against 3Q22, with its net operating earnings coming at $77.2 million, that grew 103.6% year-over-year.
3Q results of the company exhibited strong growth and profitability. It saw ~33.0% rise in gross written premiums and combined ratio of 74.8%. This was because of differentiated strategy and positive E&S market conditions.
Net investment income came in at $27.1 million in 3Q23 against $13.9 million in 3Q22, exhibiting a rise of 95.5%. This rise was supported by growth in the company’s investment portfolio. This growth stemmed from the investment of healthy operating cash flows and increased interest rates on year-over-year basis.
Conclusion
Size of the American insurance industry makes it quite obvious that the biggest health insurance company in the world, i.e., UnitedHealth Group Incorporated, has its headquarters in the United States. Best and leading insurance companies continue to focus on increasing their market presence with the help of automation, artificial intelligence, advanced analytics, and core transformation.
These advanced technology capabilities can help best and leading insurance companies achieve operational targets. These include improved underwriting for the purposes of accurate pricing and risk selection, which should help in claims management to reduce the loss costs, and improve efficiency through making the operations efficient.
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