Best stocks by sector
Best insurance stocks: how to pick quality insurers
Updated June 17, 2026 · DeepTicker
If you're looking for the best insurance stocks, the first thing to understand is that an insurer isn't analyzed like a normal company. It doesn't sell physical products and it doesn't have a business whose cash flow you can project with a classic discount: it collects premiums today and pays claims in the future, sometimes years later. That's why how to pick insurance stocks comes down to sector-specific metrics like ROE, P/B (price to book value), the combined ratio and the float. In this guide you'll learn what to look at in insurance stocks, what makes an insurer strong, what risks it hides and how to filter for quality insurance companies using data. This is educational information, not financial advice.
An insurer's business is, at its core, simple to state and hard to master. It collects premiums from many customers in exchange for taking on a risk (a car accident, a fire, a death, an industrial failure). With that money it builds a pool that it invests until the time comes to pay claims. If it collects more in premiums than it pays out in claims and expenses, it makes money from the pure underwriting activity. And in the meantime, it invests the money it hasn't paid out yet and earns an additional return. That's the key to why this sector fascinates investors like Warren Buffett: a good insurer gets paid up front, pays out late and, in between, manages an enormous pool of capital that isn't its own.
That floating capital is called the float: it's the premium money the company holds before paying future claims. If the insurer underwrites policies with discipline and doesn't lose money on the pure activity, that float is like a free loan (even one with a negative cost) that it can invest in its favor for years. A mediocre insurer has float, but it costs money because it pays more in claims than it collects. An excellent insurer has free or negative-cost float and grows it year after year. Telling one from the other is a big part of the job of analyzing the best insurance stocks.
Within the sector there are very different families, and it pays not to mix them up. Property & casualty insurers (auto, home, liability, health) have short cycles: they collect and pay out within a few months or years, and their profitability depends heavily on the combined ratio. Life and savings insurers have decade-long commitments and are very sensitive to interest rates and to policyholder longevity. Reinsurers (which insure other insurers) carry catastrophes and have very volatile results. And insurance holding companies combine underwriting with powerful investment management. Knowing which one you're dealing with changes which metrics you should prioritize.
Why might this sector be interesting for a retail investor? Because quality insurers combine a defensive business (people keep insuring their car and home in a recession) with a long-term compounding engine: book value per share compounds if the company underwrites well and invests well. Historically, several insurers have been quiet machines for generating value. The problem is that there are also plenty of traps, and a low price doesn't always mean a bargain. To invest in insurance with discipline you need to separate technical skill from luck, and that's where analysis backed by good data makes the difference.
What to look at when picking the best insurance stocks
First comes the combined ratio, the king metric of pure underwriting. It adds up claims paid and expenses and divides them by premiums. If it comes in below 100%, the company makes money just from underwriting, before investing a single dollar. A combined ratio of 95% means that for every $100 of premiums, it spends $95 and has $5 left over: that's excellent, and sustained over time it's the hallmark of a disciplined insurer. Above 100% it loses money on underwriting and depends on its investments to save the year. Look for companies that stay below 100 across the cycle, not just in one good year.
Next, look at return on equity (ROE) and book value per share. In insurance, high and stable recurring ROE (ideally above 12-15% over several years) is proof that the company turns its capital into profit reliably. And because insurers are valued largely on their balance sheet, the growth of book value per share over time is one of the best signs of value creation. A company that compounds its book value per share over a decade, without diluting shareholders, usually hides a quality business. These are the pieces that make a quality insurance company strong.
The metrics that matter most in insurance (and why the classic Reverse DCF doesn't apply)
Here comes an important methodological warning. The usual way to value a company is the discounted cash flow: estimate how much it will generate in the future and bring it back to today. At DeepTicker, that analysis takes the form of a Reverse DCF that, instead of inventing a price target, calculates what growth and what margin the current price is already pricing in so you can judge whether you believe it. That's discounted-cash-flow valuation. But with an insurer that model doesn't fit well: its cash flow depends on the float, technical reserves and investment returns, not on a clean, projectable free cash flow.
That's why DeepTicker is honest by company type: it detects when it's dealing with a financial business and tells you what to look at instead. In insurance, the metrics that rule are P/B (price to book value, how many times the balance sheet you're paying for the share), recurring ROE, the combined ratio and the quality of the float. An excellent insurer with a 15% ROE may deserve to trade at 1.5x or 2x book value; a mediocre one with a 6% ROE can hardly justify more than 0.8x. The intuitive rule: the reasonable multiple over book value depends on the sustainable ROE. If you want to understand these pieces, the glossary concepts explain them one by one.
Quality versus price: how the DeepTicker Score fits insurance
Picking well isn't just about finding what's cheap; it's about separating quality from price, two distinct questions. Quality answers "is the company good?" and is based on the quality and competitive-advantage analysis: what matters is the moat (the competitive advantage) and high, sustained profitability. In insurance, the moat usually comes from underwriting discipline, the brand, low costs and the data to price better than the rival. DeepTicker sums up that quality in the DeepTicker Score, a 0-100 grade across five dimensions (Valuation, Growth, Track record, Profitability and Solvency), compared against its sector, because a 1.5x P/B doesn't mean the same thing in a bank as in a tech company.
Price is the other half. An undervalued insurance stock would be one with a good combined ratio and solid ROE trading at a low book-value multiple relative to its own history and its peers. But be careful: sometimes the cheap thing is cheap for a reason (insufficient reserves, catastrophe exposure, a line of business running at a loss). The winning combination is high quality + reasonable price, not just one of the two. In DeepTicker you can see both sides on the stock pages and compare the quality grade with what the price is pricing in, all explained number by number so you learn while you decide.
Insurance-sector risks you should watch
The first risk is uncontrolled underwriting: to win market share, an insurer can price cheaply and accumulate claims that blow up years later. This shows up in a deteriorating combined ratio and in insufficient technical reserves. The second is catastrophe risk: hurricanes, earthquakes or pandemics can sink a year's result, especially in reinsurance. The third, in life insurance, is interest-rate risk: with very low rates for a long time, savings insurers struggle to cover the guaranteed returns they promised their customers.
There's also an accounting transparency risk. An insurer's balance sheet is full of estimates (how much it will pay in future claims), and aggressive companies can inflate profits by under-reserving. That's why you should be wary of a single year's ROE and look at the track record across several years, just like solvency (ratios such as Solvency II in Europe). DeepTicker includes Solvency as one of the DeepTicker Score dimensions precisely so that a pretty profit doesn't distract you from a fragile balance sheet. Remember: none of this is a buy recommendation, it's information so you can assess the risk yourself.
How to find the best insurance stocks with a screener
Searching by hand through hundreds of insurers is unworkable. A screener lets you filter the sector by the metrics that matter in a few seconds. In the DeepTicker stock screener you have more than 140 filters and ready-made strategy presets, and you can cross criteria designed for this sector: high recurring ROE, moderate P/B, stable profits and solid solvency. That's how you go from a huge universe to a short list of quality insurers at a reasonable price to study calmly, instead of trusting headlines or the last stock you saw mentioned.
The screener doesn't decide for you: it sets the table. Once you have your list, you open the stock pages of each candidate and review its historical combined ratio, its book-value-per-share track record and its DeepTicker Score versus the sector. Because every number comes explained, the more you use it, the more you learn to read an insurer on your own. That's the spirit of DeepTicker: the rigor the professional funds use, made simple so you can invest in insurance with discipline without needing to know finance or build spreadsheets.
Picking well among insurance stocks isn't about chasing the cheapest one, but about distinguishing an insurer with technical discipline and quality float from one that makes money by luck. DeepTicker gives you both sides — quality with the DeepTicker Score and price with sector-specific metrics like P/B and ROE — all explained number by number so you learn the more you use it. Start by filtering the sector with the stock screener: My Portfolio and the competition are free, and you get a 14-day trial with no card to analyze the best insurers with discipline.
Frequently asked questions
What are the best insurance stocks to invest in?
There's no universal closed list, and this isn't a buy recommendation. The best insurance stocks tend to share traits: a combined ratio sustainably below 100%, high and stable ROE, growing book value per share and a well-managed float. What matters is learning to identify those traits and analyze the stocks yourself with data.
What is the combined ratio and why does it matter so much?
It's the sum of claims and expenses divided by premiums. Below 100%, the insurer makes money just from underwriting; above it, it loses money on the pure activity and depends on its investments. It's the best measure of a company's technical discipline.
Why isn't an insurer valued with a normal DCF?
Because its cash flow depends on the float, the reserves and investment returns, not on a clean, projectable free cash flow. The classic Reverse DCF doesn't apply well. Instead you look at P/B, ROE, combined ratio and solvency, which better reflect how an insurer creates value.
What is an insurer's float?
It's the premium money collected that the company holds before paying future claims. If it underwrites with discipline, that float works like an almost-free loan that it invests in its favor for years. The better it manages and grows its float, the more value it creates.
How do I know if an insurance stock is undervalued?
Compare its P/B with its recurring ROE and with its peers. An insurer with high ROE trading at a low book-value multiple relative to its history may be cheap, but verify there are no insufficient reserves or a loss-making line of business that justifies that discount.
What do I look at to find quality insurers?
At underwriting discipline (a low, stable combined ratio), a sustained ROE, the growth of book value per share over the years and solid solvency. Quality in insurance comes from doing things right across the whole cycle, not in a single good year.
Is it risky to invest in insurance?
Like any stock-market investment, it has risks: uncontrolled underwriting, catastrophes, low interest rates in life insurance and poorly estimated reserves. That's why you should look at the multi-year track record and solvency, not just a one-off profit. This is educational information, not financial advice.
Can I filter insurance stocks by fundamentals in DeepTicker?
Yes. The stock screener has more than 140 filters and ready-made strategy presets; you can cross ROE, P/B, earnings stability and solvency to narrow the sector to a short list of candidates, and then study them on their stock pages with every number explained.
You may also like
Filter this sector by quality and valuation in the stock screener, see how the DeepTicker Score rates business quality, or brush up on the key concepts in the glossary.
Educational content by DeepTicker. This is not financial advice, nor a recommendation to buy or sell. Investing carries a risk of loss.