5 Accident & Health Insurance Stocks to Watch as Exposure Increases

The Zacks Accident and Health Insurance industry is poised for growth, driven by increased underwriting exposure and demand for supplemental health products, though pricing pressures and rising medical costs remain concerns; the industry has outperformed both the broader finance sector and the S&P 500 year-to-date, with a collective gain of 29.6%. While pricing pressures are expected to continue, claims frequency is projected to improve due to safety measures and better working conditions, and the increasing adoption of technology, including AI, is expected to reduce claim expenses. Key companies to watch include Trupanion (TRUP), Aflac (AFL), Unum Group (UNM), Globe Life (GL), and AMERISAFE (AMSF).

Analysis

The Accident and Health (A&H) Insurance industry demonstrates robust near-term prospects, evidenced by a significant 29.6% year-to-date collective stock gain, outperforming both the S&P 500's 2.2% and the Finance sector's 5.8% increase. This performance is supported by a Zacks Industry Rank of #95, placing it in the top 39% of industries, and a positive aggregate earnings outlook driven by constituent companies. Key growth factors include increasing underwriting exposure, rising demand for embedded and supplemental health products, and the strategic adoption of technology like AI, which a CBIZ report suggests could reduce workers’ compensation claim expenses by approximately 45%. However, the industry navigates persistent pricing pressures, further intensified by an expected inflation rate of 2.7% this year and healthcare spending projected to increase 5.4% annually through 2028. While improved safety measures are currently lowering overall claims frequency, the Bureau of Labor Statistics projects a 96.5% increase in workers aged 75 and older over the next decade, potentially elevating claim severity. Despite these challenges and Fitch Ratings' forecast of a softer performance in 2025, the industry's current valuation, with a trailing 12-month price-to-book ratio of 1.84X, is considerably lower than the S&P 500's 7.89X and the broader finance sector's 4.17X, suggesting potential value.

Key Decisions for Investors

• Investors should consider the Accident & Health insurance sector's strong year-to-date outperformance of 29.6% and favorable Zacks Industry Rank #95, while remaining vigilant about inflationary pressures (2.7% expected this year) and rising medical costs (5.4% annual increase projected through 2028).
• Trupanion (TRUP), a Zacks Rank #2 (Buy) stock with a Growth Score of A, warrants attention due to its significant projected earnings increases of 130.4% for 2025 and 428.6% for 2026 in the underpenetrated pet insurance market.
• For Aflac (AFL) and Unum Group (UNM), both Zacks Rank #3 (Hold), investors should weigh the forecasted 2025 earnings decreases (AFL: -6.5%, UNM: -6.9%) against their respective 2026 earnings growth projections (AFL: +6.6%, UNM: +9.1%) and Unum's guidance for a 10-15% dividend increase.
• Globe Life (GL), a Zacks Rank #3 (Hold), presents consistent earnings growth prospects with +10% expected in 2025 and +9.8% in 2026, while AMERISAFE (AMSF), also a Zacks Rank #3, requires a cautious stance due to projected earnings declines in 2025 (-11%) and 2026 (-6.7%) despite its debt-free balance sheet and dividend history.