5 P&C Insurers to Buy as Industry Sees Digitalization, Exposure Growth

The Zacks Property and Casualty Insurance (P&C) industry is witnessing softer pricing after several years of improvement. However, it is likely to benefit from prudent underwriting, exposure growth and accelerated digitalization. Industry players like The Hanover Insurance Group THG, Essent Group ESNT, Mercury General Corporation MCY, Selective Insurance Group SIGI and Skyward Specialty Insurance Group SKWD are poised to grow despite all odds. Given an active catastrophe environment, the policy renewal rate should accelerate. The increasing adoption of technology and the emergence of insurtech help the industry players function smoothly.

The Fed has kept interest rates unchanged till now and has hinted at the possibility of a cut later this year. Though insurers are direct beneficiaries of an improved rate environment, investment income is expected to remain strong, given insurers’ diverse investment portfolio as well as the continued growth of private market investments. Also, an investment portfolio skewed toward fixed-income maturities provides some upside. The imposition of tariffs by President Trump, as well as higher inflation, will have an impact on pricing. Nonetheless, an improvement in surplus and accelerated economic activities set the stage for a better M&A environment. Per Fitch Ratings, personal auto is expected to stay strong, and, coupled with better investment results and lower claims, should fuel insurers' performance.

About the Industry

The Zacks Property and Casualty Insurance industry comprises companies that provide commercial and personal property insurance, and casualty insurance products and services. Such insurance helps to safeguard property in case of any natural or man-made disasters. Some industry players also provide liability coverage. The insurance coverage offered also includes automobiles, professional risk, marine, excess casualty, aviation, personal accident, commercial multi-peril, and professional indemnity and surety. Premiums are the primary source of revenues for these insurers. Better pricing and increased exposure drive premiums. These companies invest a portion of premiums to meet their commitments to policyholders. However, rate cuts by the Fed pose downside risk.

4 Trends Shaping the Future of the Property and Casualty Insurance Industry

Proper pricing to help navigate claims: Catastrophic events continue to keep insurers under pressure, often prompting rate hikes to sustain claims payouts. However, Marsh’s Global Insurance Market Index reported a 5% decline in global commercial insurance rates in the first quarter of 2026, marking the seventh consecutive quarter of pricing moderation due to stronger competition, favorable claims trends and improved reinsurance conditions. Well-calibrated pricing remains critical, as prudently priced portfolios enhance loss ratios and release capital for more efficient claims servicing. Fitch Ratings highlights strong momentum in personal auto insurance, supported by better investment returns and fewer claims, while S&P Global expects underwriting profits to stabilize as insurers balance growth with steady or slightly reduced rates. Deloitte projects global premiums to grow nearly sixfold to $722 billion by 2030, with China and North America dominating. Swiss Re forecasts 4% premium growth in 2026. Thus, prudent pricing not only drives premium but also a resilient claims ecosystem.

Catastrophe loss induces volatility in underwriting profits: The property and casualty insurance industry is susceptible to catastrophe events, which drag down underwriting profits. According to Aon, natural disasters caused global economic losses of $260 billion last year, while insured losses exceeded $127 billion. Yet the industry generated an estimated net underwriting gain of $63 billion in 2025, significantly higher than $23 billion in 2024, per Verisk. The combined ratio improved to 92.9% from 96.6%, benefiting from relatively lower catastrophe losses. However, Swiss Re projects the combined ratio to deteriorate by 50 basis points to 99% in 2026 as catastrophe pressure normalizes. Insurance Information Institute and Milliman expect personal lines insurers to face higher catastrophe-related losses, which could weigh on underwriting profitability. S&P Global expects underwriting profitability to stabilize as insurers balance growth and pricing discipline.

Merger and acquisitions: Consolidation in the property and casualty industry is likely to continue as players look to diversify their operations into new business lines and geography. Buying businesses along the same lines will also continue as players look to gain market share and grow in their niche areas. With a sturdy capital level, the industry is witnessing a number of mergers, acquisitions and consolidations.

Increased adoption of technology: The industry is witnessing increased use of technologies like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation that expedite business operations and save costs. The industry has also witnessed the emergence of insurtechs or technology-led insurers. The focus of insurtech is mainly on the property and casualty insurance industry. Insurers continue to invest heavily in technology, generative AI in particular, as it is expected to improve basis points, scale and efficiencies. However, the use of technology poses cyber threats.

Zacks Industry Rank Indicates Bright Prospects

The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects in the near term. The Zacks Property and Casualty Insurance industry, which is housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #95, which places it in the top 39% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregates. Earnings estimates for 2026 have increased 0.7% year over year.

Before we present a few property and casualty stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Underperforms Sector and the S&P 500

The Property and Casualty Insurance industry has underperformed its sector and the Zacks S&P 500 composite in a year. The stocks in this industry have collectively gained 0.3% compared with the sector’s increase of 3.5% and the Zacks S&P 500 composite’s increase of 8.8% in the said time frame.

Price Performance

Current Valuation

On the basis of the trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.44X compared with the S&P 500’s 8.05X and the sector’s 4.55X.

Over the past five years, the industry has traded as high as 1.74X, as low as 1.18X and at the median of 1.45X.

Price-to-Book (P/B) Ratio (TTM)

5 Property and Casualty Insurance Stocks to Bet On

Here, we are discussing one Zacks Rank #1 (Strong Buy) stock and four Zacks Rank #2 (Buy) stocks from the P&C Insurance industry.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercury General: Headquartered in Los Angeles, Mercury General is an insurance holding company. It is primarily engaged in writing personal automobile lines of business and provides related property and casualty insurance products. Mercury General has been gaining ground by relying on a set of core organic strengths. The Property and Casualty segment has also held up well, signaling a stable backdrop for the company’s operations. These organic drivers are lifting Mercury General’s top line and shaping the path for continued expansion. Mercury General’s strong liquidity position further supports its growth. It sports a Zacks Rank #1.

The Zacks Consensus Estimate for MCY’s 2026 earnings suggests 44% year-over-year growth. The company delivered a four-quarter average earnings surprise of 738.52%. It has a VGM Score of A.

Price and Consensus: MCY

The Hanover Insurance: Headquartered in Worcester, MA, Hanover Insurance is a U.S. property and casualty insurance holding company that sells through independent agents and brokers. The insurer is poised to grow on disciplined underwriting, effective pricing, specialty insurance expansion and rising investment income. Specialty continues to anchor results through disciplined risk selection and improving mix via workflow and technology upgrades. Personal Lines is benefiting from earned pricing and margin initiatives, and management expects policies in force to grow in 2026. This Zacks Rank #2 company remains committed to returning capital to shareholders through a combination of dividends and share repurchases.

The consensus estimate for 2026 earnings has moved 4% north in the past 60 days. The company has a VGM Score of A.

Price and Consensus: THG

Essent Group: Headquartered in Hamilton, Bermuda, Essent Group boasts a strong position in the U.S. private mortgage insurance market, disciplined underwriting, and a capital-light business model. Conservative risk management, high-quality insured portfolio, and robust capital position support resilient earnings across credit cycles while benefiting from structural demand for mortgage insurance. Essent consistently generates strong free cash flow, enabling shareholder-friendly capital allocation through dividends and share repurchases while maintaining regulatory capital buffers. It carries a Zacks Rank #2.

The Zacks Consensus Estimate for ESNT’s 2026 and 2027 earnings suggests 5.1% and 6.2% year-over-year growth, respectively. The company delivered a four-quarter average earnings surprise of 1.57%. The expected long-term earnings growth rate is pegged at 5%.

Price and Consensus: ESNT

Selective Insurance Group: Headquartered in Branchville, NJ, Selective Insurance operates as a P&C insurer through 10 subsidiaries across the United States. Selective Insurance is expected to deliver steady earnings over the next year as renewal pricing remains focused on rate adequacy and investment income continues to rise. SIGI continues to prioritize underwriting profitability over aggressive premium growth and raise renewal rates to address elevated loss-cost trends. It is investing heavily in artificial intelligence and technology capabilities but continues to return capital through dividends and repurchases while keeping flexibility for underwriting and investment opportunities. It carries a Zacks Rank #2.

The Zacks Consensus Estimate for SIGI’s 2026 and 2027 earnings suggests 5.9% and 13.3% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 earnings has moved 0.6% and 0.4% north, respectively, in the past 60 days. SIGI has a VGM Score of A.

Price and Consensus: SIGI

Skyward Specialty Insurance Group: Headquartered in Houston, TX, Skyward Specialty Insurance delivers commercial property and casualty products on a non-admitted (E&S) and admitted basis. A&H momentum, disciplined niche underwriting, expense control and Apollo-led fee income support resilient earnings and sustained returns. Strong momentum in accident & health, credit and surety, global agriculture and specialty programs is helping offset pressure in more competitive property and casualty markets. Several new initiatives are expanding Skyward's addressable market. These include participation in autonomous vehicle insurance programs and the launch of life sciences coverage for businesses with international exposure. It carries a Zacks Rank #2.

The Zacks Consensus Estimate for SKWD’s 2026 and 2027 earnings suggests 23.3% and 11.8% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 earnings has moved 5.1% and 2% north, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 16.99%. It has a VGM Score of A.

Price and Consensus: SKWD

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