Insurance firms play a critical role in the financial system, offering everything from property coverage to life insurance and specialized risk solutions. But concerns about claims severity and tightening regulations have tempered enthusiasm, limiting the industry’s gains to 7.7% over the past six months. This return lagged the S&P 500’s 13.5% climb.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two insurance stocks boasting durable advantages and one that may face trouble.
One Insurance Stock to Sell:
Lemonade (LMND)
Market Cap: $3.49 billion
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE:LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Does LMND Fall Short?
- Annual earnings per share growth of 8% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 18.4% annually over the last five years
- Negative return on equity shows that some of its growth strategies have backfired
Lemonade is trading at $45.21 per share, or 7.6x forward P/B. Dive into our free research report to see why there are better opportunities than LMND.
Two Insurance Stocks to Buy:
Kinsale Capital Group (KNSL)
Market Cap: $7.77 billion
Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE:KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.
Why Are We Bullish on KNSL?
- Strong 16.3% annualized net premiums earned expansion over the last two years shows it’s capturing market share this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 40.6% exceeded its revenue gains over the last five years
- Impressive 28.6% annual book value per share growth over the last two years indicates it’s building equity value this cycle
At $341.08 per share, Kinsale Capital Group trades at 3.5x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
Bowhead Specialty (BOW)
Market Cap: $1.12 billion
Named after the Arctic bowhead whale known for navigating challenging waters, Bowhead Specialty Holdings (NYSE:BOW) is a specialty insurance company that provides customized coverage for complex and high-risk commercial sectors.
Why Should You Buy BOW?
- Net premiums earned surged by 30.3% annually over the past two years, reflecting strong market share gains this cycle
- Market share will likely rise over the next 12 months as its expected revenue growth of 19% is robust
- Annual book value per share growth of 17.6% over the last two years was superb and indicates its capital strength increased during this cycle
Bowhead Specialty’s stock price of $34.03 implies a valuation ratio of 2.2x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.