The importance of insurance companies within the financial system is immeasurable, since every property insurance, life insurance, and speciality-focused risk covers are provided by them. However, concerns over a possible economic deceleration and possible worsening of its claims have restricted sentiment, and in the last six months, the industry neics 2.5 of its returns behind that of the S&P 500 by 22.2 percentage points.
Care should be taken by investors because most of this lot of insurance is the same as their cyclical and you must be careful not to cut your cake before it falls. Speaking of which here are three insurance stocks that you should never venture into.
Globe Life (GL)
Market Cap: $11.3 billion
Globe Life has a history of existence going back to 1900 and was rebranded GLOBE Life in 2019 when it changed its name to shed the former Torchmark Corporation.
GL is an insurance holding company that markets its products in life, supplemental health insurance, and annuity products via the different distribution channels.
Why Do We Think Twice About GL?
Its sales trends were not decisive over the past two years since it recorded results of 4.6% growth annually, below the average insurance company.
The expansion in Net premiums earned was less than the insurance industry standard of 6.3 a year.
Five-year trends in annual book value per share are a negative 2.4 per cent. and indicate the company is weak in capital management during this period.
The Globe Life stock price is at $139.44 which has a 1.9x forward price to book valuation. See our free research report to understand why you need to have a second thought on including GL in your portfolio.
Everest Group (EG)
Market Cap: $14.72 billion
Once part of Everest Re, now ecstatically called Everest Group due to changes in its concept beyond mere reinsurance that same year.
EG writes property and casualty reinsurance and insurance globally, and customers in insurance companies, corporations and others in six continents.
Why Does EG Worry Us?
The 1.7 percent of sales growth rates in the next 12 months mean that the demand will not grow according to its 2-yearing trend.
Recent five-year evidence in incremental sales was far less profitable as its earnings per share reduced by an average of 10.2 percent year by year and its revenues increased.
Everest Group trades at 1x forward P/B at the price of 351.05 share. Have you been thinking EG is going on your portfolio? We have a free research report explaining more.
AXIS Capital (AXS)
Market Cap: $7.34 billion
AXIS Capital Holdings Limited was founded following the events of the 9/11 attacks when insurances were hard to secure.
AXS is a multinational insurer of specialty and reinsurer collecting and offering cover against intricate risks in the property, liability, expert, and cyber areas along with other distinctive markets.
Why Are We Wary of AXS?
Considering its annual growth of 4.9 percent, which is lower than the average insurance company, sales trends were uninspiring because it is not growing at an alarming pace in the last five years.
The net different premiums earned have experienced 2-year lows of 3.4 percent at the annual rate of growth, which means that the firm has lagged behind its peers in the insurance industry.
History of poor 9.7% annualized returns on equity indicates that the management lacked hassle free avenues of growth.
AXIS Capital is selling at 93.84 which is 1.3 forward P/B. Our comprehensive research report (which is free to download) elaborates on reasons you need to be careful in using AXS.
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FAQ,s
1. Why are insurance companies important in the financial system?
Insurance companies play a crucial role by providing coverage for various risks, including property, life, and specialized insurance, which helps stabilize the economy by mitigating financial losses.
2. What has been the recent performance of the insurance industry compared to the S&P 500?
In the last six months, the insurance industry has underperformed, trailing the S&P 500 by 22.2 percentage points, with a return of 2.5%.
3. What should investors consider before investing in insurance stocks?
Investors should be cautious as many insurance stocks are cyclical, meaning their performance can fluctuate significantly with economic conditions. It's essential to conduct thorough research before investing.
4. What are some concerns regarding Globe Life (GL)?
Globe Life has shown a low annual sales growth of 4.6% and negative trends in book value per share over five years, indicating potential weaknesses in capital management.
5. Why might Everest Group (EG) be a risky investment?
Everest Group's projected sales growth of only 1.7% and a decline in earnings per share over the past five years raise concerns about its profitability and overall financial health.
6. What factors make AXIS Capital (AXS) less appealing to investors?
AXIS Capital has recorded a modest annual growth rate of 4.9% and has faced challenges with low net premium growth, along with a concerning history of poor returns on equity.
7. How can market conditions affect investment decisions in insurance stocks?
Market volatility can lead to fear-driven selling; however, long-term investments in high-quality stocks can yield significant returns despite short-term fluctuations.
8. What should I do if I'm interested in investing in insurance stocks?
Consider downloading our free research reports for detailed insights on specific companies, and focus on quality stocks that have shown resilience in various market conditions.
Reference (APA):
StockStory. (2025, April). 3 Insurance Stocks We’re Skeptical Of. Retrieved October 3, 2025, from https://stockstory.org/
In-text citation: (StockStory, 2025)
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This article was created with the assistance of an AI language model and has been reviewed and edited by the author for accuracy. While efforts have been made to ensure correct and up-to-date information, errors or omissions may occur. The content is for general informational purposes only and should not be taken as professional, legal, financial, or medical advice. Please verify key facts independently or consult a qualified expert before making important decisions.
**About the Author**
Ahmad Khan is a finance and insurance writer who uses AI tools to assist in content creation. He researches and verifies the information provided to ensure reliability. He writes guides and articles related to insurance, banking, and personal finance to help readers make informed decisions.