Global insurance premiums declined in 2024 for the first time since 2017, driven by lower rates. BofA Securities senior insurance analyst Joshua Shanker joins Market Domination to analyze the insurance industry's growth prospects.
Shanker explains that insurance companies have two revenue streams: underwriting and investing. He notes that when companies generate stronger returns from investments due to higher rates, "there might be relief on pricing in order to take advantage of those higher yields."
"The last ten years of interest rates have been low, so the cost of insurance has gone up to compensate. In theory, and it's been a long time, there could be some rate relief over the long term in terms of what insurers charge, on the grounds that maybe they make more on the investment income, but that remains to be seen," he tells Yahoo Finance.
Addressing insurance stocks, Shanker observes they are being traded at a discount compared to the broader market, though he acknowledges these stocks typically show lower growth rates. However, he identifies specific opportunities in the sector, highlighting Progressive (PGR) and Corebridge Financial (CRBG) in particular.
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