The insurtech industry combines insurance with technology to revolutionize how insurance products are designed, delivered, and managed. Leveraging innovations like AI, machine learning, blockchain, and IoT, insurtech enhances efficiency, reduces costs, and personalizes customer experiences.

In this evolving sector, leading Insurtech stocks HCI Group, Inc. (HCI), Root, Inc. (ROOT), and, Hippo Holdings Inc. (HIPO) could be solid buys now.

The global insurance industry is transforming rapidly, driven by technological advancements, shifting demographics, and evolving consumer demands, with the insurtech sector leading the charge through innovations like AI, IoT, and big data.

As consumer expectations evolve and demand rises for personalized, tech-driven coverage, insurtech companies are reshaping traditional insurance models with innovative solutions across health, life, and property sectors.

This rapid shift is propelling market growth, with the global insurance industry expected to expand at a 4.3% CAGR until 2028.

Given the promising growth outlook, let’s explore the Insurance – Property & Casualty stocks in more detail:

Stock #3: HCI Group, Inc. (HCI)

HCI provides property and casualty insurance products, including homeowners, fire, flood, and wind-only coverage, alongside reinsurance programs. Its offerings cater to homeowners, condominium owners, and tenants, complemented by real estate investments and innovative IT solutions for policy and claims management.

On December 20, HCI distributed a regular quarterly cash dividend of $0.40 per common share to shareholders of record as of November 15, 2024. It pays an annual dividend of $1.60, which translates to a dividend yield of 1.36% at the prevailing price levels.

In the fiscal third quarter ended September 30, 2024, HCI’s total revenue increased 33.2% year-over-year to $175.32 million. Its income before income taxes was $ 14.08 million. In addition, the company’s non-GAAP net income was $366 million, and non-GAAP EPS was $0.47.

Street expects HCI’s revenue for the fiscal year (ending December 31, 2024) to increase 35.3% year-over-year to $ 745.07 million. Its EPS for the same year is likely to amount to $5.80. In addition, it surpassed the consensus EPS and revenue estimates in three of the trailing four quarters.

Over the past year, the stock has gained 34.9% to close the last trading session at $117.42. It has soared 28.3% in the past six months.

HCI’s POWR Ratings reflect its rosy outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

HCI has an A grade in Momentum and a B in Quality. It is ranked #50 out of 55 stocks in the Insurance – Property & Casualty industry.

To access HCI’s Value, Stability, Sentiment, and Growth ratings, click here.

Stock #2: Root, Inc. (ROOT)

ROOT offers automobile, homeowners, and renters insurance in the U.S. through a direct-to-consumer model via mobile apps, its website, and digital channels.

On December 17, ROOT expanded its auto insurance services to Minnesota, marking its presence in 35 states and covering over 77% of the U.S. population, including more than 4 million drivers in Minnesota.

During the fiscal third quarter that ended September 30, 2024, ROOT’s total revenue grew 165.1% year-over-year to $ 305.70 million. Its adjusted EBITDA was $41.60 million. In addition, the company’s net income and EPS came in at $22.80 million and $1.35, respectively.

Analysts expect ROOT’s revenue for the fiscal fourth quarter (ending December 31, 2024) to increase 47.7% year-over-year to $ 287.79 million. Its EPS for the same quarter is expected to grow 66.8% from the prior year. In addition, it surpassed the consensus revenue estimates in each of the trailing four quarters.

Shares of ROOT have gained 581% over the past year and 43.9% in the past six months to close the last trading session at $73.

ROOT’s POWR Ratings reflect its solid outlook. ROOT has an A grade for Momentum and a B in Growth. It is ranked #49 in the same industry.

Beyond what we have stated above, we also have given ROOT grades for Value, Stability, Sentiment, and Quality. Get all the ROOT’s ratings here.

Stock #1: Hippo Holdings Inc. (HIPO)

HIPO offers a wide range of property and casualty insurance products for individuals and businesses in the U.S. Through its technology-driven platform and licensed insurance agencies, it provides homeowners, auto, cyber, small business, life, and specialty insurance solutions.

On October 3, HIPO announced the expansion of its New Homes Program to include California, Florida, and Texas. This initiative aims to provide insurance coverage for nearly 50,000 new homes by the end of the year, addressing the needs of states.

HIPO’s revenue increased 65% year-over-year to $ 95 million in the fiscal third quarter that ended on September 30, 2024. Its income from operations came in at $ 545 million. In addition, the company’s Spinnaker surplus reached $216 million, up 18.7% from the same quarter last year.

Street expects HIPO’s revenue and EPS for the fiscal fourth quarter ending December 31, 2024, to increase to $ 98.75 million, up to 53.1% year-over-year and $0.07, respectively. It surpassed the Street revenue estimates in each of the trailing four quarters.

Over the past year, the stock has gained 186.8% to close the last trading session at $27.36. It has soared 60.9% over the past six months.

HIPO’s POWR Ratings reflect its robust outlook. It has an A grade for Momentum and a B for Growth. It is ranked #48 in the same industry.

Click here to see HIPO’s ratings for Value, Stability, Sentiment, and Quality.

What To Do Next?

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HCI shares were unchanged in premarket trading Monday. Year-to-date, HCI has gained 36.49%, versus a 26.79% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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