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Stock Strategist

Our 3 Favorite Insurance Stocks

W.R. Berkley, AIG, and Aflac are our best ideas in insurance.

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We believe  W.R. Berkley (WRB),  American International Group (AIG), and  Aflac (AFL) are the best opportunities currently available in the insurance sector. With its combination of a narrow economic moat and exemplary stewardship, we think W.R. Berkley is one of the high-water names in the space, and the market is not fully accounting for the company's leverage to a more attractive market. We believe AIG's focus on operational efficiency sets a course in the right direction, and the current market price underrates its potential. For Aflac, we think the market is focusing on the near-term decline in demand for life insurance in Japan and not fully appreciating the positive long-term impact of the country's aging population.

Given the cost uncertainty and balance sheet leverage inherent to the industry, we believe confidence in management is a critical factor in investing in insurance stocks, compared with other industries, and is just as important as the moatiness of the business. W.R. Berkley is one of the three insurance companies that we believe possess both a narrow moat and Exemplary stewardship, making it one of the highest-quality companies in the space, in our view.

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Brett Horn does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.