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3 Growth Stocks From the P&C Insurance Space to Enhance Your Portfolio
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Key Takeaways
Global insurance rates fell 4% in Q4 2025, marking the sixth straight quarterly decline.
Growth in insurer capacity and new entrants boosted competition and improved client terms.
Premiums may surge to $722B by 2030, while insured losses could hit $320B in 2026.
The Zacks Property and Casualty Insurance industry is placed within the top 16% of the 243 Zacks industries. It currently carries Zack Industry Rank #38. The insurers remain well-poised for growth, riding on better pricing, prudent underwriting, increased exposure, an improving rate environment, a solid capital position and ongoing economic expansion.
The property and casualty (P&C) insurance industry has lost 4.5% in the year-to-date period compared with the Zacks S&P 500 composite and the Finance sector’s decline of 4.9% and 5.7%, respectively.
Global insurance rates declined 4% in the fourth quarter of 2025, which marked the sixth consecutive quarter of declines in the Global Insurance Market Index, per the Marsh Global Insurance Market Index. This downward trend was aided by insurer capacity, driven by reinsurer growth and the entry of new insurers, which intensified competition and generally enabled more favorable terms and broader coverage options for clients. Per Marsh, the overall rates continue to decline in 2026.
Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030.
Per Swiss Re's modeling, insured losses are expected to reach $320 billion in 2026, underscoring the continued need for well-designed adaptation and risk mitigation measures.
Insurers are direct beneficiaries of a rising rate environment. They invest a portion of their premiums. With a lower rate of return, investment income will suffer. The Fed left the federal funds rate steady at the 3.5-3.75% target range for a second consecutive meeting in March 2026, in line with expectations. The Fed still projects a single rate cut in 2026, but also expects inflation and economic growth to rise from its previous projections.
A solid capital level supports insurers in pursuing strategic mergers and acquisitions to gain market share, expand in niche areas and diversify operations into new business lines and geography, as well as increase dividends, pay special dividends and buy back shares.
The P&C insurance industry is witnessing increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, and robotic process automation that expedite business operations and save costs. Insurers continue to invest heavily in technology to improve basis points, scale and efficiencies.
Given the bright prospects of the industry, growth stocks like Mercury General Corporation (MCY - Free Report) , First American Financial Corporation (FAF - Free Report) , and Palomar Holdings, Inc. (PLMR - Free Report) , driven by their solid fundamentals, should generate better returns.
3 Growth Picks
Given the prospects of the industry, let’s look at a few stocks that have the potential to generate better returns. Our proprietary Growth Score makes the daunting task easier.
The Growth Score analyzes the growth prospects for a company. Studies have shown that stocks exhibiting the best growth characteristics consistently outperform the market. Back-tested results have shown that for stocks with a solid Growth Score and a favorable Zacks Rank, the returns are even better.
With the help of the Zacks Stock Screener, we have selected three P&C insurance stocks with an impressive Growth Score of A or B. MCY sports a Zacks Rank #1 (Strong Buy), while FAF and PLMR carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Los Angeles, CA, Mercury General is a leading provider of personal automobile insurance and is engaged primarily in writing all risk classifications of automobile insurance in a number of states. MCY offers automobile policyholders the following types of coverage: bodily injury liability, underinsured and uninsured motorist, property damage liability, comprehensive, collision and other hazards specified in the policy.
The Zacks Consensus Estimate for MCY’s 2026 earnings suggests 13.9% year-over-year growth. The consensus estimate for 2026 and 2027 has moved up 7.1% and 3.2%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 55%. MCY also has an impressive Value Score of A. Earnings of Mercury General grew 16.4% in the last five years.
Headquartered in Santa Ana, CA, First American Financial provides financial services. First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology positions FAF well for long-term growth.
The Zacks Consensus Estimate for FAF’s 2026 and 2027 earnings suggests 5.4% and 7.8% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 has moved up 3.4% and 4.2%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 22.95%. FAF also has an impressive Value Score of A. The long-term earnings growth is expected to be 15.2%, better than the industry average of 7.7%.
Headquartered in La Jolla, CA, Palomar Holdings is a specialty insurance company that provides property and casualty insurance to individuals and businesses in the United States. The increasing volume of policies across multiple business lines, strong retention rates, expansion into new geographic areas and distribution channels, and the formation of new partnerships are expected to drive premiums. Financially, the insurer maintains a strong capital position and a debt-free balance sheet.
The Zacks Consensus Estimate for PLMR’s 2026 and 2027 earnings suggests 22.5% and 13.3% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 has moved up 11.5% and 13.4%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 14.19%. Earnings of Palomar Holdings grew 38.2% in the last five years, better than the industry average of 22.5%. PLMR also has an impressive Value Score of A.
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3 Growth Stocks From the P&C Insurance Space to Enhance Your Portfolio
Key Takeaways
The Zacks Property and Casualty Insurance industry is placed within the top 16% of the 243 Zacks industries. It currently carries Zack Industry Rank #38. The insurers remain well-poised for growth, riding on better pricing, prudent underwriting, increased exposure, an improving rate environment, a solid capital position and ongoing economic expansion.
The property and casualty (P&C) insurance industry has lost 4.5% in the year-to-date period compared with the Zacks S&P 500 composite and the Finance sector’s decline of 4.9% and 5.7%, respectively.
Global insurance rates declined 4% in the fourth quarter of 2025, which marked the sixth consecutive quarter of declines in the Global Insurance Market Index, per the Marsh Global Insurance Market Index. This downward trend was aided by insurer capacity, driven by reinsurer growth and the entry of new insurers, which intensified competition and generally enabled more favorable terms and broader coverage options for clients. Per Marsh, the overall rates continue to decline in 2026.
Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030.
Per Swiss Re's modeling, insured losses are expected to reach $320 billion in 2026, underscoring the continued need for well-designed adaptation and risk mitigation measures.
Insurers are direct beneficiaries of a rising rate environment. They invest a portion of their premiums. With a lower rate of return, investment income will suffer. The Fed left the federal funds rate steady at the 3.5-3.75% target range for a second consecutive meeting in March 2026, in line with expectations. The Fed still projects a single rate cut in 2026, but also expects inflation and economic growth to rise from its previous projections.
A solid capital level supports insurers in pursuing strategic mergers and acquisitions to gain market share, expand in niche areas and diversify operations into new business lines and geography, as well as increase dividends, pay special dividends and buy back shares.
The P&C insurance industry is witnessing increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, and robotic process automation that expedite business operations and save costs. Insurers continue to invest heavily in technology to improve basis points, scale and efficiencies.
Given the bright prospects of the industry, growth stocks like Mercury General Corporation (MCY - Free Report) , First American Financial Corporation (FAF - Free Report) , and Palomar Holdings, Inc. (PLMR - Free Report) , driven by their solid fundamentals, should generate better returns.
3 Growth Picks
Given the prospects of the industry, let’s look at a few stocks that have the potential to generate better returns. Our proprietary Growth Score makes the daunting task easier.
The Growth Score analyzes the growth prospects for a company. Studies have shown that stocks exhibiting the best growth characteristics consistently outperform the market. Back-tested results have shown that for stocks with a solid Growth Score and a favorable Zacks Rank, the returns are even better.
With the help of the Zacks Stock Screener, we have selected three P&C insurance stocks with an impressive Growth Score of A or B. MCY sports a Zacks Rank #1 (Strong Buy), while FAF and PLMR carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Los Angeles, CA, Mercury General is a leading provider of personal automobile insurance and is engaged primarily in writing all risk classifications of automobile insurance in a number of states. MCY offers automobile policyholders the following types of coverage: bodily injury liability, underinsured and uninsured motorist, property damage liability, comprehensive, collision and other hazards specified in the policy.
The Zacks Consensus Estimate for MCY’s 2026 earnings suggests 13.9% year-over-year growth. The consensus estimate for 2026 and 2027 has moved up 7.1% and 3.2%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 55%. MCY also has an impressive Value Score of A. Earnings of Mercury General grew 16.4% in the last five years.
Headquartered in Santa Ana, CA, First American Financial provides financial services. First American stands to gain from increased demand for first-time home purchases among millennials. It expects housing demand, improving economy and labor markets to drive home price appreciation. Growing leadership in title data, courtesy of proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology positions FAF well for long-term growth.
The Zacks Consensus Estimate for FAF’s 2026 and 2027 earnings suggests 5.4% and 7.8% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 has moved up 3.4% and 4.2%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 22.95%. FAF also has an impressive Value Score of A. The long-term earnings growth is expected to be 15.2%, better than the industry average of 7.7%.
Headquartered in La Jolla, CA, Palomar Holdings is a specialty insurance company that provides property and casualty insurance to individuals and businesses in the United States. The increasing volume of policies across multiple business lines, strong retention rates, expansion into new geographic areas and distribution channels, and the formation of new partnerships are expected to drive premiums. Financially, the insurer maintains a strong capital position and a debt-free balance sheet.
The Zacks Consensus Estimate for PLMR’s 2026 and 2027 earnings suggests 22.5% and 13.3% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 has moved up 11.5% and 13.4%, respectively, in the past 60 days. The company delivered a four-quarter average earnings surprise of 14.19%. Earnings of Palomar Holdings grew 38.2% in the last five years, better than the industry average of 22.5%. PLMR also has an impressive Value Score of A.