This week, we use AAII’s A+ Investor Stock Grades to provide insight into three insurance stocks. With increased fragmentation creating growth opportunities within the insurance industry, should you consider the three stocks of Allstate Corp. (ALL), Heritage Insurance Holdings Inc. (HRTG) and Mercury General Corp. (MCY)?
Insurance Stocks Recent News
The insurance industry is entering a new phase of fragmentation as global risk dynamics shift. According to a report from global insurance company Allianz, the worldwide insurance industry is estimated to have grown 7.1% to approximately $8.0 trillion (converted from euros to U.S. dollars) in 2025, adding approximately $528 billion to the global premium pool. This growth is comfortably above the 10-year compound average growth rate (CAGR) of 5.6%, confirming that the industry’s growth drivers remain intact. Life insurance is the largest segment, estimated to be approximately $3.31 trillion, followed by property & casualty insurance at about $2.69 trillion, and health insurance at around $1.96 trillion. Global health insurance premiums increased 12.3% in 2025, the strongest expansion since 2014. Meanwhile, Asia kept its place as the industry’s principal growth engine in life insurance, with premiums rising 9.9% and China by itself expanding 11.4%.
Looking ahead, the Allianz research report frames insurance as a durable growth industry even amid the more fragmented global economy. The global insurance market is expected to grow at a CAGR of 5.3% over the next 10 years, slightly above economic output. Health insurance is expected to remain the most dynamic segment, at 6.7% average annual growth. The global insurance map will continue shifting eastward, with India and China together expected to add almost four percentage points of global market share by 2036. With these dynamics expected for the insurance industry, should you invest in Allstate, Heritage Insurance and Mercury General?
Sign Up to Receive a Free Special Report That Shows How A+ Investor Grades Can Help You Make Investment Decisions
Grading Insurance Stocks With AAII’s A+ Stock Grades
When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.
Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three insurance stocks—Allstate, Heritage Insurance and Mercury General—based on their fundamentals.
AAII’s A+ Stock Grade Summary for Three Insurance Stocks
What the A+ Stock Grades Reveal
Allstate Corp. (ALL) is a leading personal lines property and casualty insurance company operating worldwide, with focuses in the U.S. and Canada. The company offers auto, home, life and commercial insurance products as well as protection services for individual, household and business customers. Allstate provides a broad range of insurance products, including automobile, homeowners and renters’ insurance that is distributed through its network of exclusive agents and direct digital channels. The company was founded in 1931 and is headquartered in Northbrook, Illinois.
Allstate has a Value Grade of A, based on its Value Score of 95, which is deep value. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA). For these value metrics, a lower rank is more attractive. The company has a price-earnings ratio of 5.1, ranking in the 4th percentile among all U.S.-listed stocks. Its enterprise-value-to-EBITDA ratio is 4.2, ranking in the 8th percentile.
The company has a Growth Grade of A, which is very strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. Allstate has a five-year annualized sales growth rate of 10.1% and has generated year-over-year sales increases in the past five consecutive years. It has also generated positive annual cash from operations in the past five consecutive years.
Earnings estimate revisions indicate how analysts view a firm’s short-term profits. Allstate has an Earnings Estimate Revisions Grade of A, based on a score of 84, which is very positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months. The company reported a positive earnings surprise of 48.0% for second-quarter 2026, and in the prior quarter reported a positive earnings surprise of 47.0%. The consensus earnings estimate for third-quarter 2026 has increased over the last month from $5.986 to $6.417 per share. Over the last month, the consensus earnings estimate for full-year 2026 has increased from $31.446 to $35.233 per share.
Heritage Insurance Holdings Inc. (HRTG) is a property and casualty insurance holding company operating in the U.S., primarily across the East Coast, the Gulf Coast and Hawaii. It offers personal and commercial residential insurance products for homeowners, condominium owners and renters in catastrophe-exposed markets. The company operates through its primary insurance subsidiaries, including Heritage Property & Casualty Insurance Co. and Zephyr Insurance Co. Heritage Insurance provides a broad range of property insurance products, including homeowners, dwelling fire, wind-only and commercial residential policies, with a focus on markets that are underserved by standard insurance carriers. It also employs reinsurance programs and risk management strategies to manage its exposure to hurricanes and other catastrophic weather events across its geographic footprint. The company was founded in 2012 and is headquartered in Tampa, Florida.
Heritage Insurance has a Value Grade of A, based on its Value Score of 95, which is deep value. The company has an enterprise-value-to-EBITDA ratio of 1.4, ranking in the 3rd percentile. Its price-to-free-cash-flow ratio is 3.5, ranking in the 7th percentile.
The company has a Momentum Grade of A, based on its Momentum Score of 92. This means that the stock’s momentum is very strong in terms of its weighted relative strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The ranks are 96, 13, 44 and 84, sequentially from the most recent quarter, with higher ranks signaling stronger price momentum. The weighted four-quarter relative price strength is 20.0%.
Heritage Insurance has a Quality Grade of B, based on a score of 73, which is strong. Higher-quality stocks possess traits associated with upside potential and reduced downside risk. The Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.
The company ranks strongly in terms of its return on assets and F-Score. Its return on assets is 8.6%, which ranks in the 84th percentile and is above the sector median of 1.2%. Its F-Score is 8, which ranks in the 92nd percentile and is above the sector median of 5. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position based on its profitability, leverage, liquidity and operating efficiency.
Don’t Miss Your Free Report — Sign Up Here!
Mercury General Corp. (MCY) is a leading personal lines property and casualty insurance company operating primarily in the U.S. It offers automobile, homeowners, renters, condo and umbrella insurance products for individual and commercial customers across multiple states. The company operates through its network of independent agents and direct channels, with its primary market concentration in California, where it is one of the largest personal automobile insurers. Mercury General provides a broad range of insurance products, including personal and commercial automobile coverage, homeowners’ insurance, and mechanical protection. The company was founded in 1961 and is headquartered in Los Angeles, California.
Mercury General has a Value Grade of A, based on its Value Score of 93, which is deep value. The company has an enterprise-value-to-EBITDA ratio of 3.4%, ranking in the 6th percentile. Its price-earnings ratio is 6.0, also ranking in the 6th percentile.
The company has a Growth Grade of A, which is very strong. Mercury General has a five-year annualized sales growth rate of 9.6% and has generated year-over-year sales increases in four of the past five years. It has also generated positive annual cash from operations in the past five consecutive years.
Mercury General has an Earnings Estimate Revisions Grade of A, based on a score of 89, which is very positive. The company reported a positive earnings surprise of 95.6% for second-quarter 2026, and in the prior quarter reported a positive earnings surprise of 62.8%. The consensus earnings estimate for third-quarter 2026 has remained unchanged over the past month at $3.35 per share. The consensus earnings estimate for full-year 2026 has increased over the past month from $11.75 to $13.50 per share based on one upward revision.