We recently published a list of the 10 Best Performing Insurance Stocks to Buy Now. This article will delve into the performance of Lincoln National Corporation (NYSE:LNC) relative to the other companies on our list.
The U.S. Insurance Market: A Landscape of Opportunity
The United States boasts the largest insurance market globally, with a combined value of approximately $1.7 trillion as of 2025. This dominance is fueled by some of the largest insurance companies by assets, which significantly influence worldwide insurance markets.
Life and health insurance remain key segments. The global health insurance market was valued at around $2.14 trillion in 2024 and is projected to reach $4.45 trillion by 2032, growing at a compound annual growth rate (CAGR) of 9.7%. North America led the health insurance market in 2024, holding a 62.15% market share.
According to a Deloitte report, the U.S. property and casualty (P&C) insurance sector reported a $9.3 billion underwriting gain in the first quarter of 2024, a significant increase from an $8.5 billion loss in the first quarter of 2023. The industry’s combined ratio improved to 94.2%, driven by rising rates in personal lines, which outweighed claim costs.
Navigating Losses from Natural Disasters
U.S. insurers are closely monitoring the commercial lines segment, particularly employment practices liability insurance, due to increasing loss trends. Social inflation continues to be a concern for insurers both in the U.S. and globally.
WTW’s Natural Catastrophe Review indicates that global insured losses exceeded $140 billion in 2024, marking the fifth consecutive year of insured damages surpassing $100 billion. The total economic damages were about $350 billion, highlighting the severe impact of climate-related risks.
The U.S. property insurance industry has been adjusting its business models to manage losses from the California wildfires. A new report from the UCLA Anderson Forecast suggests that wildfires in Los Angeles County may have caused total losses ranging from $95 billion to $164 billion, with insured losses estimated at $75 billion. Wharton professor of real estate and finance Benjamin Keys noted on a radio show, “Insurance companies have been very clear-eyed about climate change for a long time and the effect that has on their balance sheets… And that will lead to higher premiums in risky areas.”
Keys anticipates an increase in insurance premiums in climate-vulnerable areas, potentially affecting house prices. He added: “But regardless, the position that homeowners will be in is one of substantially higher premiums.”
Lincoln National Corporation (LNC) Performance
Our analysis utilized Finviz to identify insurance companies with a market capitalization exceeding $5 billion. We then selected companies with returns exceeding 15% over the past year, as of January 26, 2024, and ranked them based on the number of hedge fund holders as of Q4 2024. We focus on hedge fund activity because our research has shown that replicating the top stock picks of leading hedge funds can lead to market outperformance. Our quarterly newsletter’s strategy, which selects 14 small-cap and large-cap stocks each quarter, has returned 373.4% since May 2014, outperforming its benchmark by 218 percentage points.
Lincoln National Corporation (NYSE:LNC)
- 1-Year Returns: 40.76%
- No. of Hedge Fund Holders: 41
Lincoln National Corporation (NYSE:LNC) is a Fortune 200 holding company. It runs multiple insurance and retirement businesses through its subsidiaries. The company operates through four segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services.
In 2024, Lincoln National Corporation achieved its highest full-year adjusted operating income in three years, indicating strong financial results. The company improved its Risk-Based Capital (RBC) ratio to over 430% in 2024, enhancing its financial flexibility. All of its main business divisions produced strong outcomes, with the Group protection business reporting record Q4 earnings that more than doubled year-over-year. The Annuities business also saw solid earnings growth and recorded its highest full-year sales in five years. Retirement Plan Services recorded its tenth consecutive year of positive net flows, with full-year deposit growth of 25%.
Following strong quarterly and full-year results, analysts have adjusted their price targets for LNC shares. On February 19, Well Fargo analyst Elyse Greenspan increased LNC’s price target from $28 to $36 per share, maintaining an Equal Weight rating. Morgan Stanley analyst Nigel Dally also increased the price target from $36 to $39 per share, also maintaining an Equal Weight rating.
Overall, LNC ranked 9th on our list of top-performing insurance stocks to buy immediately. While LNC shows promise as an investment, our primary conviction lies in AI stocks, which we believe provide a greater opportunity for higher returns in a shorter timeframe. For those looking at AI stock, our report analyzes an AI stock that is more promising than LNC, but which trades at less than 5 times its earnings.
Disclaimer
This article was originally published at Insider Monkey.
