Insurance providers use their expertise in risk assessment to help protect assets while offering consumers peace of mind through comprehensive coverage options. Still, investors are uneasy as insurers face challenges from catastrophic events and potential regulatory changes. These doubts have certainly contributed to the industry’s recent underperformance - over the past six months, insurance stocks were flat while the S&P 500 was up 15.7%.

Investors should tread carefully as many of these insurers are also cyclical, and any misstep can have you catching a falling knife. With that said, here are three insurance stocks best left ignored.

Market Cap: $3.23 billion

Originally known as Unitrin until rebranding in 2011, Kemper (NYSE:KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.

Why Are We Out on KMPR?

Stagnant net premiums earned over the last five years suggest the firm needs alternative growth strategies

Earnings per share fell by 2% annually over the last five years while its revenue was flat, showing each sale was less profitable

Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 6.3% annually over the last five years

At $51.49 per share, Kemper trades at 1x forward P/B. If you’re considering KMPR for your portfolio, see our FREE research report to learn more.

Market Cap: $6.29 billion

Founded in 1852 during a time when fire insurance was crucial for protecting businesses and homes, The Hanover Insurance Group (NYSE:THG) provides property and casualty insurance products through independent agents, serving individuals, small businesses, and mid-sized companies.

Why Does THG Give Us Pause?

Muted 5.4% annual revenue growth over the last two years shows its demand lagged behind its insurance peers

Growth in insurance policies was lackluster over the last two years as its 5% annual growth underperformed the typical financial institution

Annual book value per share growth of 2% over the last five years was below our standards for the insurance sector

The Hanover Insurance Group is trading at $175.77 per share, or 1.9x forward P/B. To fully understand why you should be careful with THG, check out our full research report (it’s free).

Market Cap: $10.03 billion

Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE:ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.

Why Are We Hesitant About ORI?

Sluggish 5.2% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers

Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.5% annually

Annual book value per share growth of 8.2% over the last two years was below our standards for the insurance sector

Old Republic International’s stock price of $41.21 implies a valuation ratio of 1.5x forward P/B. Dive into our free research report to see why there are better opportunities than ORI.

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