Income investors looking for quality businesses for long-term dividend growth should consider insurance stocks. Insurance companies have an attractive business model. Insurers collect premium income on the policies they underwrite, and also make money by investing the large sums of accumulated premiums that have not been paid out as claims.

Due to this, many insurance stocks can be found on the various lists of long-term dividend growth stocks such as the Dividend Aristocrats and Dividend Kings.

The following 3 insurance stocks have solid dividend yields, and long-term dividend growth potential.

Chubb Ltd. (CB)

Chubb Ltd is a global provider of insurance and reinsurance services headquartered in Zurich, Switzerland. The company provides insurance services including property & casualty insurance, accident & health insurance, life insurance, and reinsurance.

For its fiscal second quarter, Chubb Ltd reported net earned premium of $11.0 billion, which was 15% more than the net earned premiums that Chubb generated during the previous year’s quarter. Net written premiums were up 17% year-over-year on a company-wide basis at constant currency rates, which was stronger compared to the growth recorded in the previous quarter.

Strong net written premium growth should translate into compelling net earned premium growth in coming quarters. Chubb was able to generate net investment income of $1.15 billion during the quarter. Chubb generated earnings-per-share of $4.92 during the second quarter, which was above what the analyst community had forecasted.

Chubb’s solid profitability during the quarter can be explained by a reasonable combined ratio of 85%, despite some natural disasters that impacted Chubb’s catastrophe losses. Thanks to written premium growth and tailwinds from share repurchases, Chubb’s profits could be strong in the coming quarters.

The dividend payout ratio is quite low at approximately 20%. CB has increased its dividend for 31 consecutive years, making it a top income stock.

Aflac Inc. (AFL)

Aflac Inc., founded in 1955, is the world’s largest underwriter of supplemental cancer insurance. The diversified insurance corporation also provides accident, short-term disability, critical illness, dental, vision, and life insurance. Aflac has increased its dividend for 41 consecutive years, placing it on the Dividend Aristocrats list.

On August 1st, 2023, Aflac announced second quarter results for the period ending June 30th, 2023. For the quarter, the company reported $5.17 billion in revenue, a 2.8% decline compared to Q2 of 2022. However, revenue was $700 million higher than expected. On an adjusted basis, earnings-per-share equaled $1.58 versus $2.16 in the year-ago period. Adjusted book value increased 11.5% to $46.61 per share.

Share buybacks will also boost Aflac’s earnings-per-share growth. Aflac repurchased 10.5 million shares at an average price of $66.67 during the most recent quarter. The company has 95.8 million shares, or 16% of its outstanding share count, remaining on its repurchase authorization.

The dividend payout ratio is expected to be just under 30% for 2023, which indicates a safe dividend. AFL stock currently yields 2.2%.

W.R. Berkley (WRB)

W.R. Berkley is an insurance holding company operating through a wide range of subsidiaries in the commercial casualty insurance segment. The firm primarily operates in two business segments: Insurance and Reinsurance. The insurance segment is the company's main focus, accounting for 87.4% of the total net premiums written in 2021. The company mainly underwrites commercial insurance businesses across the United States.

On July 20th, 2023, W.R. Berkley announced its Q2 2023 results, posting revenues of $2.55 billion, up 8.3% year-over-year. The diluted earnings-per-share for the quarter was reported at $1.14, beating market’s estimate of by $0.06. The operating income stood at $310.9 million, in-line with last year’s result. With an annualized return on equity of 21.1%, the company posted fantastic performance for the second quarter of 2023.

Due to the fact that a growing amount of the fixed-maturity portfolio was reinvested at higher interest rates during the quarter, net investment income increased by 42.9%. The company’s fixed-maturity portfolio's short length and strong quality has increased yields and book value as interest rates have climbed. Additionally, the total return strategy continued to provide positive investment outcomes during the quarter.

With approximately 30% of WRB's premiums generated in excess and surplus lines, the company has positioned itself well for growth with its focus on the specialty sector, which is relatively less competitive and still underpenetrated with a lot of room for growth.

WRB has increased its dividend for 18 consecutive years.
_______________
Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.