Direct Line (DLG) & LGEN: 2 FTSE insurance stocks to buy

Highlights 

• The global insurance sector is forecasted to reach record levels of premiums amounting to over US$ 7 trillion earlier than previously estimated.
• The sector is set to achieve this level by mid-2022, compared to an earlier projection of July 2022.
• This strong growth is due to high insurance demand, more risk awareness, and various other factors supporting the market’s growth.

The global insurance sector is forecasted to reach record premiums levels of over US$ 7 trillion by mid of this year, according to the latest research from reinsurance group Swiss Re’s sigma study.  

Swiss Re had earlier forecasted this to occur in July, but the higher levels of demand for insurance, more risk awareness, the hardening of non-life insurance commercial segment rates boosted the sector’s strong growth levels along with some other factors.

Given this improved industry outlook, let us look at 2 FTSE-listed insurance stocks and explore their investment potential.

1. Direct Line Insurance Group PLC (LON: DLG)

Direct Line Insurance Group is a UK-based insurance company. It was a part of the Royal Bank of Scotland’s insurance division but was divested from it in 2012 and subsequently was launched as a standalone business. It is a part of the FTSE 250 index.

The Q3 2021 group gross written premium rose by 0.7 per cent on a year-on-year basis to £857.1 million. The growth was driven by its Commercial and Green flag rescue segments.

DLG maintained its combined operating ratio guidance to be between 93 to 95 per cent (normalized for weather), for the medium term.

Its FY 2021 combined operating ratio outlook was also maintained a between 90 and 92 per cent (normalized for weather)

Image source: Refinitiv

The group’s shares were trading at GBX 309.90, down by 0.77 per cent on 20 January 2022 at 11:32 am BST, while the FTSE 250 index was at 22,714.91, up by 0.26 per cent.

The company’s market cap stood at £4,155.82 million as of date.

2. Legal & General Group PLC (LON: LGEN)

Legal & General Group is a UK-based multinational financial services firm and is among one of the biggest life insurance providers worldwide. It belongs to the FTSE 100 index.

Its H1 2021 operating profit (from continuing divisions) rose by 13 per cent to £1,271 million, up from £1,128 million in H1 2020. And its H1 2021 profit after tax (attributable to equity holders) jumped by 267 per cent to 1,065 million, from 290 million in the year before.

The H1 2021 interim dividend rose by 5 per cent to 5.18 pence per share, from 4.93 pence per share in the year before

The group targets its FY 2021 operating profit growth rate to be in the double-digit range.

Image source: Refinitiv

The group’s shares were trading at GBX 298.30, down by 0.47 per cent on 20 January 2022 at 11:51 am BST, while the FTSE 100 index was at 7,583.75, lower 0.08 per cent.

The company’s market cap stood at £17,893.34 million and has given shareholders a return of 11.35 per cent on a one-year basis as of date.