Companies, such as AIG, have also been using big data analytics to better assess risk, and many, like MetLife, have moved into more global markets, said Gloria Vogel, a senior vice president and analyst at Drexel Hamilton.
Despite the problems the sector has faced, many of these companies remained profitable after the recession, and they're still making money today. Earnings are mostly growing in line with GDP, and some companies, including MetLife, Prudential Financial and Aflac, are seeing double-digit returns on equity, she said. Things should only get better from here.
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"Most insurance stocks are good long-term-value plays, trading at reasonable valuation levels," she added. "Cash flow is good, dividends are growing, and profits should improve with higher interest rates."
Saying that, there are two things that could affect the industry's outlook. The first is if interest rates fall. While most people are expecting rates to rise next year—if the economy falters again or if the Federal Reserve doesn't think the country is ready for a rate increase—then yields could drop. Companies would then make less than they do now.
Regulation could also impact these businesses, said Lui. While the industry hasn't seen as much regulation as the banking sector has, new rules could come into play that impact how much capital a company needs to have on its balance sheets. If the regulation is too harsh, then these businesses could suffer, he said.