Insurance Stocks Are Set to Compound in 2025. This One Could Be The Best.

When it comes to building long-term wealth, insurance stocks are a favorite for investors like Warren Buffett. But with so many of them on the market … which ones should you keep an eye on?

We want to share why Progressive (NYSE: PGR) stands out with a "B" Zen Rating and a business model built to thrive. 

If you’re looking for a company with a sustainable edge and unmatched capital efficiency, here’s why PGR deserves a closer look.

The Progressive Advantage

Progressive isn’t just one of the largest auto insurers in the U.S.; it’s also one of the most efficient. 

Unlike many competitors, Progressive has leaned into a direct-to-consumer model, cutting out agent commissions and significantly lowering customer acquisition costs. 

In fact, direct sales now make up 50% of the company's premiums, a figure that’s steadily growing.

On top of that, Progressive’s culture of innovation in data analytics has given it an edge in underwriting accuracy. This means fewer claims surprises, better margins, and more room to pass savings on to customers—all while maintaining industry-leading returns. 

Add in the fact that many of its rivals still rely on outdated, agent-heavy models or operate as mutual companies (where policyholders, not investors, own the firm), and Progressive’s cost advantage becomes even clearer.

Why Investors Love Insurance Companies

Let’s take a step back and understand why businesses like Progressive offer something truly unique.

It all comes down to the ability to collect money upfront (through premiums), invest it, and then turn a profit both on the premiums themselves and the investments. This is like being paid to hold and grow someone else’s money … and keep it all for yourself (until it comes time to pay a claim).  

The combination of underwriting profits and investment income is the holy grail of capital compounding.

Other perks? Insurance companies tend to be scalable, tax-efficient, and resilient to economic swings (recession? You probably still need car insurance). These traits make them legendary long-term compounders. 

It’s no wonder Buffett and other legendary investors like Shelby Davis made insurance a cornerstone of their portfolios.

A Moat Built for Decades

Progressive’s moat is a big reason for its success. Its cost leadership, direct distribution model, and innovative underwriting ensure it stays ahead of the competition. And with property and casualty insurance being a highly capital-efficient business, Progressive is poised to deliver steady returns for decades to come.

But here’s the kicker: Progressive trades at a reasonable valuation, even with these advantages:

PGR is good value based on its earnings relative to its share price (17.39x), compared to the US market average (30.38x).

Click here to see PGR fundamentals.

The company also has B composite ratings in Growth, Financials, and more. Click here to see how we rate Progressive and why.

Finally, the company is set to continue growing in 2025, with top analysts rating it a consensus Strong Buy and average-max price forecasts implying potential upside of 14-39%.

Click here to see PGR price targets.

Bottom line? Whether you’re looking for consistent cash flow, a strong moat, or exposure to a sector built for resilience, Progressive checks all the boxes. Sometimes, the simplest businesses can be great investments.

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