"The Insurance Scam" Don't Hate....Participate

It's that time of year again—my wife asked me to get some quotes on homeowners insurance because our current provider wants to raise our rates...again. Between premium increases and claims denials, it’s easy to hate these companies. However, as an investor, it’s clear that their business model is profitable, so instead of just hating them, we can actually participate in their profiteering.

iShares U.S. Insurance ETF (IAK) is an exchange-traded fund (ETF) managed by BlackRock that aims to track the performance of the Dow Jones U.S. Select Insurance Index. This index includes a range of U.S. companies within the insurance sector, such as those involved in life insurance, property and casualty insurance, health insurance, and insurance brokerage services.

This ETF continues to impress, closing at all-time highs this week both on an absolute basis and relative to the broader market (using $RSP as a comparison due to $SPY's technology bias). The momentum remains strong, staying in a bullish regime above 50 for over a year. Rather than buying the ETF directly, I prefer to analyze its components to identify leading stocks and potential trades within sectors or industries that show promise.

The Juggernauts : While IAK consists of 52 companies, Chubb and Progressive alone make up roughly 30% of the total ETF, making them crucial to its overall performance. As shown below, both charts are looking strong.

Progressive Corporation (PGR) is one of the largest providers of car insurance in the United States and also offers other insurance products, including home, commercial, and specialty insurance.

As the largest component of IAK with a 16% weighting and a market cap of $138 billion, Progressive is by far the biggest insurance company in the ETF. Although I don't currently see an ideal entry point, I will be watching for any pullbacks to potentially gain exposure.

Chubb Limited (CB) is one of the world's largest publicly traded property and casualty insurance companies, offering a wide range of insurance products. This is the 2nd largest component of IAK with roughly 13% weighting. I’m watching this name to see if we can breakout of this little base to ATHs.

Clean Setups - To be honest, I like owning $IAK outright against the $118 area. It provides diversity and reduces single-stock risk, especially during earnings season. However, if you're interested in individual stocks, here are some components with favorable risk/reward profiles right now.

Fidelity National Financial, Inc. (FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries.

Market Cap ~ 15.5B | IAK Weighting ~2%

The Setup - Well defined risk against prior cycle highs.

Primerica, Inc. (PRI) is a financial services company that primarily provides term life insurance to middle-income families in North America

Market Cap ~ 8.8B | IAK Weighting ~1.2%

The Setup - I like it long against that $250 area.

Unum Group (UNM) is a leading provider of financial protection benefits, primarily offering disability insurance, life insurance, accident insurance, and other supplemental insurance products.

Market Cap ~ 10.2B | IAK Weighting ~1.2%

The Setup - It looks like it's just breaking out, and I like the risk/reward for going long against last week's lows around the $52 area.

Arch Capital Group Ltd. (ACGL)is a Bermuda-based global insurer and reinsurer, specializing in property, casualty, and mortgage insurance.

Market Cap ~ 38.6B | IAK Weighting ~4.3%

The Setup - Currently consolidating in a range, but would like it long once we breakout of this consolidation.

While insurance companies can be a pain in the neck, investing in them can ease the pain to your pocketbook.

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