If you pay for insurance, but never make a claim, are you wasting your money? We think the answer is no, but there’s no denying insurance companies can be highly profitable companies, as our latest visualization of the top 50 illustrates.
- Only three companies generated more than $5B in annual profit, namely Berkshire Hathaway ($81.4B), MetLife ($5.9B) and State Farm ($5.6B).
- There are 13 property and casualty insurance stock companies making multi-billion dollar annual profit, a lot more than in other categories of insurance.
- The average profit figure across the top 50 is $3.2B in annual profit.
To create our visualization, first we grouped the top 50 most profitable insurance companies in 2020 by the type of insurance according to a ranking from Fortune. Then, we color-coded and sized each circle based on how much profit the underlying insurance company made. This lets you easily and quickly see which companies dominate the different parts of the insurance industry.
Top 10 Most Profitable Insurance Companies in 2020
| Company | Profit 2020 |
|---|---|
| 1. Berkshire Hathaway | $81.4B |
| 2. MetLife | $5.9B |
| 3. State Farm | $5.6B |
| 4. Allstate | $4.8B |
| 5. Prudential | $4.2B |
| 6. USAA | $4B |
| 7. Progressive | $4B |
| 8. MassMutual | $3.7B |
| 9. AIG | $3.3B |
| 10. Aflac | $3.3B |
There are a couple caveats to keep in mind about our visualization. We are using the same division between stock and mutual companies as Fortune. Some companies, like Liberty Mutual ($1B) and Mutual of Omaha ($272M), are not actually stock companies, but are grouped that way in our visual. That’s because they adhere to the Generally Accepted Accounting Principles (GAAP) in how they report their financial numbers.
Here’s another caveat. Insurance companies make their money in a couple different ways, mainly off the premiums they get from policyowners who don’t have a claim, and income earned through investments of past profits. Annualized profit figures, like the ones our visual focuses on, are from operating gains and don’t speak to the mountains of money sitting in surplus and reserves. After all, from a legal perspective, major insurance companies have to be properly capitalized in case they have to pay out an unexpectedly high number of claims, like what might happen to life insurers during a global pandemic. Still, these companies are generating sizable profits in the hundreds of millions and even billions of dollars year after year.
One initial insight from our visualization is how there are only 3 major insurance companies making more than $5B in total annual profit, including Berkshire Hathaway ($81.4B), MetLife ($5.9B) and State Farm ($5.6B). In other words, there are a lot of insurance options on the market today with several companies making healthy profits, but no one in particular consolidating the entire industry. Combining the entire top 50 list of companies, the average company generated $3.2B in annual profit. To get a sense for proportionality, Apple is on track to generate $55.3B in annual profit according to Fortune.
In fact, there are a lot more small companies in blue making less than $1B in annual profit, or even less than $500M. These include health insurers, life insurance companies and property and casualty insurers. This would suggest that the insurance market across industries like life, health and property insurance continues to be split among several different players. That’s usually good for competition, which means lower prices for you.
If you are on the market for insurance, read one of our insurance guides to better understand the types of decisions you need to make.
Data: Table 1.1