Regardless of whether you're a bull or a bear, consensus seems to be that more turbulence and volatility will rule ASX shares this year.
With consumers and businesses having less to spend due to steep interest rate rises, inflation still roaring and unemployment potentially rising, nothing is a certainty for any stock.
However, one industry that's favoured by many professional investors for its defensive qualities is insurance.
The idea is that insurance companies reap better returns from premiums because of higher interest rates, have pricing power that can combat inflation, and their supply expenses are relatively low.
If you subscribe to this theory, here are two ASX shares playing in the insurance ecosystem that could make excellent buys at the moment:
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Revenue and earnings upgraded for the year
Although Johns Lyng Group Ltd (ASX: JLG) seems to be a favourite among analysts in recent times, the share price has still lost more than 23% over the past year.
"The company provides insurance building and restoration services in Australia and the US," Seneca Financial Solutions investment advisor Arthur Garipoli told The Bull.
He still has faith that the stock will come good.
"First half 2023 group sales revenue of $635.6 million was up 71.2% on the prior corresponding period," he said.
"Catastrophe work significantly contributed to group revenue."
Other business divisions also reported ahead of forecasts, boosting the share price over the past month in excess of 10%.
"The company has upgraded revenue and EBITDA for the full year."
Incredibly, the professional investing community unanimously agrees with Garipoli.
According to CMC Markets, Johns Lyng Group is rated as a strong buy by all 10 analysts currently covering the stock.
'A candidate for further upgrades going forward'
Garipoli's said that his other pick, Steadfast Group Ltd (ASX: SDF), provides insurance brokerage services and underwriting agencies.
Similar to Johns Lyng, the reporting season was fruitful for the company.
"Steadfast delivered a solid first half 2023 result. Underlying EBITA of $188.6 million was up 22% on the prior corresponding period," he said.
"Underlying net profit after tax and amortisation of $111.1 million was up 18.8%."
The market has been appreciative of Steadfast's potential in the current financial climate. The stock price has risen a tidy 23.3.% over the past 12 months.
Garipoli has high hopes of further gains.
"The company has the capacity to grow via acquisitions," he said.
"The premium rate cycle remains strong. Steadfast is a candidate for further upgrades going forward."
Garipoli's peers are much more divided on Steadfast compared to Johns Lyng.
Seven out of 12 analysts currently surveyed on CMC Markets rate Steadfast shares as a strong buy, but the other five think it's a hold.
