Warren Buffett has once again reminded the market why he's considered the world's greatest value investor. His latest billion-dollar buy was UnitedHealth Group (NYSE: UNH), a beaten-down US health insurer that many investors had abandoned.
True to form, Buffett steps in when the stock looks like "damaged goods": Buying quality when the rest of Wall Street is fearful.
Buffett has always had a soft spot for insurance businesses. Besides Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), named insurance operations, GEICO, Chubb, and MedPro are just a few of the insurers already sitting inside his empire. He likes the float, the pricing power, and the long-term compounding potential of the sector.
So if the Oracle of Omaha were shopping on the ASX today, which insurers might catch his eye? Two standouts are Insurance Australia Group Ltd (ASX: IAG) and Steadfast Group Ltd (ASX: SDF).
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Insurance Australia Group
IAG is our country's largest general insurer, with well-known brands including NRMA, CGU, and SGIO. The company recently posted a 51% surge in FY25 net profit to $1.36 billion, alongside a double-digit lift in dividends.
Growth was supported by fewer natural disasters, strong investment returns, and solid performance across all divisions. Management also announced the acquisition of RACQ Insurance, which is expected to lift gross written premium growth to around 10% in FY26.
Brokers are watching closely. Macquarie recently had a neutral rating, trimming its 12-month price target slightly to $9.10. Still, with a robust balance sheet, improving margins, and a full-year dividend of 31 cents per share, IAG continues to offer income appeal.
Steadfast Group
Steadfast takes a different angle on the insurance market. Rather than being a direct underwriter, it's the largest general insurance broker network in Australasia, with more than 400 brokerages and agencies under its umbrella.
This model gives the business scale, distribution power, and recurring revenue streams from broker commissions. Recent results have been strong, with gross written premium rising, and Macquarie recently forecasting upside for the share price.
Importantly, Steadfast has consistently grown both earnings and dividends, earning it a reputation as a reliable compounder in the ASX 200. The network effect and capital-light model are traits Buffett himself has often admired in other sectors.
Foolish Takeaway
Buffett's latest move into UnitedHealth reinforces a timeless principle: The right insurers can bounce back from tough periods and deliver powerful long-term returns. But as Buffett continually reminds us, one must be sure of their "circle of competence".
For ASX investors looking locally, IAG and Steadfast may not have the Buffett seal of approval — but they share some of the characteristics he prizes.
