(This is The Best Stocks in the Market, brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Insurance may be the best business in the world. That’s not always the case, as disasters can strike or underwriting can get crowded and pricing can become less attractive. But over the long term, the potential downside is far outweighed by the inherent profitability of being paid to take on the risk that your customers won’t pass on to you. And when premiums are reinvested at high rates of return, the flywheel effect can turn these companies into cash machines for investors. It’s no coincidence that Warren Buffett and Charlie Munger built the world’s largest investment platform out of insurance companies at Berkshire Hathaway. Travelers (TRV) reported earnings today, so we’ve got an update for you. This was a home run for regular readers of CNBC Pro’s “The Best Stocks in the Market” column. We’ll also talk about two other companies active in this space this summer: Chubb (CB) and Aflac (AFL). Both are Dividend Aristocrats, with 33 and 43 consecutive years of increasing dividends, respectively. Travelers is on the verge of becoming an aristocrat, with a 23-year track record of dividend increases. This is notable considering that during the Great Financial Crisis, many insurance companies were forced to cut or even suspend dividends in order to conserve capital and survive. These three companies did not. This speaks to the quality of the companies and the relative safety of these business models. Here, as always, Sean provides an overview of the Best Stocks List and the story behind today’s ticker… As of July 20th, there are 208 names on the Market’s Best Stocks List. Top Sector Rankings: Top Industries: Top 5 Blue-chip Stocks by Relative Strength: Sectors to Watch: Insurance Travelers Company (TRV): Sean — The State Street Insurance ETF (KIE) hit an all-time high in July. There are no stocks in this ETF that are below their 50-day moving average, and 85% of their holdings are above their 200-day moving average. The median insurance name is just 5% below its 52-week high. Compare this to the S&P 500. The median stock price is 14% below the high price. Insurance is a rip-off. Luckily for us, Travelers is leading the way. We wrote about TRV on June 11th and called it a case study on how implementing AI can drive revenue. Since then, the company’s stock has returned 21.4%, nearly double KIE’s 10.9% return and almost triple the financial sector’s (XLF) 7.3% return. On Friday, Travelers reported second-quarter core EPS of $10.04, compared to consensus estimates of approximately $5.39. That’s nearly double what the Street was expecting. Profits were $2.2 billion and return on equity was 24.9%. Disaster losses were $518 million, almost half of last year’s $927 million, with reserve development progressing well in all three segments and investment income increasing 14% year-on-year. As a result, the stock price rose about 8%, hitting a new all-time high. Management attributes approximately 0.5 percentage points of the improvement in business insurance’s underlying loss ratio to AI-powered claims processing. The company’s digital underwriting platform, Travis, now extracts data and generates quotes in seconds. CEO Alan Schnitzer described the company’s revenue driver as a “virtuous cycle.” In other words, profits fund innovation, and innovation funds better profits. Travelers repurchased $1.31 billion in stock and paid $266 million in dividends in the second quarter, leaving $3.9 billion in repurchase authorizations. Since the stock buyback program began in 2006, the company has canceled 70% of its original outstanding shares. It’s a great time to become a Travelers shareholder. Josh — There are no new entries here. The stock price has risen significantly since Friday, when the stock rose 10% following the earnings report. It will trade sideways for a few weeks until it cools down or, in the best-case scenario, consolidates its gains and wipes out profit-taking. I still like it. If you’re with us, raise your stop to $325 and stay longer. Chubb Ltd. (CB): Sean — Chubb is the largest commercial insurance company in the United States and one of the only insurance companies large enough to serve multinational corporations with operations in 54 countries, total assets of $275.5 billion, and nearly half of its business generated outside the United States. Overseas CB saw net premiums increase 14.4% last quarter, personal insurance grew 20.5% and life insurance business saw premiums increase 33.1% to $2.29. 1 billion people, most from Asia. Q1 numbers were great overall. Operating EPS was $6.82, up 85% year-over-year (up 13.5% excluding losses from last year’s California wildfire catastrophe), and net premiums written increased 10.7% to $14 billion. Net income increased from $5.3 billion in fiscal 2022 to $10.3 billion in fiscal 2025, nearly doubling in three years. The investment portfolio is a major lever for the company, with investment assets reaching a record $173 billion and new capital being invested at high interest rates. This is why scale is a huge advantage in this business. Each quarter that interest rates remain elevated, investment income grows at a higher rate and is paid to shareholders. Net investment income increased 9.5% in the first quarter, and management expected $1.825 billion to $1.85 billion in the second quarter. The board raised the dividend by 5.2% in May to $4.08 a year, the 33rd consecutive annual increase and yielding about 1.2%. On Tuesday, the company released its second-quarter report, with the Street expecting EPS of $6.60 on revenue of $15.89 billion, up 7.5% and 7.3%, respectively. Josh — We write about Chubb the day before earnings, so a lot can change when the company reports. I think the breakout will come as long as the company continues to execute the way Sean described above. CB fell below its 50-day moving average in the spring and traded below it for several weeks until buyers stepped in again and brought it back up to that level. From there, the stock never looked back, hitting new highs in July. The rally then triggered a sharp pullback, with prices briefly consolidating, but then buyers broke out of the range, leaving a gap on either side of the decline. If this formation had lasted more than a few sessions, I would have called it an island reversal, but it’s even more bullish that it happened this quickly. A gap down is immediately followed by a gap up. Buyers are getting louder. A sustained return above the July peak is the next level to clear. RSI is 57, which puts it in the middle of the range and gives you plenty of headroom to run in either direction. Based on current momentum, there’s nothing against the stock continuing to rise. Traders and investors alike can use $320 as a stop, a zone where the stock has found its footing numerous times before rising again. Aflac, Inc. (AFL): Sean — Aflac sells supplemental life and health insurance in two markets: the United States and Japan, but Japan is by far the largest market. In Japan, sales in the first quarter increased by 25.5% and profit margin expanded from 31.8% to 35.0% year-over-year due to the impact of three new products in the previous quarter. AFL’s goal is stable to modest increases in premiums, which would generate approximately $2.5 billion to $3 billion in free cash flow annually. That cash is also returned to shareholders. Aflac returned $1.3 billion between stock buybacks and dividends in the first quarter, and its nearly 2.0% yield is the highest of the three companies listed here, backed by 43 consecutive years of dividend increases. Ahead of the company’s second quarter report on August 6th, the stock is trading around $124, an all-time high. Josh — This is a clean breakout and continued follow-through. When I get to heaven, I’ll probably have a room full of charts like this, swapping buckets of ice-cold Pilsner Urquell. AFL has been on a strong uptrend, recently hitting new highs above $124, with a 50-day gain of $117 below. The stock price fell to $110 during the market crash in March, but it found a foothold there and rebounded cleanly. This recovery and subsequent breakout to new highs tells us everything we need to know about who is in control of this chart. The RSI is 65, reflecting serious momentum for the stock to hit new highs. It’s a bit high, but not extreme, leaving room to continue without needing immediate cooling. Traders can stay longer as long as AFL maintains its 50-day rally on a weekly closing price basis, and a break above that level will signal an exit. For investors, $110 is the line that defines the uptrend. This level absorbed the selling in March and was maintained well. A close below this would indicate a break in the trend and it might be time to look elsewhere. Disclosure: (none) All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. 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