Let’s dig into the relative performance of American Financial Group (NYSE: AFG) and its peers as we unravel the now-completed Q2 property & casualty insurance earnings season.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

The 33 property & casualty insurance stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.5%.

In light of this news, share prices of the companies have held steady as they are up 4.9% on average since the latest earnings results.

American Financial Group (NYSE: AFG)

With roots dating back to 1872 and a business model that empowers local decision-making, American Financial Group (NYSE: AFG) is an insurance holding company that specializes in commercial property and casualty insurance products for businesses through its Great American Insurance Group.

American Financial Group reported revenues of $1.81 billion, up 3% year on year. This print fell short of analysts’ expectations by 4.5%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net premiums earned and book value per share estimates.

Interestingly, the stock is up 8.8% since reporting and currently trades at $135.35.

Read our full report on American Financial Group here, it’s free.

Best Q2: Root (NASDAQ: ROOT)

Pioneering a data-driven approach that rewards good driving habits, Root (NASDAQ: ROOT) is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.

Root reported revenues of $382.9 million, up 32.4% year on year, outperforming analysts’ expectations by 7.5%. The business had an incredible quarter with a beat of analysts’ EPS and net premiums earned estimates.

Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 15.5% since reporting. It currently trades at $104.

Is now the time to buy Root? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Selective Insurance Group (NASDAQ: SIGI)

Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ: SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.

Selective Insurance Group reported revenues of $127.9 million, down 89.3% year on year, falling short of analysts’ expectations by 90.3%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS and book value per share estimates.

Selective Insurance Group delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 13.1% since the results and currently trades at $78.63.

Read our full analysis of Selective Insurance Group’s results here.

Assured Guaranty (NYSE: AGO)

Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty (NYSE: AGO) provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.

Assured Guaranty reported revenues of $281 million, up 39.1% year on year. This result topped analysts’ expectations by 51.2%. More broadly, it was a softer quarter as it recorded a significant miss of analysts’ EPS and net premiums earned estimates.

Assured Guaranty achieved the biggest analyst estimates beat among its peers. The stock is down 1.3% since reporting and currently trades at $83.57.

Read our full, actionable report on Assured Guaranty here, it’s free.

First American Financial (NYSE: FAF)

Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE: FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.

First American Financial reported revenues of $1.84 billion, up 14.2% year on year. This print surpassed analysts’ expectations by 4.9%. It was a very strong quarter as it also put up a beat of analysts’ EPS estimates.

The stock is up 13.6% since reporting and currently trades at $65.46.

Read our full, actionable report on First American Financial here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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