As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at property & casualty insurance stocks, starting with HCI Group (NYSE: HCI).
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.
HCI Group (NYSE: HCI)
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
HCI Group reported revenues of $221.9 million, up 7.6% year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
Management Commentary“HCI Group delivered another strong quarter, marked by solid profitability, industry-leading net combined ratios, and meaningful growth in book value per share,” said HCI Group Chairman and Chief Executive Officer Paresh Patel.
Interestingly, the stock is up 32.2% since reporting and currently trades at $182.31.
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 its peers, the market seems unhappy with the results as the stock is down 20.1% since reporting. It currently trades at $98.35.
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 13.4% since the results and currently trades at $78.32.
Read our full analysis of Selective Insurance Group’s results here.
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 result missed analysts’ expectations by 4.5%. Overall, it was a disappointing quarter as it also logged a significant miss of analysts’ net premiums earned and book value per share estimates.
The stock is up 15.4% since reporting and currently trades at $143.53.
Read our full, actionable report on American Financial Group here, it’s free.
W. R. Berkley (NYSE: WRB)
Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE: WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.
W. R. Berkley reported revenues of $3.67 billion, up 10.8% year on year. This number topped analysts’ expectations by 1%. More broadly, it was a slower quarter as it produced a significant miss of analysts’ book value per share estimates and a narrow beat of analysts’ EPS estimates.
The stock is up 9.3% since reporting and currently trades at $74.14.
Read our full, actionable report on W. R. Berkley here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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