The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Enact Holdings (NASDAQ: ACT) and the rest of the property & casualty insurance stocks fared in Q3.

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 strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.8%.

In light of this news, share prices of the companies have held steady as they are up 4.6% on average since the latest earnings results.

Enact Holdings (NASDAQ: ACT)

Playing a critical role in helping first-time homebuyers access the housing market, Enact Holdings (NASDAQ: ACT) provides private mortgage insurance that enables lenders to offer home loans with lower down payments while protecting against borrower defaults.

Enact Holdings reported revenues of $311.5 million, flat year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a narrow beat of analysts’ EPS estimates.

"Enact continues to execute with discipline and purpose,” stated Rohit Gupta, President and CEO of Enact.

Interestingly, the stock is up 8.3% since reporting and currently trades at $38.90.

Read our full report on Enact Holdings here, it’s free for active Edge members.

Best Q3: 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 $387.8 million, up 26.9% year on year, outperforming analysts’ expectations by 4.5%. The business had an incredible quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ 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 8.5% since reporting. It currently trades at $81.94.

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

Weakest Q3: 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 $138.7 million, down 88.9% year on year, falling short of analysts’ expectations by 52.7%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ EPS estimates.

Selective Insurance Group delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 2.2% since the results and currently trades at $79.42.

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

RLI (NYSE: RLI)

Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI (NYSE: RLI) is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.

RLI reported revenues of $509.3 million, up 8.4% year on year. This number topped analysts’ expectations by 12.4%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is up 7.2% since reporting and currently trades at $63.92.

Read our full, actionable report on RLI here, it’s free for active Edge members.

Progressive (NYSE: PGR)

Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE: PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.

Progressive reported revenues of $22.51 billion, up 14.2% year on year. This print was in line with analysts’ expectations. More broadly, it was a softer quarter as it recorded a significant miss of analysts’ EPS estimates and a miss of analysts’ book value per share estimates.

The stock is down 4.8% since reporting and currently trades at $228.82.

Read our full, actionable report on Progressive here, it’s free for active Edge members.

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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