The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how property & casualty insurance stocks fared in Q3, starting with Erie Indemnity (NASDAQ: ERIE).
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.
Erie Indemnity (NASDAQ: ERIE)
Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ: ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.
Erie Indemnity reported revenues of $1.07 billion, up 6.7% year on year. This print fell short of analysts’ expectations by 1.6%. Overall, it was a slower quarter for the company with a miss of analysts’ revenue estimates and a narrow beat of analysts’ EPS estimates.
Unsurprisingly, the stock is down 5% since reporting and currently trades at $294.24.
Is now the time to buy Erie Indemnity? Access our full analysis of the earnings results 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 an impressive 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.
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 number was in line with analysts’ expectations. Aside from that, it was a softer quarter as it logged 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.
Stewart Information Services (NYSE: STC)
Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services (NYSE: STC) provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.
Stewart Information Services reported revenues of $796.9 million, up 19.3% year on year. This print surpassed analysts’ expectations by 31%. Overall, it was a stunning quarter as it also put up an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
Stewart Information Services scored the biggest analyst estimates beat among its peers. The stock is up 1.7% since reporting and currently trades at $76.40.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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