Looking back on property & casualty insurance stocks’ Q4 earnings, we examine this quarter’s best and worst performers, including Kinsale Capital Group (NYSE: KNSL) and its peers.
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 37 property & casualty insurance stocks we track reported a strong Q4. As a group, revenues beat analysts’ consensus estimates by 5%.
While some property & casualty insurance stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.3% since the latest earnings results.
Kinsale Capital Group (NYSE: KNSL)
Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE: KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.
Kinsale Capital Group reported revenues of $483.3 million, up 17.3% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ net premiums earned estimates and an impressive beat of analysts’ revenue estimates.
Unsurprisingly, the stock is down 7.8% since reporting and currently trades at $369.75.
Best Q4: 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 $246.2 million, up 52.1% year on year, outperforming analysts’ expectations by 3.8%. The business had an incredible quarter with an impressive beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 2.7% since reporting. It currently trades at $167.85.
Is now the time to buy HCI Group? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Old Republic International (NYSE: ORI)
Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE: ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.
Old Republic International reported revenues of $2.36 billion, up 9.5% year on year, exceeding analysts’ expectations by 1.6%. Still, it was a softer quarter as it posted a significant miss of analysts’ EPS estimates and a significant miss of analysts’ book value per share estimates.
As expected, the stock is down 2.9% since the results and currently trades at $41.86.
Read our full analysis of Old Republic International’s results here.
The Hanover Insurance Group (NYSE: THG)
Founded in 1852 during a time when fire insurance was crucial for protecting businesses and homes, The Hanover Insurance Group (NYSE: THG) provides property and casualty insurance products through independent agents, serving individuals, small businesses, and mid-sized companies.
The Hanover Insurance Group reported revenues of $1.69 billion, up 4.3% year on year. This result lagged analysts' expectations by 1.1%. More broadly, it was a satisfactory quarter as it also logged a beat of analysts’ EPS estimates but a miss of analysts’ net premiums earned estimates.
The stock is up 2.1% since reporting and currently trades at $177.76.
Read our full, actionable report on The Hanover Insurance Group here, it’s free.
Travelers (NYSE: TRV)
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE: TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Travelers reported revenues of $12.45 billion, up 3.2% year on year. This number beat analysts’ expectations by 0.5%. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.
The stock is up 13.6% since reporting and currently trades at $306.17.
Read our full, actionable report on Travelers here, it’s free.
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