As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the property & casualty insurance industry, including Progressive (NYSE: PGR) 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 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 3.7% on average since the latest earnings results.
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, but overall, it was a softer quarter for the company with a significant miss of analysts’ EPS estimates and a miss of analysts’ book value per share estimates.
Unsurprisingly, the stock is down 8.2% since reporting and currently trades at $220.61.
Is now the time to buy Progressive? 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 1% since reporting. It currently trades at $88.10.
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 and 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 2.8% since the results and currently trades at $79.11.
Read our full analysis of Selective Insurance Group’s results here.
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 $2.42 billion, up 3.5% year on year. This result beat analysts’ expectations by 6.5%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ book value per share estimates and a solid beat of analysts’ revenue estimates.
The stock is up 1.6% since reporting and currently trades at $42.68.
Mercury General (NYSE: MCY)
Founded in 1961 and maintaining a network of over 6,300 independent agents across the country, Mercury General (NYSE: MCY) is an insurance company that primarily sells automobile insurance policies through independent agents in 11 states, with a strong focus on California.
Mercury General reported revenues of $1.58 billion, up 3.6% year on year. This print surpassed analysts’ expectations by 6.7%. It was a stunning quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
The stock is up 9.3% since reporting and currently trades at $87.29.
Read our full, actionable report on Mercury General 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.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
