Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Enact Holdings (NASDAQ: ACT) and the best and worst performers in the property & casualty insurance industry.
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 4.2% 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 $304.9 million, up 2% year on year. This print fell short of analysts’ expectations by 1.1%. Overall, it was a mixed quarter for the company with a narrow beat of analysts’ net premiums earned estimates but a narrow beat of analysts’ EPS estimates.
"Our strong second quarter results underscore the resilience of our business model and the consistency of our execution,” stated Rohit Gupta, President and CEO of Enact.
Interestingly, the stock is up 9.7% since reporting and currently trades at $37.74.
Read our full report on Enact Holdings here, it’s free.
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 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 29.4% since reporting. It currently trades at $86.90.
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 estimates and a significant miss of analysts’ 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 14.6% since the results and currently trades at $77.29.
Read our full analysis of Selective Insurance Group’s results here.
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 $12.11 billion, up 7.3% year on year. This number was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.
The stock is up 6.6% since reporting and currently trades at $268.87.
Read our full, actionable report on Travelers here, it’s free.
Trupanion (NASDAQ: TRUP)
Born from a vision to help pet owners avoid economic euthanasia when faced with expensive veterinary bills, Trupanion (NASDAQ: TRUP) provides medical insurance for cats and dogs through data-driven, vertically-integrated products priced specifically for each pet's unique characteristics.
Trupanion reported revenues of $353.6 million, up 12.3% year on year. This result surpassed analysts’ expectations by 1.1%. It was a very strong quarter as it also recorded an impressive beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
The stock is down 1.7% since reporting and currently trades at $47.98.
Read our full, actionable report on Trupanion here, it’s free.
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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