As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at property & casualty insurance stocks, starting with Mercury General (NYSE: MCY).

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 mixed Q1. As a group, revenues beat analysts’ consensus estimates by 2.4%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

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 $1.39 billion, up 9.4% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EPS estimates.

Interestingly, the stock is up 12.1% since reporting and currently trades at $66.09.

Is now the time to buy Mercury General? Access our full analysis of the earnings results here, it’s free.

Best Q1: 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 $349.4 million, up 37.1% year on year, outperforming analysts’ expectations by 9.1%. The business had an incredible quarter with a solid 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 13.7% since reporting. It currently trades at $121.16.

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

Weakest Q1: Fidelity National Financial (NYSE: FNF)

Issuing more title insurance policies than any other company in the United States, Fidelity National Financial (NYSE: FNF) provides title insurance and escrow services for real estate transactions while also offering annuities and life insurance through its F&G subsidiary.

Fidelity National Financial reported revenues of $2.73 billion, down 17.3% year on year, falling short of analysts’ expectations by 17.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.

Fidelity National Financial delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 10.5% since the results and currently trades at $57.60.

Read our full analysis of Fidelity National Financial’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 $2.11 billion, up 4.9% year on year. This number topped analysts’ expectations by 2.5%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ book value per share estimates and a decent beat of analysts’ EPS estimates.

The stock is flat since reporting and currently trades at $37.80.

Read our full, actionable report on Old Republic International here, it’s free.

Lemonade (NYSE: LMND)

Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE: LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.

Lemonade reported revenues of $151.2 million, up 27% year on year. This result surpassed analysts’ expectations by 4.3%. It was a very strong quarter as it also put up a solid beat of analysts’ net premiums earned estimates and a decent beat of analysts’ EPS estimates.

The stock is up 42.1% since reporting and currently trades at $42.62.

Read our full, actionable report on Lemonade here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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