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 Q2, starting with The Hanover Insurance Group (NYSE: THG).
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 4.6% on average since the latest earnings results.
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 $1.66 billion, up 5.5% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.
"Our outstanding second quarter results are a testament to disciplined underwriting and strong execution across the organization," said John C. Roche, president and chief executive officer at The Hanover.
Interestingly, the stock is up 4.5% since reporting and currently trades at $173.13.
Is now the time to buy The Hanover Insurance Group? Access our full analysis of the earnings results 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 28.3% since reporting. It currently trades at $88.30.
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 4.8% since the results and currently trades at $86.16.
Read our full analysis of Selective Insurance Group’s results here.
Radian Group (NYSE: RDN)
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Radian Group reported revenues of $318 million, flat year on year. This result lagged analysts' expectations by 1.9%. It was a slower quarter as it also logged a slight miss of analysts’ net premiums earned estimates and a narrow beat of analysts’ EPS estimates.
The stock is up 3.5% since reporting and currently trades at $34.72.
Read our full, actionable report on Radian Group here, it’s free.
Assured Guaranty (NYSE: AGO)
Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty (NYSE: AGO) provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.
Assured Guaranty reported revenues of $281 million, up 39.1% year on year. This number topped analysts’ expectations by 51.2%. However, it was a softer quarter as it logged a significant miss of analysts’ EPS estimates and a miss of analysts’ net premiums earned estimates.
Assured Guaranty achieved the biggest analyst estimates beat among its peers. The stock is down 3.8% since reporting and currently trades at $81.42.
Read our full, actionable report on Assured Guaranty here, it’s free.
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.
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