As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the property & casualty insurance industry, including American Financial Group (NYSE:AFG) 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 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.
American Financial Group (NYSE:AFG)
With roots dating back to 1872 and a business model that empowers local decision-making, American Financial Group (NYSE:AFG) is an insurance holding company that specializes in commercial property and casualty insurance products for businesses through its Great American Insurance Group.
American Financial Group reported revenues of $1.73 billion, flat year on year. This print fell short of analysts’ expectations by 8.6%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net premiums earned and EPS estimates.
Interestingly, the stock is up 1.5% since reporting and currently trades at $125.69.
Read our full report on American Financial Group 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.
The market seems unhappy with the results as the stock is down 11.3% since reporting. It currently trades at $124.48.
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 14.3% since the results and currently trades at $55.17.
Read our full analysis of Fidelity National Financial’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 $11.87 billion, up 6% year on year. This print missed analysts’ expectations by 2.3%. It was a slower quarter as it also logged a significant miss of analysts’ book value per share estimates and a miss of analysts’ net premiums earned estimates.
The stock is down 5.9% since reporting and currently trades at $255.82.
Read our full, actionable report on Travelers here, it’s free.
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 $1.29 billion, up 10.3% year on year. This number came in 1.4% below analysts' expectations. Overall, it was a disappointing quarter as it also recorded a significant miss of analysts’ book value per share and EPS estimates.
The stock is down 1.8% since reporting and currently trades at $85.96.
Read our full, actionable report on Selective Insurance Group here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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