Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at 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 strong Q3. As a group, revenues beat analysts’ consensus estimates by 15.1%.
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 $2.20 billion, down 1.3% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ revenue estimates and a decent beat of analysts’ book value per share estimates.
Interestingly, the stock is up 2.4% since reporting and currently trades at $134.60.
Is now the time to buy American Financial Group? 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 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 10.1% since reporting. It currently trades at $80.45.
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 $1.36 billion, up 9.3% year on year, exceeding analysts’ expectations by 364%. Still, it was a softer quarter as it posted a significant miss of analysts’ EPS estimates and a significant miss of analysts’ book value per share estimates.
As expected, the stock is down 5.5% since the results and currently trades at $76.71.
Read our full analysis of Selective Insurance Group’s results here.
Erie Indemnity (NASDAQ:ERIE)
Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ:ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.
Erie Indemnity reported revenues of $1.07 billion, up 6.7% year on year. This print missed analysts’ expectations by 1.6%. Overall, it was a slower quarter as it also recorded a miss of analysts’ revenue estimates and a narrow beat of analysts’ EPS estimates.
The stock is down 9.3% since reporting and currently trades at $280.97.
Read our full, actionable report on Erie Indemnity here, it’s free for active Edge members.
Skyward Specialty Insurance (NASDAQ:SKWD)
Founded in 2006 to serve markets where standard insurance coverage falls short, Skyward Specialty Insurance (NASDAQ:SKWD) provides customized commercial property, casualty, and health insurance solutions for underserved or specialized market niches.
Skyward Specialty Insurance reported revenues of $382.5 million, up 27.1% year on year. This result surpassed analysts’ expectations by 14.3%. Overall, it was a stunning quarter as it also produced an impressive beat of analysts’ net premiums earned estimates and a solid beat of analysts’ revenue estimates.
The stock is flat since reporting and currently trades at $46.74.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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