As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the property & casualty insurance industry, including Trupanion (NASDAQ: TRUP) 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 14.7%.
Thankfully, share prices of the companies have been resilient as they are up 6.1% on average since the latest earnings results.
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 $366.9 million, up 12.1% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS and book value per share estimates.
“We delivered record quarterly profitability while accelerating subscription pet growth for the third consecutive quarter,” said Margi Tooth, Chief Executive Officer and President of Trupanion.
Unsurprisingly, the stock is down 10.3% since reporting and currently trades at $37.74.
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 18.2% since reporting. It currently trades at $73.23.
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: Progressive (NYSE: PGR)
Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE: PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.
Progressive reported revenues of $22.51 billion, up 14.2% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates and a miss of analysts’ book value per share estimates.
As expected, the stock is down 5.3% since the results and currently trades at $227.69.
Read our full analysis of Progressive’s results here.
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. This number topped analysts’ expectations by 364%. Taking a step back, it was a softer quarter as it produced a significant miss of analysts’ EPS estimates and a significant miss of analysts’ book value per share estimates.
Selective Insurance Group scored the biggest analyst estimates beat among its peers. The stock is up 4.8% since reporting and currently trades at $85.06.
Employers Holdings (NYSE: EIG)
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE: EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Employers Holdings reported revenues of $239.3 million, up 6.8% year on year. This result surpassed analysts’ expectations by 10.4%. However, it was a slower quarter as it logged a significant miss of analysts’ EPS estimates and a significant miss of analysts’ book value per share estimates.
The stock is up 5.1% since reporting and currently trades at $42.79.
Read our full, actionable report on Employers Holdings here, it’s free for active Edge members.
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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