Wrapping up Q4 earnings, we look at the numbers and key takeaways for the property & casualty insurance stocks, including Skyward Specialty Insurance (NASDAQ: SKWD) 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 37 property & casualty insurance stocks we track reported a strong Q4. As a group, revenues beat analysts’ consensus estimates by 5%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
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 $385.6 million, up 26.7% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
Skyward Group Chairman and CEO Andrew Robinson commented, “The fourth quarter was another excellent quarter and capped off a truly transformational year for the Company. Similar to the previous three quarters, we delivered Company bests in adjusted operating income(1), underwriting income(1) and the combined ratio of 88.5%. Our gross written premiums growth in the quarter of 13% culminated a year of 24% growth, and our return on equity and return on tangible equity of 18.9% and 20.9%(1) respectively for the full year are simply outstanding.”
Interestingly, the stock is up 3.4% since reporting and currently trades at $48.76.
Best Q4: HCI Group (NYSE: HCI)
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
HCI Group reported revenues of $246.2 million, up 52.1% year on year, outperforming analysts’ expectations by 3.8%. The business had an incredible quarter with a solid beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 6.7% since reporting. It currently trades at $174.51.
Is now the time to buy HCI Group? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $2.36 billion, up 9.5% year on year, exceeding analysts’ expectations by 1.6%. 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 1.3% since the results and currently trades at $42.55.
Read our full analysis of Old Republic International’s results here.
Bowhead Specialty (NYSE: BOW)
Named after the Arctic bowhead whale known for navigating challenging waters, Bowhead Specialty Holdings (NYSE: BOW) is a specialty insurance company that provides customized coverage for complex and high-risk commercial sectors.
Bowhead Specialty reported revenues of $151.7 million, up 27.1% year on year. This result surpassed analysts’ expectations by 6%. It was a strong quarter as it also recorded a solid beat of analysts’ net premiums earned estimates and an impressive beat of analysts’ revenue estimates.
The stock is flat since reporting and currently trades at $24.88.
Read our full, actionable report on Bowhead Specialty here, it’s free.
Enact Holdings (NASDAQ: ACT)
Playing a critical role in helping first-time homebuyers access the housing market, Enact Holdings (NASDAQ: ACT) provides private mortgage insurance that enables lenders to offer home loans with lower down payments while protecting against borrower defaults.
Enact Holdings reported revenues of $315.6 million, up 2.1% year on year. This number met analysts’ expectations. It was a strong quarter as it also produced a beat of analysts’ EPS estimates.
The stock is up 5% since reporting and currently trades at $42.36.
Read our full, actionable report on Enact Holdings here, it’s free.
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