Property & Casualty Insurance Stocks Q4 In Review: American Financial Group (NYSE:AFG) Vs Peers
As the Q4 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 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.
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 $1.96 billion, down 3.2% year on year. This print fell short of analysts’ expectations by 2.8%. Overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but a miss of analysts’ revenue estimates.
American Financial Group Total Revenue
Interestingly, the stock is up 2% since reporting and currently trades at $132.82.
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 an impressive beat of analysts’ book value per share estimates and a beat of analysts’ EPS estimates.
HCI Group Total Revenue
The market seems happy with the results as the stock is up 6.7% since reporting. It currently trades at $174.51.
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.
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 print met analysts’ expectations. Overall, it was a strong quarter as it also recorded a beat of analysts’ EPS estimates.
The stock is up 5% since reporting and currently trades at $42.36.
Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ:NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.
NMI Holdings reported revenues of $180.7 million, up 8.5% year on year. This result was in line with analysts’ expectations. Zooming out, it was a slower quarter as it recorded EPS in line with analysts’ estimates and revenue in line with analysts’ estimates.
The stock is down 2.4% since reporting and currently trades at $39.24.
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