Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Stewart Information Services (NYSE: STC) 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 5.4% on average since the latest earnings results.
Stewart Information Services (NYSE: STC)
Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services (NYSE: STC) provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.
Stewart Information Services reported revenues of $796.9 million, up 19.3% year on year. This print exceeded analysts’ expectations by 31%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ revenue and EPS estimates.
"I am proud of our third quarter results as they demonstrate our momentum," commented Fred Eppinger, chief executive officer.
Unsurprisingly, the stock is down 6.4% since reporting and currently trades at $70.27.
Is now the time to buy Stewart Information Services? 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 an impressive 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 19.7% since reporting. It currently trades at $71.87.
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 4.3% since the results and currently trades at $230.10.
Read our full analysis of Progressive’s results here.
First American Financial (NYSE: FAF)
Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE: FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.
First American Financial reported revenues of $1.98 billion, up 40.7% year on year. This print surpassed analysts’ expectations by 6.2%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
The stock is up 1.1% since reporting and currently trades at $62.06.
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 number beat analysts’ expectations by 1.3%. It was an exceptional quarter as it also produced a beat of analysts’ EPS estimates and a solid beat of analysts’ book value per share estimates.
The stock is down 9.4% since reporting and currently trades at $38.14.
Read our full, actionable report on Trupanion here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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