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5 P&C Insurers to Buy Despite an Active Hurricane Season
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Colorado State University (CSU) estimates an active hurricane season this year. The latest report published by CSU states that the 2024 hurricane season may have 23 named storms, including 11 hurricanes and five major hurricanes and be about 170% of the average season.
The hurricane season typically starts in June and lasts through November, gathering strength in August and September. Thus, property and casualty insurers’ third-quarter results are affected the most.
Better pricing, prudent underwriting, increased exposure, favorable reserve development and a solid capital position are likely to help The Progressive Corporation (PGR - Free Report) , RLI Corporation (RLI - Free Report) , HCI Group (HCI - Free Report) , Palomar Holdings (PLMR - Free Report) and ProAssurance (PRA - Free Report) withstand blows from the catastrophe events.
For last year, Aon had estimated a global economic loss of $380 billion from natural disasters, while insured losses were estimated to be more than $118 billion. Per a report published in Carrier Management, net underwriting loss was $38 billion in 2023 per AM Best. The rating giant also stated that the combined ratio deteriorated 60 basis points year over year to 103.7% in 2023.
This year, per Aon’s Q1 Global Catastrophe Recap, total economic losses were more than $45 billion in the first quarter of 2024, while insured losses were $17 million, driven mainly by severe convective and winter storms in the United States, windstorms and flooding in Europe, and the Noto earthquake in Japan. Nonetheless, improved pricing places insurers well to weather catastrophe loss, while frequent occurrences of natural disasters accelerate the policy renewal rate.
An increase in catastrophe activities induces higher pricing. Global commercial insurance prices rose for 26 straight quarters, increasing 1% in the first quarter of 2024. However, the magnitude has slowed down, per Marsh Global Insurance Market Index. Per Fitch Ratings, personal auto will likely perform better than other lines of business, thus aiding in better premiums. Swiss Re estimates premium to grow 7% in 2024 and 4.5% in 2025. It also estimates combined ratio to improve from the 2023 level to 98.5% in both 2024 and 2025.
P&C Insurers to Bet On
Frequent catastrophes that accelerate policy renewal rates and lead to upward pricing pressure will boost the performance of Zacks Property and Casualty Insurance industry players. With the help of the Zacks Stock Screener, we have selected five stocks that carry a favorable Zacks Rank and have witnessed upward estimate revisions.
Progressive is one of the major auto insurers in the country and is seen as a leader in product, service and distribution innovation, especially in personal auto. A compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, better pricing retention and a solid capital position bode well for this Zacks Rank #1 (Strong Buy) insurer’s growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for its 2024 bottom line have jumped over the past 30 days by 3% and suggest an 89.9% increase from the year-ago reported number. Progressive has a Growth Score of A. The expected long-term earnings growth is pegged at 22.5%, better than the industry average of 10%.
RLI is a specialty property-casualty underwriter that caters primarily to niche markets and is one of the industry’s most profitable P&C writers with an impressive track record of delivering 27 consecutive years of underwriting profitability. A broad range of product offerings, focus on specialty insurance lines, business expansion, sustained rate increase, expanded distribution and operational strength bode well for this Zacks Rank #2 (Buy) insurer’s growth.
Estimates for its 2024 bottom line have jumped over the past 30 days by 1.8% and suggest an 18.2% increase from the year-ago reported number.
HCI Group, a Florida-focused insurance business, has been growing its homeowners business, acquiring profitable books of business, proactively managing risk and loss costs and deploying excess capital into investments and growth initiatives. Premiums should improve attributable to policies assumed from Citizen through TypTap, the addition of Condo Owners Reciprocal Exchange and a higher average premium per policy. HCI formed Condo Owners Reciprocal Exchange to write commercial and residential insurance in Florida.
Estimates for HCI’s 2024 bottom line have jumped 13.4% over the past 30 days and suggest a 57.6% increase from the year-ago reported number. It has a Growth Score of A and a Zacks Rank #1.
Palomar Holdings is a rapidly growing and profitable company focused on the provision of catastrophe insurance for personal and commercial property. Palomar is uniquely positioned to address over $30 billion of the $600 billion U.S. property and casualty insurance market. It has grown into the fifth-largest writer of earthquake insurance in California. New business, strong premium retention rates for existing business and, renewals of existing policies and better pricing favor this Zacks Rank #1 insurer. Premiums should continue to benefit from its solid product portfolio (short tail in nature) as well as geographic expansion, appointment of new producers, strategic partnerships with other insurance carriers and rate increases.
Estimates for PLMR’s 2024 bottom line have risen 4.1% over the past 30 days and suggest a 21.7% increase from the year-ago reported number.
ProAssurance operates as a holding company for many property and casualty insurance companies. New business growth is aiding its Workers' Compensation Insurance and Specialty P&C businesses. Its inorganic growth strategy continues to boost its results. Its cost-cutting efforts in the form of implementing numerous operational and structural changes in the organization are expected to improve the margins of this Zacks Rank #1 insurer. Despite economic volatility, the company enjoys solid gross premiums. Higher new business written are aiding the company's premium revenues.
Estimates for PRA’s 2024 bottom line have moved 38.5% north over the past 30 days, implying a 357.1% increase from the year-ago reported number.
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5 P&C Insurers to Buy Despite an Active Hurricane Season
Colorado State University (CSU) estimates an active hurricane season this year. The latest report published by CSU states that the 2024 hurricane season may have 23 named storms, including 11 hurricanes and five major hurricanes and be about 170% of the average season.
The hurricane season typically starts in June and lasts through November, gathering strength in August and September. Thus, property and casualty insurers’ third-quarter results are affected the most.
Better pricing, prudent underwriting, increased exposure, favorable reserve development and a solid capital position are likely to help The Progressive Corporation (PGR - Free Report) , RLI Corporation (RLI - Free Report) , HCI Group (HCI - Free Report) , Palomar Holdings (PLMR - Free Report) and ProAssurance (PRA - Free Report) withstand blows from the catastrophe events.
For last year, Aon had estimated a global economic loss of $380 billion from natural disasters, while insured losses were estimated to be more than $118 billion. Per a report published in Carrier Management, net underwriting loss was $38 billion in 2023 per AM Best. The rating giant also stated that the combined ratio deteriorated 60 basis points year over year to 103.7% in 2023.
This year, per Aon’s Q1 Global Catastrophe Recap, total economic losses were more than $45 billion in the first quarter of 2024, while insured losses were $17 million, driven mainly by severe convective and winter storms in the United States, windstorms and flooding in Europe, and the Noto earthquake in Japan. Nonetheless, improved pricing places insurers well to weather catastrophe loss, while frequent occurrences of natural disasters accelerate the policy renewal rate.
An increase in catastrophe activities induces higher pricing. Global commercial insurance prices rose for 26 straight quarters, increasing 1% in the first quarter of 2024. However, the magnitude has slowed down, per Marsh Global Insurance Market Index. Per Fitch Ratings, personal auto will likely perform better than other lines of business, thus aiding in better premiums. Swiss Re estimates premium to grow 7% in 2024 and 4.5% in 2025. It also estimates combined ratio to improve from the 2023 level to 98.5% in both 2024 and 2025.
P&C Insurers to Bet On
Frequent catastrophes that accelerate policy renewal rates and lead to upward pricing pressure will boost the performance of Zacks Property and Casualty Insurance industry players. With the help of the Zacks Stock Screener, we have selected five stocks that carry a favorable Zacks Rank and have witnessed upward estimate revisions.
Progressive is one of the major auto insurers in the country and is seen as a leader in product, service and distribution innovation, especially in personal auto. A compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, better pricing retention and a solid capital position bode well for this Zacks Rank #1 (Strong Buy) insurer’s growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for its 2024 bottom line have jumped over the past 30 days by 3% and suggest an 89.9% increase from the year-ago reported number. Progressive has a Growth Score of A. The expected long-term earnings growth is pegged at 22.5%, better than the industry average of 10%.
RLI is a specialty property-casualty underwriter that caters primarily to niche markets and is one of the industry’s most profitable P&C writers with an impressive track record of delivering 27 consecutive years of underwriting profitability. A broad range of product offerings, focus on specialty insurance lines, business expansion, sustained rate increase, expanded distribution and operational strength bode well for this Zacks Rank #2 (Buy) insurer’s growth.
Estimates for its 2024 bottom line have jumped over the past 30 days by 1.8% and suggest an 18.2% increase from the year-ago reported number.
HCI Group, a Florida-focused insurance business, has been growing its homeowners business, acquiring profitable books of business, proactively managing risk and loss costs and deploying excess capital into investments and growth initiatives. Premiums should improve attributable to policies assumed from Citizen through TypTap, the addition of Condo Owners Reciprocal Exchange and a higher average premium per policy. HCI formed Condo Owners Reciprocal Exchange to write commercial and residential insurance in Florida.
Estimates for HCI’s 2024 bottom line have jumped 13.4% over the past 30 days and suggest a 57.6% increase from the year-ago reported number. It has a Growth Score of A and a Zacks Rank #1.
Palomar Holdings is a rapidly growing and profitable company focused on the provision of catastrophe insurance for personal and commercial property. Palomar is uniquely positioned to address over $30 billion of the $600 billion U.S. property and casualty insurance market. It has grown into the fifth-largest writer of earthquake insurance in California. New business, strong premium retention rates for existing business and, renewals of existing policies and better pricing favor this Zacks Rank #1 insurer. Premiums should continue to benefit from its solid product portfolio (short tail in nature) as well as geographic expansion, appointment of new producers, strategic partnerships with other insurance carriers and rate increases.
Estimates for PLMR’s 2024 bottom line have risen 4.1% over the past 30 days and suggest a 21.7% increase from the year-ago reported number.
ProAssurance operates as a holding company for many property and casualty insurance companies. New business growth is aiding its Workers' Compensation Insurance and Specialty P&C businesses. Its inorganic growth strategy continues to boost its results. Its cost-cutting efforts in the form of implementing numerous operational and structural changes in the organization are expected to improve the margins of this Zacks Rank #1 insurer. Despite economic volatility, the company enjoys solid gross premiums. Higher new business written are aiding the company's premium revenues.
Estimates for PRA’s 2024 bottom line have moved 38.5% north over the past 30 days, implying a 357.1% increase from the year-ago reported number.