Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at The Hanover Insurance Group (NYSE:THG) and the best and worst performers in the property & casualty insurance industry.
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%.
In light of this news, share prices of the companies have held steady as they are up 5% on average since the latest earnings results.
The Hanover Insurance Group (NYSE:THG)
Founded in 1852 during a time when fire insurance was crucial for protecting businesses and homes, The Hanover Insurance Group (NYSE:THG) provides property and casualty insurance products through independent agents, serving individuals, small businesses, and mid-sized companies.
The Hanover Insurance Group reported revenues of $1.67 billion, up 6.1% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.
"Once again, our team put forth a very strong performance, not only achieving impressive financial results, but also affirming the effectiveness of our strategy and building on the positive momentum we've established across The Hanover," said John C. Roche, president and chief executive officer.
Interestingly, the stock is up 9.1% since reporting and currently trades at $183.73.
Is now the time to buy The Hanover Insurance Group? 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 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 11.7% since reporting. It currently trades at $79.00.
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 3.3% since the results and currently trades at $232.50.
Read our full analysis of Progressive’s results here.
Assured Guaranty (NYSE:AGO)
Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty (NYSE:AGO) provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.
Assured Guaranty reported revenues of $207 million, down 23% year on year. This number topped analysts’ expectations by 12.2%. Overall, it was an incredible quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Assured Guaranty had the slowest revenue growth among its peers. The stock is up 11.5% since reporting and currently trades at $90.82.
Read our full, actionable report on Assured Guaranty here, it’s free for active Edge members.
Essent Group (NYSE:ESNT)
Serving as a crucial bridge between homebuyers and the American dream of homeownership, Essent Group (NYSE:ESNT) provides private mortgage insurance and title services that enable lenders to offer home loans with down payments of less than 20%.
Essent Group reported revenues of $311.8 million, down 1.5% year on year. This result came in 1.6% below analysts' expectations. It was a softer quarter as it also logged a significant miss of analysts’ EPS estimates and a miss of analysts’ revenue estimates.
The stock is up 7.2% since reporting and currently trades at $65.14.
Read our full, actionable report on Essent Group 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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