The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how property & casualty insurance stocks fared in Q1, starting with Radian Group (NYSE: RDN).
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 mixed Q1. As a group, revenues beat analysts’ consensus estimates by 2.4%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Radian Group (NYSE: RDN)
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Radian Group reported revenues of $318.1 million, down 3.4% year on year. This print fell short of analysts’ expectations by 3%. Overall, it was a softer quarter for the company with EPS in line with analysts’ estimates.
“We had a strong start to the year with excellent first quarter operating results for Radian. We increased book value per share by 11% year-over-year, generated net income of $145 million, and delivered a return on equity of 12.6%. Our primary mortgage insurance in force, which is the main driver of future earnings for our company, was $274 billion,” said Radian’s Chief Executive Officer Rick Thornberry.
Interestingly, the stock is up 9.3% since reporting and currently trades at $36.32.
Read our full report on Radian Group here, it’s free.
Best Q1: 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 $349.4 million, up 37.1% year on year, outperforming analysts’ expectations by 9.1%. The business had an incredible quarter with an impressive beat of analysts’ EPS and 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% since reporting. It currently trades at $124.84.
Is now the time to buy Root? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Fidelity National Financial (NYSE: FNF)
Issuing more title insurance policies than any other company in the United States, Fidelity National Financial (NYSE: FNF) provides title insurance and escrow services for real estate transactions while also offering annuities and life insurance through its F&G subsidiary.
Fidelity National Financial reported revenues of $2.73 billion, down 17.3% year on year, falling short of analysts’ expectations by 17.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
Fidelity National Financial delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.4% since the results and currently trades at $57.
Read our full analysis of Fidelity National Financial’s results here.
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 $317.6 million, up 6.4% year on year. This number surpassed analysts’ expectations by 2.1%. More broadly, it was a mixed quarter as it recorded EPS in line with analysts’ estimates.
The stock is up 4.2% since reporting and currently trades at $61.12.
Read our full, actionable report on Essent Group here, it’s free.
MGIC Investment (NYSE: MTG)
Founded in 1957 when the modern mortgage insurance industry was in its infancy, MGIC Investment (NYSE: MTG) provides private mortgage insurance that protects lenders when homebuyers default on their loans, enabling borrowers to purchase homes with smaller down payments.
MGIC Investment reported revenues of $306.2 million, up 4% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also produced a decent beat of analysts’ EPS estimates.
The stock is up 12.1% since reporting and currently trades at $27.91.
Read our full, actionable report on MGIC Investment here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
