For Immediate Release
Chicago, IL – November 14, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Cincinnati Financial Corp. CINF, The Progressive Corp. PGR, HCI Group Inc. HCI, Mercury General Corp. MCY and W. R. Berkley Corp. WRB.
Here are highlights from Monday’s Analyst Blog:
Top 5 Property & Casualty Insurers to Enhance Your Portfolio
The Property and Casualty (P&C) insurance industry is poised to benefit from better pricing, prudent underwriting, increased exposure, an improving rate environment and a solid capital position. With the ongoing economic expansion, insurers remain well-poised for growth.
According to the Marsh Global Insurance Market Index, global commercial insurance prices rose 3% in the second quarter of 2023. This marked the 23rd consecutive quarter of composite price increase. Improvement in pricing drove premiums and claims payment.
Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030.
The P&C insurance industry is witnessing increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation that expedite business operations and save cost. Insurers continue to invest heavily in technology to improve basis points, scale and efficiencies.
However, the industry is susceptible to catastrophe events, which drag down underwriting profits. Swiss Re estimated a global economic loss of $120 billion in the first half of 2023 from natural disasters, while insured losses were estimated to be about $50 billion.
Finally, a massive rise in the market interest rate will raise the cost of funds, enabling financial companies to widen the spread between longer-term assets, such as loans, with shorter-term liabilities, thus boosting the financial sector's profit margin.
The spread between the longer-term assets and shorter-term liabilities would increase the spread of insurers. The insurance industry's profitability has risen historically during periods of rising interest rates.
Our Top Picks
We have narrowed our search to five P&C insurers with strong potential for the rest of 2023. These stocks have seen positive earnings estimates in the last 30 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Cincinnati Financial Corp. continues to grow premiums through a disciplined expansion of Cincinnati Re while the division makes a nice contribution to its overall earnings. Price increases and a higher level of insured exposures are positives. CINF is focused on earning new business by appointing new agencies and believes that an agent-focused business model will drive long-term premium growth.
CINF expects 2023 property-casualty premium to grow 8% while its agent-focused business model will drive long-term premium growth. CINF boasts a solid capital position supporting effective capital deployment. Consistent cash flow and sufficient cash balances continue to boost liquidity.
Cincinnati Financial has an expected revenue and earnings growth rate of 10.5% and 28.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.9% over the last 30 days. CINF has a current dividend yield of 3.01%.
The Progressive Corp. continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR's growth.
Policies in force and retention ratio should remain healthy for PGR. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
The Progressive has an expected revenue and earnings growth rate of 18.4% and 31.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.7% over the last 30 days. PGR has a current dividend yield of 0.25%.
HCI Group Inc. is engaged in diverse business activities, including property and casualty insurance, information technology, real estate and reinsurance. HCI, through its largest subsidiary, Homeowners Choice Property & Casualty Insurance Company Inc., provides property and casualty insurance. HCI's insurance product includes property and casualty homeowners' insurance, condominium-owners' insurance and tenants' insurance to individuals owning property.
HCI Group has an expected revenue and earnings growth rate of 5.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 46.2% over the last 30 days. HCI has a current dividend yield of 2.11%.
Mercury General Corp. is engaged primarily in writing all risk classifications of automobile insurance in a number of states, principally California. MCY offers automobile policyholders the following types of coverage: bodily injury liability, underinsured and uninsured motorist, property damage liability, comprehensive, collision and other hazards specified in the policy.
Mercury General has an expected revenue and earnings growth rate of 6.9% and 65.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 59% over the last 30 days. MCY has a current dividend yield of 3.52%.
W. R. Berkley Corp. has been consistently benefiting from its insurance business, performing well on the increase in premiums written over the past many years. WRB has been investing in numerous startups since 2006 and establishing new units in growing international markets. WRB's international business is poised for growth supported by the emerging markets. Solid capital position enables capital deployment. Investment in alternative assets should help improve investment income.
W. R. Berkley has an expected revenue and earnings growth rate of 9.9% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last seven days. WRB has a current dividend yield of 0.65%.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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