The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from better pricing, prudent underwriting and exposure growth. Industry players like The Progressive Corporation PGR, Chubb Limited CB, The Travelers Companies TRV, The Allstate Corporation ALL and Arch Capital Group ACGL are poised to grow despite a rise in catastrophic activities. Given an active catastrophe environment, the policy renewal rate should accelerate. Also, the increasing adoption of technology and the emergence of insurtech will help the industry players function smoothly.
However, insurers witnessed a decline in pricing after more than seven years of rate rise in the third quarter of 2024 but bounced back in the fourth quarter. The last year witnessed three interest rate cuts, and there is a possibility of more this year. This is a concern for insurers as they are direct beneficiaries of an improved rate environment. Nonetheless, an improvement in surplus and accelerated economic activities set the stage for a better M&A environment. Per Fitch Ratings, personal auto is expected to stay strong, and coupled with better investment results and lower claims, should fuel insurers' performance in 2025.
About the Industry
The Zacks Property and Casualty Insurance industry comprises companies that provide commercial and personal property insurance, and casualty insurance products and services. Such insurance helps to safeguard property in case of any natural or man-made disasters. Liability coverages are also provided by some industry players. The insurance coverage offered also includes automobiles, professional risk, marine, excess casualty, aviation, personal accident, commercial multi-peril, and professional indemnity and surety. Premiums are the primary source of revenues for these insurers. Better pricing and increased exposure drive premiums. These companies invest a portion of premiums to meet their commitments to policyholders. However, three rate cuts last year and few more expected this year raise concerns.
4 Trends Shaping the Future of the Property and Casualty Insurance Industry
Better pricing to help navigate claims: Catastrophes are a concern for insurers due to the high degree of losses incurred. Insurers implement price hikes to ensure uninterrupted claims payment. Per a recent analysis by MarketScout’s Market Barometer, the commercial insurance sector saw a composite rate increase of 2.64%. Per the report, the personal lines composite rate increased 4% in the fourth quarter of 2024. Per Fitch Ratings, personal auto is expected to stay strong and, coupled with better investment results and lower claims, should fuel insurers' performance in 2025. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030. China and North America should account for more than two-thirds of the global market, per the report. Analysts at Swiss Re Institute predict premium growth to slow down to 2.3% in 2025-2026.
Catastrophe loss induces volatility in underwriting profits: The property and casualty insurance industry is susceptible to catastrophe events, which drag down underwriting profits. Per a Colorado State University (CSU) report, 2024 had a very active hurricane season. Gallagher Re Natural Catastrophe and Climate Report 2024 stated global insured losses were $154 billion in 2024 due to catastrophes. Analysts at Wells Fargo Securities estimate losses from the recent California wildfire to be between $20 billion and $40 billion, largely affecting homeowners' insurance. Swiss Re estimates the combined ratio to improve from 2023 to 98.5% in 2025. Underwriting profitability is expected to be under pressure, primarily due to soft performance in personal lines, which are expected to witness higher catastrophe losses per Insurance Information Institute and Milliman but profitability in 2025. Exposure growth, better pricing, prudent underwriting and favorable reserve development will help withstand the blow. Also, frequent occurrences of natural disasters should accelerate the policy renewal rate.
Merger and acquisitions: Consolidation in the property and casualty industry is likely to continue as players look to diversify their operations into new business lines and geography. Buying businesses along the same lines will also continue as players look to gain market share and grow in their niche areas. With a sturdy capital level, the industry is witnessing a number of mergers, acquisitions and consolidations.
Increased adoption of technology: The 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 costs. The industry has also witnessed the emergence of insurtechs or technology-led insurers. The focus of insurtech is mainly on the property and casualty insurance industry. Insurers continue to invest heavily in technology, generative AI in particular, as it is expected to improve basis points, scale and efficiencies. However, the use of technology poses cyber threats.
Zacks Industry Rank Indicates Weak Prospects
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. The Zacks Property and Casualty Insurance industry, which is housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #135, which places it in the bottom 46% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Earnings estimates for the current year have decreased 0.4% year over year. Before we present a few property and casualty stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector and the S&P 500
The Property and Casualty Insurance industry has underperformed its sector and the Zacks S&P 500 composite in a year. The stocks in this industry have collectively risen 19.2% compared with the Zacks S&P 500 composite’s increase of 23.6% and the sector’s increase of 27%.
One-Year Price Performance
Current Valuation
On the basis of the trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.61X compared with the S&P 500’s 8.89X and the sector’s 4.2X.
Over the past five years, the industry has traded as high as 1.71X, as low as 1.45X and at the median of 1.56X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
5 Property and Casualty Insurance Stocks to Focus On
Here, we are discussing one Zacks Rank #2 (Buy) stock and four Zacks Rank #3 (Hold) stocks from the P&C Insurance industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Progressive Corporation: Based in Mayfield Village, OH, The Progressive Corporation is one of the major auto insurers in the country. It is the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance and one of the top 15 homeowners carriers based on premiums written. A solid market presence, a convincing portfolio of products and services, and underwriting and operational expertise should help this insurer deliver steady profitability. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for PGR’s 2025 and 2026 earnings suggests 2.8% and 6.5% year-over-year growth, respectively. The consensus estimate for 2025 and 2026 earnings has moved 2.9% and 4.2% north, respectively, in the past seven days. It delivered a four-quarter average earnings surprise of 18.45%. It has a VGM Score of A. The expected long-term earnings growth rate is pegged at 27.4%, better than the industry average of 11.1%.
Price and Consensus: PGR
Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest property-casualty (P&C) insurer and the largest publicly-held personal lines carrier in the United States. Its premiums are poised to improve courtesy of rate increases in auto and home insurance businesses as well as an enhanced distribution strategy. The company keeps expanding its Protection Services business with strategic acquisitions, which position it for long-term growth. Divestments and cost-cutting measures are expected to enhance margins of this Zacks Rank #3 insurer.
The Zacks Consensus Estimate for ALL’s 2025 and 2026 earnings suggests 2.9% and 9% year-over-year growth, respectively. The consensus estimate for 2025 has moved up 0.5% in the past seven days. The company delivered a four-quarter average earnings surprise of 127.06%. The expected long-term earnings growth rate is pegged at 7%. It has a VGM Score of A.
Price and Consensus: ALL
Travelers Companies: Based in New York, NY, Travelers Companies is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. High levels of retention, improved pricing, increased new business and a positive renewal premium change, banking on the strength of a compelling product portfolio of coverages across nine lines of business, poise it well for growth. Travelers’ commercial businesses should continue to perform well on the back of stability in the markets where it operates as well as the execution of its strategies. It carries a Zacks Rank #3.
The Zacks Consensus Estimate for TRV’s 2026 earnings suggests 12.7% year-over-year growth. The consensus estimate for 2026 has moved up 1.1% in the past seven days. It delivered a four-quarter average earnings surprise of 25.44%. It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 11.2%.
Price and Consensus: TRV
Chubb Limited: Headquartered in Zurich, Switzerland, Chubb is one of the world’s largest providers of property and casualty insurance and reinsurance and the largest publicly traded P&C insurer based on market capitalization. Chubb is poised for long-term growth as it capitalizes on the potential of middle-market businesses (both domestic and international) as well as enhances traditional core packages and specialty products. Investments in various strategic initiatives bode well for growth. It focuses on cyber insurance, which has immense room for growth. This Zacks Rank #3 insurer has increased dividends for 31 straight years.
The Zacks Consensus Estimate for CB’s 2026 earnings suggests 14.9% year-over-year growth. The expected long-term earnings growth rate is 3.7%. The consensus estimate for 2026 has moved 0.6% north in the past seven days. It delivered a four-quarter average earnings surprise of 8.83%.
Price and Consensus: CB
Arch Capital: Headquartered in Pembroke, Bermuda, Arch Capital offers insurance, reinsurance and mortgage insurance across the world. Arch Capital is set to grow on premium growth, strategic buyouts, and robust capital and liquidity position, which shield it from market volatility and enable it to retain its financial flexibility.
The Zacks Consensus Estimate for ACGL’s 2025 and 2026 earnings suggests 4.9% and 1.6% year-over-year growth, respectively. The expected long-term earnings growth rate is 6.8%. This Zacks Rank #3 company has a VGM Score of B and delivered a four-quarter average earnings surprise of 17.07%.
Price and Consensus: ACGL
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