Chicago, IL – May 2, 2025 – Today, Zacks Equity Research discusses Berkshire Hathaway (BRK.B), The Progressive Corp. PGR, Chubb Ltd. CB, The Travelers Companies TRV and The Allstate Corp. ALL.
Industry: Property & Casualty Insurance
Link: https://www.zacks.com/commentary/2460546/5-stocks-to-watch-from-the-prospering-pc-insurance-industry
The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from better pricing, prudent underwriting and exposure growth. Industry players like Berkshire Hathaway, The Progressive Corp., Chubb Ltd., The Travelers Companies and The Allstate Corp. are poised to grow despite a rise in catastrophes. 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. 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.
Also, the imposition of tariffs by President Trump as well as higher inflation will have an impact on pricing. 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.
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 a few more expected this year raise concerns.
Better pricing to help navigate claims: Catastrophes remain a major concern for insurers due to the high losses incurred, leading to rate increases to ensure claims payouts. MarketScout’s Market Barometer reports a 3% rise in commercial insurance rates and a 4.9% increase in personal lines in the first quarter 2025.
Fitch Ratings expects strong performance in personal auto insurance, driven by improved investment returns and reduced claims. S&P Global projects that underwriting profits in this segment will stabilize as insurers aim to grow policy volumes while keeping rates steady or slightly reduced. Deloitte estimates gross premiums to grow sixfold to $722 billion by 2030, with China and North America accounting for over two-thirds of the total. Swiss Re predicts premium growth of 5% in 2025 and 4% in 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 Aon, first-quarter insured losses from natural catastrophes are projected at more than $53 billion, which represents the second-highest total on record after the first quarter of 2011. California wildfires contributed nearly $38 billion, or 71% of the total insured losses, per Aon.
According to Intact Financial Corporation, total catastrophe losses in the first quarter of 2025 are expected to be $244 million, pre-tax and net of reinsurance. Swiss Re estimates the combined ratio to improve from 2023 to 98.5% in 2025 and deteriorate by another 50 basis points to 99% in 2026.
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 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.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright 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 #37, which places it in the top 15% 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 top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
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.
The Property and Casualty Insurance industry has outperformed its sector and the Zacks S&P 500 composite year to date. The stocks in this industry have collectively risen 15.3% compared with the sector’s increase of 1.4%. The Zacks S&P 500 composite has declined 23.6% in the said time frame.
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 1.65X compared with the S&P 500’s 7.82X and the sector’s 3.97X.
Over the past five years, the industry has traded as high as 1.67X, as low as 1.09X and at the median of 1.34X.
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 Corp.: Based in Mayfield Village, OH, Progressive 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 11.8% and 1.9% year-over-year growth, respectively. The consensus estimate for 2025 and 2026 earnings has moved 0.1% and 0.6% north, respectively, in the past seven days. It delivered a four-quarter average earnings surprise of 18.45%. It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 10.4%, better than the industry average of 7.4%.
Berkshire Hathaway: Omaha, NE-based Berkshire Hathaway owns more than 90 subsidiaries in insurance, railroads, utilities, manufacturing services, retail and homebuilding. BRK.B is one of the largest property and casualty insurance companies measured by premium volume. BRK.B, carrying a Zacks Rank #3, should continue to benefit from its growing Insurance business as well as Manufacturing,
Service and Retailing, and Finance and Financial Products segments. Continued insurance business growth fuels an increase in float, drives earnings and generates maximum return on equity. With Warren Buffett at its helm, Berkshire continues to create tremendous value for shareholders.
The Zacks Consensus Estimate for 2026 bottom line suggests a year-over-year increase of 7.7%. The expected long-term earnings growth rate is 7%.
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 2026 earnings suggests 28.3% year-over-year growth. The consensus estimate has moved up 1 cent 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 10%. It has a VGM Score of B.
The 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 31.2% year-over-year growth. The consensus estimate for 2026 has moved up 4.7% in the past seven days. It delivered a four-quarter average earnings surprise of 75.37%. It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 3.6%.
Chubb Ltd.: 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 19.4% year-over-year growth. The expected long-term earnings growth rate is 3.7%. The consensus estimate for 2025 and 2026 has moved 1.5% and 0.4% north, respectively, in the past seven days. It delivered a four-quarter average earnings surprise of 11.48%. The expected long-term earnings growth rate is pegged at 4.2%.
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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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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
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The Allstate Corporation (ALL) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
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