We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Stocks to Add to Your Portfolio From the Prospering P&C Insurance Industry
Read MoreHide Full Article
The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from prudent underwriting, exposure growth and accelerated digitalization. Industry players like The Travelers Companies (TRV - Free Report) , The Allstate Corporation (ALL - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) , CNA Financial Corporation (CNA - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) are poised to grow despite a rise in catastrophic events. Given an active catastrophe environment, the policy renewal rate should accelerate. The increasing adoption of technology and the emergence of insurtech help the industry players function smoothly.
However, insurers are witnessing soft pricing after several years of improved pricing. Also, the Fed in its September FOMC meeting had implemented an interest rate cut and hinted at the possibility of more through the year. Though insurers are direct beneficiaries of an improved rate environment and rate cuts are headwinds, investment income is expected to remain strong, given insurers’ diverse investment portfolio as well as continued growth of private market investments. Also, an investment portfolio skewed toward fixed-income maturities provides some upside. 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.
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. Some industry players also provide liability coverage. 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, rate cuts by the Fed is a downside.
4 Trends Shaping the Future of the Property and Casualty Insurance Industry
Proper 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. Per Global Insurance Market Index by Marsh, global commercial insurance rates fell 4% in the third quarter, for fifth straight time. The Index noted rate decline were across all regions and most product lines. 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: Catastrophe events drag down profitability of the P&C insurers. The latest report published by CSU states that the 2025 hurricane season may have 16 named storms, including eight hurricanes and three major hurricanes. Swiss Re estimates the combined ratio to be 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.
Zacks Industry Rank Indicates Bright Prospects
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 outperform 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 aggregates. Earnings estimates for 2025 have increased 5% 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 year to date. The stocks in this industry have collectively risen 6.8% compared with the sector’s increase of 12.5% and the Zacks S&P 500 composite’s increase of 14.9% in the said time frame.
Year-to-Date 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 1.53X compared with the S&P 500’s 8.79X and the sector’s 4.23X.
Over the past five years, the industry has traded as high as 1.72X, as low as 1.17X and at the median of 1.42X.
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, position 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 sports a Zacks Rank #1.
The Zacks Consensus Estimate for TRV’s 2025 and 2026 earnings suggests 12.3% and 7.6% year-over-year growth. The consensus estimate for 2025 and 2026 has moved up 11.3% and 4.7%, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 89.26%. It has a VGM Score of A. The expected long-term earnings growth rate is pegged at 4.6%.
Price and Consensus: TRV
Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest 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 the margins of this Zacks Rank #2 insurer.
The Zacks Consensus Estimate for ALL’s 2025 and 2026 earnings suggests 0.1% and 22% year-over-year growth, respectively. The consensus estimate for 2025 and 2026 has moved up 7.7% and 0.1%, respectively, in the past 30 days. The company delivered a four-quarter average earnings surprise of 57.7%. The expected long-term earnings growth rate is pegged at 11.8%, better than the industry average of 7%. It has a VGM Score of A.
Price and Consensus: ALL
Cincinnati Financial: Headquarters in Fairfield, OH, Cincinnati Financial markets property and casualty insurance. Cincinnati Financial continues to grow on better pricing, strong renewal, solid retention and exposure growth and a disciplined expansion of Cincinnati Re, which is making a nice contribution to its overall earnings. The company intends to grow the commercial lines segment through additional agency appointments, expansion of local field presence, enhanced expertise and a robust product catalog. It carries Zacks Rank #2.
The Zacks Consensus Estimate for 2026 earnings suggests 31.1% year-over-year growth. The consensus estimate for 2025 and 2026 earnings has moved 0.9% and 0.6% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 41.2%. It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 3.5%, better than the industry average of 6.7%.
Price and Consensus: CINF
Axis Capital: Bermuda-based Axis Capital aims to be a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets. Lowering risk exposure while concentrating on accident and health, excess and supply property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth. A compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position continue to drive this specialty and global reinsurer. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for 2025 and 2026 bottom line suggests a year-over-year increase of 8.7% and 1.9%, respectively. The expected long-term earnings growth rate is 6.8%. The consensus estimate for 2025 and 2026 has moved 1.6% and 0.9% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 13.4%.
Price and Consensus: AXS
CNA Financial: Headquartered in Chicago, IL, CNA Financial offers commercial P&C insurance products, mainly across the United States. It is one of the most versatile property and casualty insurers, maintaining its combined ratio at favorable levels despite a challenging operating environment. A compelling product portfolio, better retention, improved pricing, positive growth in all three operating segments and new business growth poise it well for growth. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for CNA’s 2026 earnings suggests 4.3% year-over-year growth. The expected long-term earnings growth rate is 2.5%. The consensus estimate for 2025 has moved 2.2% and 0.2% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 8.78%.
Price and Consensus: CNA
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Stocks to Add to Your Portfolio From the Prospering P&C Insurance Industry
The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from prudent underwriting, exposure growth and accelerated digitalization. Industry players like The Travelers Companies (TRV - Free Report) , The Allstate Corporation (ALL - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) , CNA Financial Corporation (CNA - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) are poised to grow despite a rise in catastrophic events. Given an active catastrophe environment, the policy renewal rate should accelerate. The increasing adoption of technology and the emergence of insurtech help the industry players function smoothly.
However, insurers are witnessing soft pricing after several years of improved pricing. Also, the Fed in its September FOMC meeting had implemented an interest rate cut and hinted at the possibility of more through the year. Though insurers are direct beneficiaries of an improved rate environment and rate cuts are headwinds, investment income is expected to remain strong, given insurers’ diverse investment portfolio as well as continued growth of private market investments. Also, an investment portfolio skewed toward fixed-income maturities provides some upside. 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.
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. Some industry players also provide liability coverage. 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, rate cuts by the Fed is a downside.
4 Trends Shaping the Future of the Property and Casualty Insurance Industry
Proper 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. Per Global Insurance Market Index by Marsh, global commercial insurance rates fell 4% in the third quarter, for fifth straight time. The Index noted rate decline were across all regions and most product lines. 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: Catastrophe events drag down profitability of the P&C insurers. The latest report published by CSU states that the 2025 hurricane season may have 16 named storms, including eight hurricanes and three major hurricanes. Swiss Re estimates the combined ratio to be 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.
Zacks Industry Rank Indicates Bright Prospects
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 outperform 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 aggregates. Earnings estimates for 2025 have increased 5% 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 year to date. The stocks in this industry have collectively risen 6.8% compared with the sector’s increase of 12.5% and the Zacks S&P 500 composite’s increase of 14.9% in the said time frame.
Year-to-Date Price Performance
.jpg)
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 1.53X compared with the S&P 500’s 8.79X and the sector’s 4.23X.
Over the past five years, the industry has traded as high as 1.72X, as low as 1.17X and at the median of 1.42X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
5 Property and Casualty Insurance Stocks to Add
Here, we are discussing one Zacks Rank #1 (Strong Buy) stock and four Zacks Rank #2 (Buy) stocks from the P&C Insurance industry. You can see the complete list of today’s Zacks #1 Rank stocks here.
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, position 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 sports a Zacks Rank #1.
The Zacks Consensus Estimate for TRV’s 2025 and 2026 earnings suggests 12.3% and 7.6% year-over-year growth. The consensus estimate for 2025 and 2026 has moved up 11.3% and 4.7%, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 89.26%. It has a VGM Score of A. The expected long-term earnings growth rate is pegged at 4.6%.
Price and Consensus: TRV
Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest 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 the margins of this Zacks Rank #2 insurer.
The Zacks Consensus Estimate for ALL’s 2025 and 2026 earnings suggests 0.1% and 22% year-over-year growth, respectively. The consensus estimate for 2025 and 2026 has moved up 7.7% and 0.1%, respectively, in the past 30 days. The company delivered a four-quarter average earnings surprise of 57.7%. The expected long-term earnings growth rate is pegged at 11.8%, better than the industry average of 7%. It has a VGM Score of A.
Price and Consensus: ALL
Cincinnati Financial: Headquarters in Fairfield, OH, Cincinnati Financial markets property and casualty insurance. Cincinnati Financial continues to grow on better pricing, strong renewal, solid retention and exposure growth and a disciplined expansion of Cincinnati Re, which is making a nice contribution to its overall earnings. The company intends to grow the commercial lines segment through additional agency appointments, expansion of local field presence, enhanced expertise and a robust product catalog. It carries Zacks Rank #2.
The Zacks Consensus Estimate for 2026 earnings suggests 31.1% year-over-year growth. The consensus estimate for 2025 and 2026 earnings has moved 0.9% and 0.6% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 41.2%. It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 3.5%, better than the industry average of 6.7%.
Price and Consensus: CINF
Axis Capital: Bermuda-based Axis Capital aims to be a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets. Lowering risk exposure while concentrating on accident and health, excess and supply property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth. A compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position continue to drive this specialty and global reinsurer. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for 2025 and 2026 bottom line suggests a year-over-year increase of 8.7% and 1.9%, respectively. The expected long-term earnings growth rate is 6.8%. The consensus estimate for 2025 and 2026 has moved 1.6% and 0.9% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 13.4%.
Price and Consensus: AXS
CNA Financial: Headquartered in Chicago, IL, CNA Financial offers commercial P&C insurance products, mainly across the United States. It is one of the most versatile property and casualty insurers, maintaining its combined ratio at favorable levels despite a challenging operating environment. A compelling product portfolio, better retention, improved pricing, positive growth in all three operating segments and new business growth poise it well for growth. It carries a Zacks Rank #2.
The Zacks Consensus Estimate for CNA’s 2026 earnings suggests 4.3% year-over-year growth. The expected long-term earnings growth rate is 2.5%. The consensus estimate for 2025 has moved 2.2% and 0.2% north, respectively, in the past 30 days. It delivered a four-quarter average earnings surprise of 8.78%.
Price and Consensus: CNA