We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
TRV or PGR: Which P&C Insurance Industry Player Has an Edge?
Read MoreHide Full Article
Property and casualty insurers are facing operational challenges arising due to the pandemic. The resultant increase in unemployment and furlough adversely impacted new sales in property and casualty insurance space.
Nonetheless, a benign catastrophe environment coupled with better pricing and exposure growth will likely help maintain underwriting profitability.
However, claims are likely to increase. A low interest rate and equity market fluctuations might weigh on investment results.
The industry has declined 20.2% year to date, compared with the Zacks S&P 500 composite’s decrease of 1.4% and the Finance sector’s decline of 20.2%.
The property and casualty insurance industry in particular is witnessing the emergence of insurtech — technology-led insurers. This should help cater to demand even during the pandemic that has led to remote working.
Sturdy policyholders’ surplus will help the industry absorb losses. Also, given a sturdy capital level, insurers are buying businesses as they look to gain market share and grow in their niche areas.
Here we focus on two property and casualty insurers, namely The Travelers Companies (TRV - Free Report) and Progressive Corporation (PGR - Free Report) .
While Travelers provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United States and internationally, Progressive provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States. Both these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Let’s now see how these P&C insurers have fared in terms of some of the key metrics.
Price Performance
Progressive has outperformed both Travelers and the industry year to date. While shares of Progressive have gained 7.4%, those of Travelers have lost 19.7%.
Return on Equity (ROE)
Progressive with a return on equity 26.8% exceeded Travelers’s ROE of 9.6% and the industry average of 6.4%.
Valuation
Price to book value is the best multiple used for valuing insurers. Compared with the P&C insurance industry’s P/B ratio of 1.2 and Progressive’s reading 3.3, Travelers is cheaper with a reading of 1.1.
Dividend Yield
Travelers with dividend yield of 3.1% betters Progressive’s 0.5% as well as the industry’s average of 0.5%.
Debt-to-Capital
Travelers’ debt-to-capital ratio of 20.7 is lower than the industry average of 21.8 as well as Progressive’s reading of 27.3.
Earnings Surprise History
Progressive outpaced expectations in three of the four trailing quarters, delivering average positive surprise of 15.58%. Travelers surpassed estimates in only one of the last four quarters with, the average negative surprise being 14.29%.
Progressive has an edge in this respect.
Combined Ratio
Combined ratio is a profitability measure for insurers to identify how well an insurer is performing in its daily operations. A ratio below 100% indicates that the company is making an underwriting profit. Progressive’s combined ratio of 86.9 betters Travelers’ reading of 95.5.
To Conclude
Our comparative analysis shows that Progressive has an edge over Travelers with respect to price performance, return on equity, earnings surprise history and combined ratio. Meanwhile, Travelers scores higher in terms of valuation, dividend yield and leverage.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
TRV or PGR: Which P&C Insurance Industry Player Has an Edge?
Property and casualty insurers are facing operational challenges arising due to the pandemic. The resultant increase in unemployment and furlough adversely impacted new sales in property and casualty insurance space.
Nonetheless, a benign catastrophe environment coupled with better pricing and exposure growth will likely help maintain underwriting profitability.
However, claims are likely to increase. A low interest rate and equity market fluctuations might weigh on investment results.
The industry has declined 20.2% year to date, compared with the Zacks S&P 500 composite’s decrease of 1.4% and the Finance sector’s decline of 20.2%.
The property and casualty insurance industry in particular is witnessing the emergence of insurtech — technology-led insurers. This should help cater to demand even during the pandemic that has led to remote working.
Sturdy policyholders’ surplus will help the industry absorb losses. Also, given a sturdy capital level, insurers are buying businesses as they look to gain market share and grow in their niche areas.
Here we focus on two property and casualty insurers, namely The Travelers Companies (TRV - Free Report) and Progressive Corporation (PGR - Free Report) .
While Travelers provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United States and internationally, Progressive provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States. Both these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Let’s now see how these P&C insurers have fared in terms of some of the key metrics.
Price Performance
Progressive has outperformed both Travelers and the industry year to date. While shares of Progressive have gained 7.4%, those of Travelers have lost 19.7%.
Return on Equity (ROE)
Progressive with a return on equity 26.8% exceeded Travelers’s ROE of 9.6% and the industry average of 6.4%.
Valuation
Price to book value is the best multiple used for valuing insurers. Compared with the P&C insurance industry’s P/B ratio of 1.2 and Progressive’s reading 3.3, Travelers is cheaper with a reading of 1.1.
Dividend Yield
Travelers with dividend yield of 3.1% betters Progressive’s 0.5% as well as the industry’s average of 0.5%.
Debt-to-Capital
Travelers’ debt-to-capital ratio of 20.7 is lower than the industry average of 21.8 as well as Progressive’s reading of 27.3.
Earnings Surprise History
Progressive outpaced expectations in three of the four trailing quarters, delivering average positive surprise of 15.58%. Travelers surpassed estimates in only one of the last four quarters with, the average negative surprise being 14.29%.
Progressive has an edge in this respect.
Combined Ratio
Combined ratio is a profitability measure for insurers to identify how well an insurer is performing in its daily operations. A ratio below 100% indicates that the company is making an underwriting profit. Progressive’s combined ratio of 86.9 betters Travelers’ reading of 95.5.
To Conclude
Our comparative analysis shows that Progressive has an edge over Travelers with respect to price performance, return on equity, earnings surprise history and combined ratio. Meanwhile, Travelers scores higher in terms of valuation, dividend yield and leverage.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>