The Zacks Property and Casualty Insurance industry has performed well so far this year, banking on better pricing, increased exposure, prudent underwriting, streamlined operations, global presence and a solid capital position. The industry has gained 32.1% year to date, outperforming the Finance sector's rise of 15.1% and the Zacks S&P 500 composite's increase of 18.4%. The group's Zacks Industry Rank places it in the top 10% of more than 250 Zacks industries and earnings estimates for the current year have increased 12.4% year over year.
However, after seven years of increase, the industry has been witnessing flat pricing. Also, the prospect of an interest rate cut by the Fed this month adds pressure.
Despite the challenges, Heritage Insurance Holdings, Inc. (NYSE: HRTG), Arch Capital Group Ltd. (NASDAQ: ACGL), AXIS Capital Holdings Limited (NYSE: AXS) and NMI Holdings, Inc. (NASDAQ: NMIH) are poised to do well and are strong contenders for addition to one's portfolio for better returns. These insurers have outperformed the industry year to date and are poised to retain the rally given their solid prospects.
Industry Outperformers
Image Source: Zacks Investment Research
Flat Pricing in Q2
After 26 straight quarters of year-over-year rise, pricing stayed flat in the second quarter of 2024. Per Marsh's Global Insurance Market Index, pricing declined 1% sequentially. Per Marsh, the continued moderation of rates was largely due to increasing competition among insurers in the global property market, as published in Insurance Journal.
Per Marsh, region-wise, "on average, Q2 rates decreased by 5% in Canada and the Pacific, and by 3% in the UK and in Asia regions. Rates increased in the US and Europe by 1%, and by 4% in the Latin America and the Caribbean and India, Middle East, and Africa (IMEA) regions."
Business line wise, property insurance rates globally were flat, casualty lines rates increased 3% globally, while global financial and professional lines (FinPro) rates decreased 5% globally for the eighth consecutive quarter. Cyber insurance rates decreased 6% globally.
Pricing, a crucial underwriting action, plays an important part in driving premiums and addressing claims payment prudently, thus benefiting underwriting profitability.
Per Deloitte Insights, gross ...
