Top US P&C insurers poised to report mixed Q4'21 results

Industry analysts project a mixed bag of fourth-quarter 2021 results from the biggest U.S. P&C insurers amid a period of below-average catastrophic losses.

Keefe Bruyette & Woods' forecasts are "generally above consensus" for P&C carriers, analyst Meyer Shields wrote in a Jan. 13 note, thanks to those lower catastrophe losses. Most of the damage done stemmed from December tornadoes across the central part of the U.S. and Colorado wildfires.

Insurers likely to have exposure to the Colorado wildfires include The Allstate Corp., Chubb Ltd., The Travelers Cos. Inc., and The Progressive Corp., CFRA Research analyst Cathy Seifert said.

"We expect the largest homeowners' insurers in the region to bear the brunt of claims," Seifert said in an emailed statement.

Sixteen of the top 20 largest P&C insurers by total assets are expected to post sequentially higher EPS for the quarter, according to an S&P Global Market Intelligence examination of sell-side analyst forecasts. However, only eight are projected to see year-over-year increases.

Revenues are forecast to grow year over year for more than half of the top 20 insurers. Sequentially, however, just five companies in this analysis are expected to see revenue increases.

This analysis was limited to the 20 largest P&C and multiline insurers by total assets that are traded on major U.S. exchanges. Total assets were based on GAAP filings as of Sept. 30, 2021. The analysis excludes American National Group Inc., for which estimates were not available.

All eyes on pricing, auto results

The pricing environment is expected to be one of the focal points for commercial P&C players. Investors are interested in whether pricing will keep up with inflation, Piper Sandler analyst Paul Newsome said.

"If pricing increases do not keep up with inflation then that suggests commercial insurance valuation expansion should be limited in 2022," he said in a note to clients.

Seifert also expects the pricing environment to be one of the main discussion topics, as will be to what degree the economy is boosting demand for insurance coverage overall. Personal auto insurers like Allstate and Progressive require "careful attention" following the increased claims severity in the third quarter of 2021, Seifert said. Investors will be keen to know whether some of the adverse claim trends have eased, according to the analyst.

Auto results will be in the spotlight as severity and frequency are "up materially" while insurers struggle to get regulatory approvals for higher rates, Newsome said. Some personal auto insurers will likely be in a better position as some were less aggressive in reducing rates during the height of pandemic-related shutdowns, he said.

Overall, American International Group Inc., Chubb, The Hartford Financial Services Group Inc. and Travelers will set the tone for the earnings season, Seifert said.