US P&C insurers in line for higher revenues, lower EPS in Q3

Revenues at 10 of the largest publicly traded U.S. property and casualty insurers are expected to increase year over year in the third quarter, while 11 would see their EPS decrease, according to an S&P Global Market Intelligence examination of sell-side analyst forecasts.

Analysts also expect a majority of the 20 largest P&C and multiline insurers by total assets that are traded on major U.S. exchanges to record a quarterly decline in EPS.

UBS analyst Brian Meredith said executives will likely talk about an accelerated pricing environment for commercial property insurers and a disciplined approach to commercial casualty pricing during their companies' third-quarter earnings calls, both driven by insured losses and higher reinsurance prices from Hurricane Ian.

"I expect [commercial lines insurance companies and reinsurers] to be much more optimistic on the pricing environment," Meredith told Market Intelligence. "On [earnings] calls, there will be a lot of questions as far as the ability to take advantage of that."

The Travelers Cos. Inc., which kicks off the reporting period for P&C companies on Oct. 19, is expected to report EPS of $1.72, down both year over year and quarter over quarter. Among the topics analysts will be listening for in the company's call are pricing for middle-market insurance, exposure growth and losses from Hurricane Ian, Piper Sandler analyst Paul Newsome said in a research note.

Companies expected to see a year-over-year slump in earnings include American International Group Inc., The Allstate Corp., CNA Financial Corporation, Arch Capital Group Ltd., W. R. Berkley Corp., Cincinnati Financial Corp., American Financial Group Inc., AXIS Capital Holdings Ltd., Old Republic International Corp. and First American Financial Corp.

Revenues rise

Insurers fared better in the revenue portion of the analysis in both year-over-year and previous-quarter assessments.

Allstate's revenue for the third quarter is expected to climb year over year to $13.08 billion, the highest in the analysis. The Illinois-based carrier was one of three insurers in the analysis with revenues estimated higher than $10 billion.

Chubb Ltd. would see its revenue rise to $10.93 billion, up quarter over quarter and year over year, Market Intelligence data shows.

Progressive reported third-quarter revenue of $13.02 billion, up on a quarterly and yearly basis.