Shares of The Travelers moved higher after its first-quarter earnings results and executive remarks pleased industry observers.
Wells Fargo analyst Elyse Greenspan said in a note that the company's strong business insurance margins and "bullish commentary around commercial pricing" were "well-received," especially in the aftermath of previewed weaker commercial results from The Hartford Financial Services Group.
President of Business Insurance Greg Toczydlowski said the Travelers business segment's 13% year-over-year rise in income was spurred by higher underlying underwriting income, thanks to higher earned premiums and a lower underlying combined ratio. The segment also benefited from its share of a one-time tax benefit of $211 million created by the repeal of an IRS code related to the discounting of property casualty loss reserves, Toczydlowski said.
As of 12 p.m. ET on April 21, Travelers shares were up about 6% for the week.
Several other property and casualty carriers also saw their stocks move higher, with several being among the week's biggest winners.
Through the noon hour on the final day of trading, Heritage Insurance Holdings Inc. and RLI Corp. were up 15.20% and 12.58%, respectively, for the week, while Kemper Corp. rose 4.09%, and HCI Group Inc. was up 7.65%. Universal Insurance Holdings Inc. had risen 6.70%, The Allstate Corp. was up 3.28%, and Chubb Ltd. saw a 2.14% improvement.
The entire insurance industry as a whole had a fairly positive week, as the S&P 500 Insurance index was up 1.71% to 577.21. Multiline insurer The Hartford's stock tracked fairly closely with the index.
Strong recovery for United
United Insurance Holdings Corp.'s shares were still down nearly 15% as the trading week neared the close, but that represented a substantial bounce back for the stock.
Share prices had plunged more than 50% on April 18 after the company company's Form 10-K for 2022, which included a statement raising concerns about the insurer's ability to continue on given "uncertainties regarding the allocation of reinsurance recoveries."
United also reported a net loss in 2022 of $469.9 million and a combined ratio of 194.7%.
The recoveries in question were connected to United's catastrophe reinsurance program, which covered both its specialty insurance subsidiary, American Coastal Insurance Co. Inc., and United Property & Casualty Insurance Co. (UPC), which was placed into receivership with the Florida Department of Financial Services (DFS) on Feb. 27.
Since the regulator controls UPC, it also controls the money the company was slated to recover from Hurricane Ian losses. Without those funds, United said there was some doubt about American Coastal's ability to secure sufficient catastrophe reinsurance coverage at the upcoming June 1 renewal season.
The issue was resolved April 20 when United and the DFS reached an allocation agreement. The stock responded by rising 62% by the end of that day.
Berkley sees property opportunities
Elsewhere, W. R. Berkley Corp. CEO Rob Berkley during a first-quarter earnings conference call said the company sees opportunities in property insurance lines amid a continued strong pricing environment.
Berkley said the current pricing cycle is "alive and well" despite a slow start to the quarter, and the property market is in "early stages of meaningful firming." The CEO added that the company's growth rate should pick up as early as the second quarter, "but certainly as we make our way into the second half of the year."
Professional liability lines, which Berkley referred to as "a mixed bag," is an area where the company is "making meaningful hay" with errors and omissions coverage. The directors and officers marketplace, however, has struggled for a "number of quarters" and "continues to be in a state of free fall as far as rate adequacy or pricing," he said.
Berkley said the main issue within directors and officers is demand for coverage, thanks to a "dramatic reduction" in IPOs.
W. R. Berkley's share price had fallen 7.51% for the week as of noon ET on April 21.
