latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/insurance-stocks-lag-broader-markets-as-q2-earnings-results-roll-in-59700919 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Insurance stocks lag broader markets as Q2 earnings results roll in

Part Two IFRS 9 Blog Series: The Need to Upgrade Analytical Tools

2018 US Property Casualty Insurance Market Report


Fintech Funding Flows To Insurtech In February

Lemonade Growing Premiums Faster Than Esurance's Homeowners Business Did

Insurance stocks lag broader markets as Q2 earnings results roll in

Insurance stocks finished a volatile week flat even as ugly macroeconomic headlines rattled the market on multiple occasions.

The S&P 500 posted a 1.73% gain for the week ending July 31, ending at 3,271.12. The SNL U.S. Insurance Index ticked down 0.41% to 1,044.66.

Brown & Brown Inc. was the first of the large insurance brokerages to report second-quarter earnings , booking adjusted net EPS of 34 cents. That number surpassed the S&P Capital IQ estimate, but the company also said it saw a slowdown in organic growth to 0.5%. The company's shares dipped by more than 2% a day after those results were released.

Wells Fargo analyst Elyse Greenspan suspects that investors reacted negatively to Brown's cautious financial forecast for the second half of 2020.

"We believe there is some sense of conservatism here as the company handily beat consensus for [second-quarter organic growth]," Greenspan said in a July 28 research note to clients. Executives were upbeat about prospects for its national programs segment, which powered what she viewed as a strong earnings performance.

Brown closed the week up 0.15%.

SNL Image

Shares of Willis Towers Watson PLC bounced higher after the broker reported a slight increase to year-over-year quarterly adjusted net earnings. But those gains were short-lived as the stock lost ground just a day later. For the week, Willis Towers Watson was down 0.71%.

Investors did not warm to shares of Willis merger partner Aon Ltd. on July 31 after it reported adjusted net income of $458 million, a slight improvement over the previous year that came with an EPS beat over the S&P Capital IQ consensus estimate. Aon's share price performance also lagged the broader markets for the day and finished with a 0.94% drop for the week.

Chubb Ltd. posted an operating loss of $254 million after markets closed July 28 compared with income of $1.20 billion in the prior-year period. The property and casualty giant's stock tumbled 5.69% on the week.

Piper Sandler analyst Paul Newsome believes the steady rise in property and casualty premium rates will offer particular benefits to Chubb's mix of business in the months to come.

"Given the company's conservative view towards reserves and loss picks, we think this sets up the company well to experience earnings growth once the effects of the pandemic abate," Newsome wrote in a note to clients.

More broadly, insurance stocks largely fell with the double blast of macroeconomic reports July 30 showing that the second-quarter GDP contraction was one of the worst declines in U.S. history and rising jobless claims that might signal a stalled recovery.

Fitch Ratings analyst James Auden said the domestic P&C insurance sector has the capital backing to weather the COVID-19 crisis. The challenges companies face are from low interest rates, which make return on capital difficult and pressures companies to make up the shortfall through underwriting profits, Auden said.

The reduced exposure for auto insurers from less driving that has widened margins in the near term could result in a harmful downward pressure on prices if conditions persist, Auden said in an interview.

"You need to keep pace with claims severity," he said. "When the time comes, things are back to normal and you need rate, competitive forces or regulatory constraints may not allow it."

Much could change during the balance of the year to weigh on the industry's stable outlook, particularly if the Atlantic hurricane season and other catastrophes produce insured losses like they have in recent years and beset the industry with worse financial headwinds than the pandemic, Auden said.

Elsewhere in the P&C space, Allstate Corp. was essentially flat, while Progressive Corp. managed a 2.82% advance.

In the life sector, Genworth Financial Inc. logged an operating loss in the second quarter. Its shares were among the biggest decliners, falling 6.85%.

Unum Group booked lower year-over-year after-tax adjusted income in its earnings report that nevertheless exceeded analysts' expectations. Investors gave its stock a short-term boost, but the company ended up losing ground on the week, sliding 4.96%.

SNL Image