Progressive Corp. shares gained ground during a week that saw it release monthly earnings results for May that generally reflected positive news.
Despite choppy trading in the latter half of the week amid news that some states' coronavirus cases are trending upward again, the S&P 500 managed to gain 1.86% to close the week ending June 19 at 3,097.74, while the SNL U.S. Insurance Index rose 1% to 1,002.61.
Progressive's May earnings included a year-over-year jump in net income attributable to the company and an impact of $510 million, or 17.1 points on the companywide expense ratio, due to its plan to provide credits to certain personal auto customers in light of the reduction in auto accident frequency during the pandemic. The property and casualty insurer expects written premium growth rate for June will be negatively impacted by fiscal calendar timing, with a portion of policy cancellations that were suppressed by the billing leniency and state moratoriums also taking effect that month.
B. Riley FBR analyst Randy Binner said auto accident frequency and Progressive's lower loss ratios represent a "pretty significant tailwind" for the company, adding that its top line seems to be stabilizing as well.
"The way I look at it all, it's still positive," Binner said of the earnings report. He holds a "neutral" rating on Progressive.
While lower accident frequency is beneficial for personal lines auto insurance, Binner said it may be more important for commercial auto insurers because it is not as clear that commercial insureds are getting as many discounts or rebates as policyholders in the personal lines book.
Progressive's shares gained 5.73%.
Other property and casualty insurers finished the week in the green as well.
Allstate Corp. disclosed an estimated pretax catastrophe loss of $350 million, or $277 million after tax, for the month of May. About 80% of those losses were due to four severe weather events, including rain, wind and hail, that primarily impacted the Midwest and Texas. Allstate's stock closed up 3.17%.
Chubb Ltd., Travelers Cos. Inc. and W. R. Berkley Corp. shares gained 1.80%, 2.85% and 2.88%, respectively.
Life insurers were mixed, as many big names moved only modestly higher or lower.
Shares of Athene Holding Ltd., however, rose strongly in the same week it and Apollo Global Management Inc. announced they would inject capital into MFA Financial Inc., a mortgage real estate investment trust that has struggled to meet margin calls during the pandemic. The insurer also committed to purchasing a portion of the mortgage REIT's first securitization of nonqualified mortgage loans, subject to certain pricing conditions. Athene's stock increased 7.48%.
Prudential Financial Inc. and Aflac Inc. each ticked down 0.11%, while Lincoln National Corp. dropped 2.65%. Great-West Lifeco Inc., meanwhile, rose 2.07%.
Genworth Financial Inc. was the biggest loser of the week as the June 30 deadline to complete its pending merger with China Oceanwide Holdings Ltd. quickly approaches.
CFRA analyst Cathy Seifert in an email said investors will be looking for an update on the merger as the latest revised deadline nears. Seifert added that the life insurer was also "negatively impacted" by the persistently low interest rate environment, which could lead to additional reserve charges for some of its long-term obligations.
"The lack of clarity on the merger and the impact of low interest rates are weighing on the shares," said Seifert.
Genworth's stock fell 14.92%.