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RLI moves higher, eHealth tanks after releasing Q2 results

Insurance stocks were a mixed bag as earnings season got underway and the broader market responded to the latest pandemic news and domestic economic figures, as well as geopolitical developments between China and the U.S.

The S&P 500 declined 0.28% for the week ending July 24 to 3,215.63, while the SNL U.S. Insurance Index ticked up 0.36% to 1,049.21.

Big swings up and down have been the norm for eHealth Inc.'s stock thus far in 2020. It was the worst-performing insurance stock this week, diving 25.92% even as the company reported second-quarter results that CEO Scott Flanders said showed strong revenue and Medicare enrollment growth. Flanders on a conference call did also say that eHealth has experienced elevated Medicare Advantage plan churn.

The health insurance marketplace posted a GAAP net loss of $3.4 million, or a loss of 13 cents per share, compared with a net loss of $5.8 million, or a loss of 25 cents per share, in the second quarter of 2019. Non-GAAP net income came in at $1.7 million, or 7 cents per share, which was worse than the $2.3 million, or 10 cents per share, a year ago.

Travelers Cos. Inc. this week posted a net loss of $40 million, or a loss of 16 cents per share, for the second quarter, compared to net income of $557 million, or $2.10 per share, in the prior-year period. It recorded a core loss of $50 million, or a loss of 20 cents per share, versus core income of $537 million, or $2.02 per share, a year ago.

The swing was primarily due to higher catastrophe losses, lower net investment income and lower net favorable prior-year reserve development. Travelers had an "OK" quarter according to Wells Fargo analyst Elyse Greenspan, who said in a note that COVID-19 losses were modest, while natural catastrophe losses were high. On the positive side, pricing momentum continued to build, she said.

Travelers said virus-related claims will not likely be material to its results, but other commercial lines insurers will see a number of claims, according to CFRA Research analyst Cathy Seifert.

"I think some insurers with bespoke coverage terms that do not explicitly exclude pandemics and viruses from coverage may be facing a significant level of claims," Seifert said in an interview. "Of course, the economic contraction that has occurred in the wake of COVID-19 has dramatically impacted demand for coverage, which has offset an otherwise strong pricing environment."

Travelers ticked down 0.74% for the week.

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Employers Holdings Inc. was among the biggest gainers among all insurance companies. It rallied strongly in the final two trading days of the week after announcing that its board authorized a $50 million expansion for its existing share repurchase program.

RLI Corp. was also one of the strongest performers as it disclosed year-over-year increases in both net and operating earnings for the second quarter.