The Zacks Analyst Blog Highlights: Progressive, Selective Insurance Group, Mercury General and NMI Holdings
For Immediate Release
Chicago, IL – September 4, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Progressive Corp. PGR, Selective Insurance Group, Inc. SIGI, Mercury General Corp. MCY and NMI Holdings, Inc. NMIH.
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Here are highlights from Friday’s Analyst Blog:
P&C Industry Crushes S&P 500: 4 Growth Picks
Sunny days seem to be back for the Property and Casualty insurance industry by the grace of Mother Nature. Given a benign catastrophe environment, the primary factor responsible for property casualty insurers’ profitability, the industry players should experience underwriting profit compared with losses incurred over the last few years. Shares of the industry have rallied nearly 12%, outperforming the Zacks S&P 500 Composite’s increase of 7.5%, banking on a favorable operating environment so far.
Combined ratio — a measure of underwriting profitability — is estimated to be 99% for 2018, an improvement of 450 basis points year over year, per S&P Global Market Intelligence. Lower claims costs due to a timid catastrophe environment have likely propelled the upside. Colorado State University (CSU) released its updated outlook for the 2018 Atlantic hurricane season earlier this month. The report forecasts a below-normal season with a total of 12 named storms, less than 14 predicted in June. A news of relief is that the third quarter of 2018 is projected to be not as devastating as last year.
In 2017, the U.S. property and casualty insurance industry suffered net underwriting loss of $29.3 billion, wider than $5.5 billion loss incurred in 2016 according to A.M. Best. A series of destructive hurricanes had induced disappointing results.
After a turbulent 2017, this year so far offered some respite to the industry players. The first quarter encountered the California mudslide and the northeast winter storms followed by a few cat events like rain storms in the United States and Canada during the second quarter. Notably, the third quarter to date escaped the vagaries of nature. Although last week, Hurricane Lane Hawaii stormed through, its magnitude weakened to classify it as a Category 3 Hurricane. Therefore, it is not expected to cause major damages.
On a positive note, due to massive cat loss, property and casualty insurers enjoyed higher prices that remained flat for quite some time. Better pricing should help insurers meet claims without denting profitability.
Another component driving profitability for insurers is their investment income. They invest a portion of premiums they receive and thus, higher rate will boost investment income. Given the recovery in U.S. economy, the Fed has been active in raising interest rates that currently stands at 2% from the near-zero level when the recession hit the economy hard. There have been seven hikes in the rate since December 2015. Per current market speculations, there is a very high possibility of nearly 96% for a rate hike in September 2018, followed by 60% chance of another raise in December 2018.
Property and casualty insurance industry is currently ranked at #114, representing the top 45% of the Zacks Industry Ranks.
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The Progressive Corp. provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The stock sports a Zacks Rank #1 (Strong Buy) and a robust Growth Score of A. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 8.7% upward and moved 7.1% north for 2019 over the past 60 days. Progressive has an expected long-term earnings growth rate of 7.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Progressive have gained 13.6% quarter to date.
Selective Insurance Group, Inc. provides insurance products and services in the United States. The stock carries a Zacks Rank #2 (Buy) and a favorable Value Score of B. The Zacks Consensus Estimate has moved 3.8 % north for 2018 and 0.7% for 2019 over the past 60 days. Selective Insurance has an expected long-term earnings growth rate of 16.2%.
Shares of Selective Insurance have rallied 15.7% quarter to date.
Mercury General Corp. engages in writing personal automobile insurance in the United States. The stock has a Zacks Rank of 2 and a strong Value Score of B. The consensus estimate for 2018 bottom line has been raised 11.1% over the past 60 days. Mercury General has an expected long-term earnings growth rate of 34.8%.
Shares of Mercury General have climbed 18.5% quarter to date.
NMI Holdings, Inc. provides private mortgage guaranty insurance services in the United States. The company is a Zacks #1 Ranked player and has a commendable Value Score of B. The consensus mark for 2018 has moved 6.2% north while for 2019 earnings, the estimates have been revised 8.3% upward over the past 60 days.
Shares of NMI Holdings have surged 31% quarter to date.
5 Companies Verge on Apple-Like Run
Did you miss Apple’s 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
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Strong Stocks that Should Be in the News
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Selective Insurance Group, Inc. (SIGI): Free Stock Analysis Report
The Progressive Corporation (PGR): Free Stock Analysis Report
Mercury General Corporation (MCY): Free Stock Analysis Report
NMI Holdings Inc (NMIH): Free Stock Analysis Report
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