The Zacks Analyst Blog Highlights: Allstate Corp, Berkshire Hathaway, Cincinnati Financial, Everest Re Group and Alleghany Corp

For Immediate Release

Chicago, IL – June 2, 2021 – 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 Allstate Corporation ALL, Berkshire Hathaway Inc. BRK.B, Cincinnati Financial Corporation CINF, Everest Re Group, Ltd. RE and Alleghany Corporation Y.

Here are highlights from Tuesday’s Analyst Blog:

P&C Insurers Brace for Yet Another Active Hurricane Season

Like 2020, this year is also expected to see a very active hurricane season. Per Colorado State University (CSU), 2021 above-average hurricane season may have 17 named storms, including eight hurricanes and four major hurricanes. This year’s hurricane season could be about 140% of average season per CSU.

The hurricane season typically starts in June and lasts through November, gathering strength in August and September. Thus, property and casualty insurers’ third-quarter results are affected the most. Better pricing, prudent underwriting, increased exposure, favorable reserve development and a solid capital position help insurers withstand blows from the catastrophe events.

Per a report published by Swiss Re Institute, global insured catastrophe losses incurred in 2020 were $83 billion, which made it the fifth-costliest year. The report further stated that natural catastrophes accounted for $76 billion of global insured losses, an increase of 40% from 2019 level.

The private U.S. P&C insurance industry thus witnessed a 27.5% decline in net income while net underwriting gains plummeted 94.4% in the first nine months of 2020 per a report from Verisk. However, policyholders’ surplus increased 1.9% to $863.3 billion as of Sep 30, 2020, driven by growth in the stock market, per the report.

Per a report published in Carrier Management, AM Best noted that combined ratio deteriorated only 70 basis points to 98.7 in the first nine months of 2020.

Coming back to this year’s Atlantic hurricane season, The National Oceanic and Atmospheric Administration (NOAA) predicts that there’s a 60% chance of an above-normal hurricane season, a 30% chance of a near-normal season, and a 10% chance of a below-normal season. Nonetheless, improved pricing prepares the insurers to weather the catastrophe loss.

As per Marsh, global commercial insurance prices in the first quarter of 2021 increased 18%, marking the 14th straight quarter of price increase. Per the report, property rates increased 15%, casualty pricing rose 6%, U.S. financial and professional lines pricing increased 40% while cyber insurance pricing rose 35%. Per Willis Towers Watson’s 2021 Insurance Marketplace Realities report, except for one, 29 lines should witness price rise.

Also, frequent occurrences of natural disasters should accelerate the policy renewal rate.

The first quarter of 2021 witnessed the wrath of winter storms Uri and Viola. Per reports in Reinsurance News, catastrophe risk modeller AIR Worldwide estimated industry loss of more than $10 billion from the storms. Subsequently, catastrophe risk modelling specialist Karen Clark & Company updated insurance and reinsurance market loss estimate from winter storm Uri in the United States to about $18 billion.

Stocks in Focus

Frequent catastrophes that accelerate policy renewal rate and lead to upward pricing pressure will boost performance of Zacks Property and Casualty Insurance industry players. With the help of our Zacks Stock Screener, we have selected seven stocks that carry a favorable Zacks Rank and have witnessed upward estimate revisions.

Allstate Corp. is the third-largest property-casualty insurer and the largest publicly-held personal lines carrier in the United States. Estimates for its 2021 bottom line have jumped over the past seven days by 8.2%, and suggest a 5.5% increase from the year-ago reported number. This Zacks Rank #3 (Hold) insurer carries an impressive VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Berkshire Hathaway owns more than 90 subsidiaries in insurance, rail roads, utilities, manufacturing services, retail and home building. Estimates for this Zacks Rank #2 (Buy) insurer’s 2021 bottom line have jumped over the past 30 days by 2.1%, and suggest a 18.8% increase from the year-ago reported number.

Cincinnati Financial Corp markets property and casualty insurance. Estimates for this Zacks Rank #2 insurer’s 2021 bottom line have jumped over the past 30 days by 3.5%, and suggest a 25.3% increase from the year-ago reported number.

Everest Re Group writes property and casualty, reinsurance and insurance in the United States, Bermuda and international markets. Estimates for 2021 bottom line have jumped over the past seven days by about 9%, and suggest a 243.4% increase from the year-ago reported number. This Zacks Rank #3 insurer carries an impressive VGM Score of A.

Alleghany Corp. engages in property and casualty reinsurance and insurance businesses in the United States and internationally. Estimates for its 2021 bottom line have jumped over the past 30 days by 18.9%, and suggest a 221% increase from the year-ago reported number. This Zacks Rank #2 insurer carries a favorable VGM Score of B.

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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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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
The Allstate Corporation (ALL) : Free Stock Analysis Report
 
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
 
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
 
Alleghany Corporation (Y) : Free Stock Analysis Report
 
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