The insurance industry’s first-quarter earnings season wrapped up during a week in which US equity markets once again lost ground.
Insurance stocks almost mirrored the broader market as the S&P 500 Insurance index dropped 2.43% to 549.76 for the week ending May 13, while the S&P 500 slid 2.41% to 4,023.89.
Hippo Holdings Inc.’s stock plunged to a new all-time low on May 12, but then soared the following day after the insurtech posted first-quarter results that were significantly better than a year ago. CEO Assaf Wand during an earnings call said Hippo’s stock is “not where it should be” but was upbeat about the company’s potential and future performance.
“We’re actually very optimistic and have more conviction than ever in the company,” Wand said.
Hippo reported a net loss attributable to the company of $ 67.6 million, or 12 cents per share, for the first quarter, compared to a loss of $ 195.2 million, or $ 2.03 per share, in the prior-year period. The company’s gross loss ratio dramatically improved year over year, falling to 76% from 198% in the first quarter of 2021.
Even with a dramatic rally on May 13, Hippo’s shares still lost 4.14% for the week.
Fellow insurtech Lemonade Inc. this week disclosed that its first-quarter net loss widened to $ 74.8 million, or a loss of $ 1.21 per share, from a net loss of $ 49.0 million, or a loss of 81 cents per share, a year ago. Lemonade’s stock closed down 0.99%.
In the life and health space, Brighthouse Financial Inc.’s stock slumped despite the insurer swinging to a first-quarter net profit.
Wells Fargo analyst Elyse Greenspan in a research note said as an interest-rate sensitive life insurer, Brighthouse is in a good position to benefit from rising interest rates. However, Greenspan assigned an equal weight rating to the stock, as opposed to an overweight rating, because Brighthouse has a “less diverse earnings stream” compared to its peers.
Brighthouse finished the week down 12.09%.
In property and casualty, United Insurance Holdings Corp. saw its stock tumble after the Florida-focused insurer’s first-quarter net loss almost doubled to $ 33.2 million from $ 17.8 million a year ago. Troubled FedNat Holding Co., which in late April said there was doubt about its ability to continue as a going concern, earlier this week likewise reported a much larger net loss compared to the prior-year period. Its first-quarter net loss came in at $ 31.3 million, or $ 1.79 per share, versus $ 19.4 million, or $ 1.35 per share.
Florida’s property insurance woes were further underscored when the state’s last resort insurer reported that its in-force policy count at the close of April hit its highest level since September 2014 and was up 44.5% year over year. The state’s legislature plans to hold a special session in late May to address property insurance reform.
United Insurance plunged 31.42% on the week, while FedNat, which trades under $ 1, rose 23.19%.