The Travelers Cos. Inc.'s shares moved higher after it released earnings results that showed a 36% year-over-year increase in net income for full-year 2021 and was one of the few major insurers to mostly hold its ground in a difficult week for equities.
The broader market fared quite poorly for the week ending Jan. 21, with the S&P 500 sliding 5.68% to 4,397.94. The S&P 500 Insurance Index dropped 3.57% to 541.46.
Piper Sandler analyst Paul Newsome said in an interview that Travelers had a "very good" fourth-quarter 2021, which was partially driven by good fortune as catastrophe losses were relatively light.
"Underlying underwriting results were quite good, particularly in commercial lines," Newsome said. "That shows that it looks like their efforts to raise prices and improve margins are coming through."
Newsome did note that personal lines auto remains a big focus overall for investors. Even though the impact of increased driving activity and auto accidents, as well as inflation, were evident in Travelers' results, they still looked relatively benign, the analyst said.
Travelers' shares were green for the week through Jan. 20 but stumbled on the final trading day of the week, finishing down 0.36%.
Later in the week, The Allstate Corp. announced estimated pretax catastrophe losses for December 2021 of $411 million, or $325 million after tax. Approximately $218 million of the total was related to the destruction from a wildfire that swept through parts of Colorado. The blaze, termed the Marshall Fire, as well as unusual winter tornadoes that struck parts of the Southern and Central U.S., accounted for about 78% of Allstate's December 2021 estimated catastrophe losses. Allstate's fourth-quarter 2021 catastrophe losses came in $528 million before tax.
Allstate shares fell 3.76%
In the managed care space, UnitedHealth Group Inc. kicked off earnings season for the group, logging net earnings attributable to shareholders of $4.07 billion, or $4.26 per share, in the fourth quarter of 2021, an increase from $2.21 billion, or $2.30 per share, in the prior-year quarter.
CFRA analyst Paige Meyer said in a note that the quarter's "outperformance" was mainly due to "robust growth" across business segments. Meyer added that UnitedHealth Group is experiencing inpatient hospitalization levels for its members similar to those experienced in January 2021, except with lower severity and shorter lengths of stay, which has led to a slowdown for primary care, elective visits and procedural volumes.
"Looking forward, we anticipate cost savings from double-digit declines in both physician visits as well as specialist visits to be partially offset by increased COVID-19 testing costs," Meyer said.
UnitedHealth ended the week down 1.60%.
Meanwhile, insurtech Root Inc.'s stock tumbled 29.37% in the same week it announced it would lay off about 20% of its workforce as it deals with the impact of inflation on loss cost trends. The actions are expected to bring charges of about $7.0 million to $8.0 million for severance, benefits and related costs in the first quarter.
In the life insurance space, a news report from Reuters revealed that Principal Financial Group Inc. is in advanced talks to sell its U.S. retail fixed annuity business and its universal life insurance with secondary guarantees unit to Talcott Resolution Life Insurance Co.
Principal Financial's stock decreased 6.27% for the week.