Property & Casualty Insurance covers insurers of homes, vehicles and businesses, specialty and reinsurance carriers, and surety and title insurers. MoatScope covers 73 companies here. One has a wide moat, 31 a narrow moat and 41 none.
How the industry makes money
Insurers earn in two ways: an underwriting profit when premiums exceed claims and expenses, and investment income on the premiums they hold until claims are paid. The discipline to price risk correctly through the cycle separates the best from the rest.
Where the moats are
Intangible assets, meaning underwriting expertise, data, brands and licenses, appear in 29 of the 32 moat-rated companies. Switching costs, cost advantages and efficient scale each appear in eight to ten.
- Markel: specialty insurance, where expertise in hard-to-price risks earns better margins than standard lines.
The narrow-moat group includes Chubb, Progressive, Travelers, Allstate, AIG, Hartford and Arch Capital. Companies without a moat include Lemonade, Palomar and NMI.
What wears moats down
Catastrophes such as hurricanes and wildfires can wipe out a year's profit, and rising repair, medical and legal costs push claims above what was priced in. Soft markets tempt insurers to cut prices to win business, and reserves that prove too thin surface as losses years later.
What the quality scores say
Markel scores 58 on MoatScope's quality scale, while narrow-moat Progressive, Arch Capital and Travelers score 70 to 72. The industry averages 49.
What to watch
- Combined ratios, the measure of underwriting profit.
- Catastrophe losses and reinsurance costs.
- Premium pricing trends and reserve development.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.