Berkshire Hathaway (BRK.B), Old Republic International (ORI), and Lemonade (LMND) -- Buy, Hold or Sell?

NYSE: BRK.B | Berkshire Hathaway Inc. New  News, Ratings, and Charts

BRK.B – The insurance sector illustrates significant potential, particularly within the property and casualty segment. Given this backdrop, let us ascertain which insurance stocks among Lemonade (LMND), Berkshire Hathaway (BRK.B), and Old Republic International (ORI) are worth buying, selling, or holding. Read on….

Insurance companies typically thrive in a high-interest-rate environment. The Federal Reserve has recently affirmed its determination to control inflation, intensifying the probability of further boosts in interest rates.

I believe Old Republic International Corporation (ORI) is a strong candidate to invest in, given its robust growth and solid momentum. Conversely, waiting for a better entry point in Berkshire Hathaway Inc. (BRK.B) might be prudent, while insurance stock Lemonade, Inc. (LMND) could be best avoided now.

The insurance industry plays a vital role in economies worldwide, providing essential risk management solutions to mitigate potential losses, thereby protecting businesses, institutions, and individuals. It also aids policyholders financially in moments of disaster, injury, or loss.

As per Swiss Re, the insurance industry’s strength is predicted to display resilience over the next few years, with global insurance premiums expected to rise by 1.1% in 2023 and 1.7% in 2024.

According to a report by Allianz Trade, last year, the Property & Casualty (P&C) segment grew impressively by 8.7%, and more than half, or a staggering €77.5 billion ($82.81 billion) of 2022’s global uptick stemmed from North America alone. The U.S. P&C insurance market is anticipated to grow at a CAGR of 6% between 2023 and 2028, while the global P&C insurance market is expected to reach $2.47 trillion in 2027, growing at a CAGR of 7.6%.

Further propelling the industry’s development is consumers’ increasing preference for digital channels when purchasing and managing insurance. Consequently, P&C insurers have heavily invested in enhancing their digital infrastructure, automation, AI, and advanced analytics capabilities. McKinsey anticipated that by 2030, about 50% of all routine claims will be digitally processed.

The financial environment has grown hospitable for insurers. The Fed held interest rates steady at a 22-year high and left room for potential interest rate hikes later in the year to bring inflation to its 2% target. High-interest rates bode well for insurers as they will likely see an improvement in their businesses through recovery in the personal auto business, stability in commercial lines underwriting, and growth in investment income.

The ability of insurance companies to earn revenue by levying premiums and investing these earnings in interest-generating assets implies that heightened interest rates could potentially boost their financial performance.

Nevertheless, ratings agency Fitch warns that U.S. P&C insurers could face formidable challenges. The looming uncertainty over future catastrophe losses, inflation-induced higher claim costs, dwindling demand and loss reserve experience could pose difficulties for the industry.

In light of these trends, let’s look at the fundamentals of the three Insurance – Property & Casualty stocks, beginning with number 3.

Stock #3: Lemonade, Inc. (LMND)

LMND provides various insurance products in the United States and Europe. Its insurance products include stolen or damaged property and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property.

Its trailing-12-month EBIT and net income margins are negative at 77.39% and 79.54% compared to the industry averages of 19.81% and 25.78%, respectively. Its trailing-12-month gross profit margin of 29.79% is 50% lower than the 59.55% industry average.

For the fiscal second quarter that ended June 30, 2023, LMND’s total revenue stood at $104.60 million. Its total expense increased 48.3% year-over-year to $170.5 million. The company’s adjusted EBITDA decreased 4.8% year-over-year to negative $52.70 million.

Its net loss came in at $67.20 million, while the net loss per share attributable to common stockholders came in at $0.97. The gross loss ratio for the quarter stood at 94%, compared to 86% in the year-ago quarter.

Analysts expect LMND’s EPS to be negative $0.97 for the fiscal third quarter ending September 2023, while its revenue is expected to be $104.08 million for the same quarter.

The stock has declined 43.7% over the past year to close its last trading session at $12.20. Over the past three months, it lost 29.3%. The stock is trading lower than the 50-day and 200-day moving averages of $16.35 and $15.79, respectively, indicating a downtrend. Moreover, it has a 60-month beta of 1.56.

LMND’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

LMND is rated a D in Value, Stability, and Sentiment. It is ranked #55 among 56 stocks in the Insurance – Property & Casualty industry.

In addition to the POWR Ratings highlighted above, LMND’s rating for Growth, Momentum, and Quality can be seen here.

Stock #2: Berkshire Hathaway Inc. (BRK.B)

BRK.B engages in insurance, freight rail transportation, and utility businesses worldwide. It provides property, casualty, life, accident, health insurance, and reinsurance; and operates railroad systems in North America.

Over the past three years, BRK.B’s revenue and total assets have grown at 10.3% and 9.7% CAGRs. The company’s tangible book value has increased at CAGRs of 12.6% and 11.3% over the past three and five years, respectively.

BRK.B’s trailing-12-month asset turnover of 0.34x is 62.6% higher than the industry average of 0.21x. Its trailing-12-month cash from operations of $42.99 billion is significantly higher than the industry average of $137.73 million.

For the fiscal second quarter that ended June 30, 2023, BRK.B’s total revenues increased 21.4% year-over-year to $92.50 billion, with Insurance and Other segment revenues rising 4.1% from the year-ago value to $65.61 billion.

Its net earnings attributable to BRK.B shareholders stood at $35.91 billion, compared to a net loss of $43.62 billion in the year-ago quarter.  Its net cash flows from operating activities for the six months that ended June 30, 2023, was $21.13 billion, up 37.6% year-over-year. Moreover, cash and cash equivalents and restricted cash at the end of the second quarter stood at $50.65 billion, up 62.2% year-over-year.

Analysts expect BRK.B’s revenue and EPS for the fiscal third quarter ending September 2023 to increase 5.7% and 37.6% year-over-year to $81.28 billion and $4.85, respectively. Moreover, it surpassed the consensus EPS estimates in three of the trailing four quarters, which is promising.

The stock has gained 34.2% over the past year to close the last trading session at $363.28. However, over the past five days, it lost 1.2%. The stock is trading above its 50-day and 200-day moving averages of $356.16 and $326.82, respectively, indicating an uptrend. Moreover, it has a 60-month beta of 0.87.

BRK.B’s POWR Ratings reflect its uncertain outlook. The stock has an overall rating of C, translating to Neutral in our proprietary rating system.

BRK.B has a B grade for Momentum, Sentiment, and Stability. It is ranked #28 within the same industry.

For additional BRK.B ratings for Growth, Value, and Quality, click here.

Stock #1: Old Republic International Corporation (ORI)

ORI engages in the insurance underwriting and related services business, primarily in the United States and Canada. It operates through three segments: General Insurance, Title Insurance, and the Republic Financial Indemnity Group Run-off Business.

On September 18, ORI announced the formation of a new underwriting subsidiary, Old Republic Accident & Health, Inc., to provide Accident & Health insurance products. The new company will be the sixth new company that ORI has launched in the last eight years, adding to the depth and talent of the Old Republic General Insurance Group.

Last month, ORI’s board of directors declared a regular quarterly dividend of $0.245 per common share, payable to the shareholders on September 15, 2023. The company pays a $0.98 per share dividend annually, translating to a 3.56% yield on the current share price. Its four-year average dividend yield is 9.70%.

The company’s dividend payouts have grown at a CAGR of 5.2% over the past three years and 4.5% over the past five years. The current annualized rate marks the 42nd consecutive year that the company has increased this rate, and 2023 becomes the 82nd year of uninterrupted regular dividend payments.

ORI’s revenue grew at CAGRs of 4.2% and 4% over the past three and five years, respectively. In addition, its total assets grew at 6.1% and 5.9% CAGRs over the past three and five years, respectively.

ORI’s trailing-12-month asset turnover of 0.30x is 42% higher than the industry average of 0.21x. Its trailing-12-month cash from operations of $1.01 billion is 636.7% higher than the industry average of $137.73 million.

For the fiscal second quarter that ended June 30, 2023, ORI’s total operating revenues stood at $1.83 billion, whereas its total revenues came at $1.80 billion. The company’s net income stood at $155.50 million, compared to a net loss of $40.10 million in the prior year quarter. Its net income per share came in at 0.62.

Also, its net premiums and fees earned and underwriting and related services income for the quarter stood at $1.65 billion and $108.60 million, respectively.

For the fiscal year ending December 2023, Street expects ORI’s revenue and EPS to come at $7.46 billion and $2.53, respectively. Moreover, it surpassed the consensus EPS estimates in all the trailing four quarters.

The stock has gained 26.8% over the past year to close the last trading session at $27.34. Over the past three months, the stock gained 11.1%. The stock is trading above its 50-day and 100-day moving averages of $27.19 and $26.12, respectively. Moreover, it has a 60-month beta of 0.84.

ORI’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

It has a B grade for Growth and Momentum. It is ranked #6 within the A-rated Insurance – Property & Casualty industry.

Click here to see the other ratings of ORI for Value, Stability, Sentiment, and Quality.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >


BRK.B shares rose $1.36 (+0.37%) in premarket trading Friday. Year-to-date, BRK.B has gained 18.16%, versus a 14.48% rise in the benchmark S&P 500 index during the same period.


About the Author: Sristi Suman Jayaswal


The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors. More...


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