Several publicly traded insurance technology companies saw their stocks rise sharply this week as earnings kicked off in earnest for the property and casualty space.

Through the first four trading days of the week, insurance technology (insurtech) companies Hippo Holdings Inc., Lemonade Inc. and Root Inc. saw their stocks rise by at least 14%. Hippo posted the largest increase at 29.1% as of market close July 18, while Lemonade was up 15.6%. Root was higher by 14.2%.

While equities in general can be volatile during earnings season, Insurtech Advisors analyst Kaenan Hertz said the recent surge has more to do with "general investor interest."

"The movement has less to do with the insurance operations and results than it does with market players," Hertz said in an interview. "Also, some analysts are retooling where they think the stock will be, which may or may not be fully based on performance on business performance, but rather on market expectations."

All three companies are set to report their financial results late in the earnings season.

Boost in May for Root

Hertz said, in Root's case, the insurtech's stock benefited greatly from Citizens JMP analyst Matt Carletti, who in early May raised his target price on the stock to $90 from $15. Carletti based the change on Root's "two consecutive quarters of strong results that have quickly taken the investment narrative from one of survival to underwriting profitability."

Root's stock closed at $56.29 on May 3, down 32% from its high for the year, which it hit less than a month earlier. Since May 3, two days after Carletti's note was published, Root has regained its footing and was up nearly 50% through the July 18 close. Hertz said there also was a great deal of options trading, which refers to contracts that give someone the right to buy or sell a financial instrument, such as shares of stocks, at a specific price for a limited time.

"As I looked at Root over the last month or two, the share volume is not huge," Hertz said. "When the share volume isn't huge, then you can start to see appreciation. People are able, or are willing to do something."

Root, Lemonade and Hippo declined to comment.

Previewing earnings season for insurtechs

Insurtechs had a fairly lackluster performance in the second quarter when it came to their stocks. Root and Hippo finished the quarter down 15.5% and 5.9%, respectively, while Lemonade's stock ticked up 0.5%.

Hertz expects "mixed outcomes" from the group when it comes to their earnings, with much focus on catastrophe losses and casualty loss reserves.

Given its first-quarter results, Hertz expects Root "to either be at breakeven or very close." Root's first quarter saw it achieve positive operating income and adjusted EBITDA for the first time, while more than doubling policies in force, gross written premiums and gross earned premiums compared to the first quarter of 2023.

UBS analyst Brian Meredith anticipates Root recording a 115% increase in direct written premiums and a 221% rise in net premiums written. Meredith also expects to see growth in new business and continued reduction of its ceded premiums.

High on the list of discussion topics for Hippo, according to Hertz, will be the effect of Hurricane Beryl on its bottom line. Hertz also expects some talk concerning Hippo's partnership with homebuilder Lennar Corp., which in June announced that it reduced its forecast for home deliveries in the third quarter.

Hertz said the good news is that continued improvement in Spinnaker Insurance Co., Hippo's property and casualty subsidiary, "should offset any negative effects."

Lemonade's expanding product lines and its expanded footprint in the market should spur growth, Hertz said. "However, I anticipate the least improvement in their bottom line among the three, given their past performance."