Should you explore these US financial stocks in 2023?

By - Raza Naqvi


  • In Q4’22, net investment income for RenaissanceRe grew to US$ 211.2 million, up 162.5 per cent from Q4’21.
  • While Cincinnati Financial generated a net income of US$ 2.946 billion in Q4’22, the net loss was US$ 486 million.
  • Triumph Financial’s network payment volume increased from US$ 288 million to US$ 301 million quarter-over-quarter in Q4’22.

Banks are commonly seen as the face of the financial sector. However, the financial sector comprises more than just banks; it includes insurance firms, fintech startups, financial services providers, mortgage REITs, and others.

Financial stocks can often be cyclical. When the economy struggles and unemployment rises, they may lose value. At the same time, companies in the financial sector have higher possibilities of increasing their profits if interest rates rise.

However, it is important to note that the stock market is unpredictable, and nothing here is guaranteed.

In light of this, let’s find out how these three US financial businesses have been faring lately:

RenaissanceRe Holdings Ltd. (NYSE: RNR)

Operating as a reinsurance and insurance solutions provider, Renaissance Holding Ltd. generates most of its revenue from its investment of capital funds and cash, joint ventures, and premiums from its insurance activities.

The company has paid its shareholders a quarterly cash dividend of US$ 0.38 per share.

In the fourth quarter of 2022, RenaissanceRe had net income and operating income available to its common shareholders of US$ 448.1 and US$ 315.6 million, respectively. Besides, the company delivered a 41.2 per cent annualized return and 29.6 per cent annualized operating return on average common equity in Q4’22.

Moreover, RenaissanceRe grew its net investment income by 162.5 per cent to US$ 211.2 million in the fourth quarter of 2022 compared to Q4’21.

Cincinnati Financial Corporation (NASDAQ: CINF)

Cincinnati Financial Corporation provides consumers with business, home, and auto insurance via its Cincinnati Insurance Company and two other property-casualty companies. In addition to this, the company also offers fixed annuities, life insurance, and surplus lines insurance.

In the fourth quarter of 2022, the company generated a net income of US$ 1.013 billion and a non-GAAP operating income of US$ 202 million.

The life insurance subsidiary of Cincinnati Financial grew its net income in Q4’22 by US$ 5 million from the prior comparable period and pre-tax investment income by US$ 22 million.

The company’s financial highlights are shown below:

© 2023 Krish Capital Pty. Ltd.

Triumph Financial, Inc. (NASDAQ: TFIN)

Headquartered in Dallas, Texas, Triumph Financial, Inc. poses itself as a financial holding company that engages in payments, banking, and factoring activities. The company houses brands like TBK Bank, TriumphPay, and Triumph.

According to the company’s fourth-quarter results, Triumph generated a net income of US$ 16.8 million for its common shareholders.

The company’s banking segment improved its loan yield to 74 bps in Q4’22, increasing the consolidated cost of deposits to 28 bps. The factoring segment, on the other hand, made 20 per cent higher pre-tax contributions compared to 2021.

Meanwhile, during the fourth quarter of 2022, Triumph’s total network payment volume grew from US$ 288 million to US$ 301 million quarter-over-quarter and network transaction volume witnessed an 8.8 per cent increase.

Bottom Line

Financial stocks have historically performed well; however, the market is still recovering from inflationary pressures, and equity market volatility is still a major factor. Therefore, investors are advised to conduct extensive market research before investing.