Insurance Costs Hammer C.H. Robinson and Landstar Shares Despite Strong Q3

C.H. Robinson lost 11.14% of its market value in a single session — $15.99 a share, closing at $127.60 — after insurance costs turned an otherwise solid third-quarter report into a selloff. Landstar fared worse: down 17.76%, or $29.98, to $138.80, a steep slide from its 52-week high of $228.46 set on June 8.

Both companies posted strong financial numbers between Tuesday and Wednesday. Investors looked past them. The issue that dominated analyst calls at both carriers was claims expense, arriving in a six-month window in which broker liability exposure expanded through the Supreme Court's ruling in Montgomery vs. Caribe Transport II, and C.H. Robinson absorbed a nuclear verdict in Lipe vs. Lupus Superior that a Dallas County judge subsequently upheld.

What spooked the market?

C.H. Robinson's disclosure that Selling, General & Administrative expenses rose 29.7% year over year — "primarily due to higher claims expenses" — sat at the center of the selloff. Insurance costs sit inside SG&A at the broker.

CFO Damon Lee guided full-year SG&A to $585–590 million, up from a prior estimate of $540–580 million. Lee noted depreciation and amortization contributed too, but the revision appeared to catch analysts off guard relative to their own insurance models.

Operating cash flow added pressure: it fell to $124.1 million from $275.4 million a year earlier, though that was an improvement on the second quarter's $35.9 million. The company attributed the decline to "unfavorable changes in working capital driven by higher transportation rates." Deutsche Bank's transportation research team also flagged the company's North American Surface Transportation gross margin relative to truckload carrier peers.

The $30 million comparison that needed clarifying

CEO Dave Bozeman said the company is "progressing nicely" through the 2027 insurance renewal process and believes it "will result in insurance inflation that is reasonable and manageable." He then offered a comparison that analysts read as a signal: "As a reference, we've been absorbing approximately $30 million of annual wage inflation, and we've still delivered double-digit earnings growth in 2024 through 2026."

UBS analyst Tom Wadewitz pressed for clarity: was Bozeman implying the insurance increase would be below that $30 million? Lee said the figure was "provided as an example of magnitude, just so you guys can get your head around the headwinds that we absorb every day and never talk about." He added: "We're built to offset headwinds, we're built to absorb inflation and still deliver demonstrable results."

Lee repeated the reassurance elsewhere. C.H. Robinson benchmarks total insurance and claims expense at roughly 50 basis points of gross revenue, and year to date it sits below that level despite an elevated third quarter. Claims expenses, he told FreightWaves, are "de minimis" as a share of revenue, and "periodically, some quarters are higher than others, as demonstrated in Q3."

Bozeman said the renewal process finishes by end of December, with an update on 2027 insurance costs likely in mid-to-late December — "when we get finality on what the insurance policy will look like" — and ideally before the next earnings call. "We feel like the outcome will be close to industry leading, if not industry leading," he said, adding that most legal cases are "either dismissed or settled for amounts below our deductible." That promise, notably, arrives before any final renewal numbers exist.

What changed at Landstar?

CFO Jim Todd said claim cost severity "has been going up at a decent clip" after years in which reserves seemed sufficient. Incurred-but-not-reported reserves rose 27% in gross dollars between Q4 2022 and Q4 2025 — on a declining truck count. Two second-quarter claims landed in federal jurisdictions where FAAAA protection for brokers had been eliminated by the Montgomery decision. Todd declined to project forward estimates, calling it "a highly complex environment to estimate insurance and claim reserves," and said Landstar will stop disclosing the claim-reserve percentage of BCO revenue.

On the RXO acquisition, the first call since the deal was announced produced few questions, though Bozeman repeated that "RXO's legal docket is a neutral factor when compared to our own docket," with its own contingent auto liability insurance tower.

Whether the mid-December renewal disclosure confirms or punctures management's "manageable inflation" framing will set the next leg for both stocks.