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Insurance Stock Q4 Earnings Due Feb 2: MET, AFL, ALL & LNC
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The fourth-quarter earnings season has been impressive for Insurance industry players so far. Factors like favorable renewals, improved pricing, reinsurance agreements, strong retention and organic business growth are boosting these companies’ results. Some of the Insurance stocks like MetLife, Inc. (MET - Free Report) , Aflac Incorporated (AFL - Free Report) , The Allstate Corporation (ALL - Free Report) and Lincoln National Corporation (LNC - Free Report) are set to reveal quarterly numbers tomorrow.
The Insurance space belongs to the Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), whose overall earnings and revenues are projected to jump 11.9% and 4.2% year over year, per the latest Earnings Preview. The year-over-year improvement, especially for the Insurance industry, is expected to have been buoyed by an increase in earned premiums.
Let’s delve deeper and take a look at the key factors that are likely to have impacted Insurance stocks during the fourth quarter.
Major Influencing Factors
Improved pricing in the fourth quarter is expected to have boosted premium revenues. Frequent occurrences of natural disasters are likely to have accelerated policy renewals and the pricing momentum. Even though insurance companies are likely to have seen major claims resulting from catastrophes, they are expected to have benefited from improved pricing, exposure management and enhanced reinsurance programs. Players in the commercial property and casualty space are expected to witness a composite 5.8% increase in insurance rates, per MarketScout’s latest data.
The life insurance providers are likely to have gained from redesigning of products and services to maintain sales and profitability. Increased awareness following the COVID pandemic continued to support the life insurance business in the quarter. In fact, this major positive factor is expected to continue well beyond the fourth quarter of 2021 to 2022. The life insurance premium is expected to increase 4% in 2022, per Deloitte Insights.
Increased adoption of technology is expected to have boosted insurance providers’ operating efficiency, which might reflect on fourth-quarter results. Increased usage of technologies like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation is likely to have expedited business operations and saved costs. This is likely to have enabled the companies to reduce operating costs and boost the bottom line.
With greater relaxation of COVID-related restrictions and increased travel across the world, auto premiums are likely to have witnessed an increase in the fourth quarter. Also, ramped-up economic activities and a low unemployment rate are expected to have boosted commercial insurance and group insurance businesses in the quarter under review.
A low-interest-rate environment might have affected the insurance companies’ investment income and yield in the fourth quarter. Yet, increased flow of funds in alternative investments like private equity, hedge funds, real estate and many others might have provided a cushion from the low-interest rates.
Insurance Providers Reporting on Feb 2
Given such a backdrop, let us see how the following four companies are placed ahead of their fourth-quarter earnings release tomorrow.
Our proprietary model clearly indicates that a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
MetLife: MetLife’s Latin America business is likely to have benefited from favorable investment and expense margins in the fourth quarter. The positives were partly offset by softer underwriting results. The Zacks Consensus Estimate for the segment’s adjusted earnings is pegged at $17 million, which indicates an improvement of 21.4% from the prior-year quarter.
MetLife’s U.S. business is likely to have been affected by unfavorable underwriting margins in Group Life, partly offset by volume growth. Strong performance of its Retirement and Income Solutions sub-segment is also expected to have somewhat limited the adverse impacts. The Zacks Consensus Estimate for adjusted earnings of this segment is pegged at $525 million, which suggests a decline of 48.6% from the prior-year quarter. (Read more: Will Lower Net Investment Income Hurt MetLife Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.42 per share and $17.2 billion, respectively. This indicates a year-over-year earnings and revenue decline of 30.1% and 16.4%, respectively. As far as earnings surprises are concerned, MetLife beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 43.1%.
Our proven model doesn’t predict an earnings beat for MET this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Aflac Incorporated: Aflac’s Japan segment is expected to have benefited from improved net investment income, lower-than-expected benefit ratios and solid premium persistency rates. The Zacks Consensus Estimate for the unit’s pretax operating earnings stands at $858 million, indicating an increase of 4.5% from the year-ago level. Similarly, the consensus mark for pretax operating earnings from the Aflac U.S. segment is pegged at $280 million, suggesting an improvement of 49.7% from the year-ago quarter. (Read more: Can Aflac Sustain its Surprise Streak in Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.25 per share and $5.2 billion, respectively. This indicates year-over-year earnings growth of 16.8% but a revenue decline of 11.6%. As far as earnings surprises are concerned, Aflac beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 18.3%.
Our proven model predicts an earnings beat for AFL this time around as well. This is because it has an Earnings ESP of +3.34% and a Zacks Rank #3.
The Allstate Corporation: The leading property-casualty insurer’s profits are likely to have been affected by high catastrophe losses and lower profits from the Services business (protection services) line. Net investment income from Property-Liability in the quarter is likely to have declined, resulting in a year-over-year decline in the bottom line. Nevertheless, increased premiums and higher profits from the Allstate Benefits (Allstate Health and Benefits) unit are likely to have boosted Allstate’s fourth-quarter performance and positioned it for an earnings beat. (Read more: Allstate to Post Q4 Earnings Beat on Benefits Profits)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $2.74 per share and $11 billion, respectively. This indicates year-over-year earnings and revenue decline of 53.3% and 3%, respectively. As far as earnings surprises are concerned, Allstate beat the Zacks Consensus Estimate in three of the last four quarters and missed once, delivering an average surprise of 21.1%.
Our proven model predicts an earnings beat for ALL this time around. This is because it has an Earnings ESP of +2.86% and a Zacks Rank #3.
Lincoln National Corporation: Lincoln National’s Annuity business is likely to have witnessed growth in variable annuity sales without guaranteed living benefits. The consensus mark for revenues from Annuities indicates an upside of 9.5% from the year-ago level due to product innovation and growing digital capabilities. The Retirement business is expected to have gained from an improved economy and increased account values. (Read more: What's in Store for Lincoln National's Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.98 per share and $4.7 billion, respectively. This indicates year-over-year earnings and revenue growth of 11.2% and 0.7%, respectively. As far as earnings surprises are concerned, Lincoln National beat the Zacks Consensus Estimate twice in the last four quarters and missed on other two occasions, delivering an average surprise of 2.1%.
Lincoln National Corporation Price and EPS Surprise
Our proven model doesn’t conclusively predict an earnings beat for LNC this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
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Insurance Stock Q4 Earnings Due Feb 2: MET, AFL, ALL & LNC
The fourth-quarter earnings season has been impressive for Insurance industry players so far. Factors like favorable renewals, improved pricing, reinsurance agreements, strong retention and organic business growth are boosting these companies’ results. Some of the Insurance stocks like MetLife, Inc. (MET - Free Report) , Aflac Incorporated (AFL - Free Report) , The Allstate Corporation (ALL - Free Report) and Lincoln National Corporation (LNC - Free Report) are set to reveal quarterly numbers tomorrow.
The Insurance space belongs to the Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), whose overall earnings and revenues are projected to jump 11.9% and 4.2% year over year, per the latest Earnings Preview. The year-over-year improvement, especially for the Insurance industry, is expected to have been buoyed by an increase in earned premiums.
Let’s delve deeper and take a look at the key factors that are likely to have impacted Insurance stocks during the fourth quarter.
Major Influencing Factors
Improved pricing in the fourth quarter is expected to have boosted premium revenues. Frequent occurrences of natural disasters are likely to have accelerated policy renewals and the pricing momentum. Even though insurance companies are likely to have seen major claims resulting from catastrophes, they are expected to have benefited from improved pricing, exposure management and enhanced reinsurance programs. Players in the commercial property and casualty space are expected to witness a composite 5.8% increase in insurance rates, per MarketScout’s latest data.
The life insurance providers are likely to have gained from redesigning of products and services to maintain sales and profitability. Increased awareness following the COVID pandemic continued to support the life insurance business in the quarter. In fact, this major positive factor is expected to continue well beyond the fourth quarter of 2021 to 2022. The life insurance premium is expected to increase 4% in 2022, per Deloitte Insights.
Increased adoption of technology is expected to have boosted insurance providers’ operating efficiency, which might reflect on fourth-quarter results. Increased usage of technologies like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation is likely to have expedited business operations and saved costs. This is likely to have enabled the companies to reduce operating costs and boost the bottom line.
With greater relaxation of COVID-related restrictions and increased travel across the world, auto premiums are likely to have witnessed an increase in the fourth quarter. Also, ramped-up economic activities and a low unemployment rate are expected to have boosted commercial insurance and group insurance businesses in the quarter under review.
A low-interest-rate environment might have affected the insurance companies’ investment income and yield in the fourth quarter. Yet, increased flow of funds in alternative investments like private equity, hedge funds, real estate and many others might have provided a cushion from the low-interest rates.
Insurance Providers Reporting on Feb 2
Given such a backdrop, let us see how the following four companies are placed ahead of their fourth-quarter earnings release tomorrow.
Our proprietary model clearly indicates that a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
MetLife: MetLife’s Latin America business is likely to have benefited from favorable investment and expense margins in the fourth quarter. The positives were partly offset by softer underwriting results. The Zacks Consensus Estimate for the segment’s adjusted earnings is pegged at $17 million, which indicates an improvement of 21.4% from the prior-year quarter.
MetLife’s U.S. business is likely to have been affected by unfavorable underwriting margins in Group Life, partly offset by volume growth. Strong performance of its Retirement and Income Solutions sub-segment is also expected to have somewhat limited the adverse impacts. The Zacks Consensus Estimate for adjusted earnings of this segment is pegged at $525 million, which suggests a decline of 48.6% from the prior-year quarter. (Read more: Will Lower Net Investment Income Hurt MetLife Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.42 per share and $17.2 billion, respectively. This indicates a year-over-year earnings and revenue decline of 30.1% and 16.4%, respectively. As far as earnings surprises are concerned, MetLife beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 43.1%.
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
Our proven model doesn’t predict an earnings beat for MET this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Aflac Incorporated: Aflac’s Japan segment is expected to have benefited from improved net investment income, lower-than-expected benefit ratios and solid premium persistency rates. The Zacks Consensus Estimate for the unit’s pretax operating earnings stands at $858 million, indicating an increase of 4.5% from the year-ago level. Similarly, the consensus mark for pretax operating earnings from the Aflac U.S. segment is pegged at $280 million, suggesting an improvement of 49.7% from the year-ago quarter. (Read more: Can Aflac Sustain its Surprise Streak in Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.25 per share and $5.2 billion, respectively. This indicates year-over-year earnings growth of 16.8% but a revenue decline of 11.6%. As far as earnings surprises are concerned, Aflac beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 18.3%.
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
Our proven model predicts an earnings beat for AFL this time around as well. This is because it has an Earnings ESP of +3.34% and a Zacks Rank #3.
The Allstate Corporation: The leading property-casualty insurer’s profits are likely to have been affected by high catastrophe losses and lower profits from the Services business (protection services) line. Net investment income from Property-Liability in the quarter is likely to have declined, resulting in a year-over-year decline in the bottom line. Nevertheless, increased premiums and higher profits from the Allstate Benefits (Allstate Health and Benefits) unit are likely to have boosted Allstate’s fourth-quarter performance and positioned it for an earnings beat. (Read more: Allstate to Post Q4 Earnings Beat on Benefits Profits)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $2.74 per share and $11 billion, respectively. This indicates year-over-year earnings and revenue decline of 53.3% and 3%, respectively. As far as earnings surprises are concerned, Allstate beat the Zacks Consensus Estimate in three of the last four quarters and missed once, delivering an average surprise of 21.1%.
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Our proven model predicts an earnings beat for ALL this time around. This is because it has an Earnings ESP of +2.86% and a Zacks Rank #3.
Lincoln National Corporation: Lincoln National’s Annuity business is likely to have witnessed growth in variable annuity sales without guaranteed living benefits. The consensus mark for revenues from Annuities indicates an upside of 9.5% from the year-ago level due to product innovation and growing digital capabilities. The Retirement business is expected to have gained from an improved economy and increased account values. (Read more: What's in Store for Lincoln National's Q4 Earnings?)
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top lines is $1.98 per share and $4.7 billion, respectively. This indicates year-over-year earnings and revenue growth of 11.2% and 0.7%, respectively. As far as earnings surprises are concerned, Lincoln National beat the Zacks Consensus Estimate twice in the last four quarters and missed on other two occasions, delivering an average surprise of 2.1%.
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
Our proven model doesn’t conclusively predict an earnings beat for LNC this time around. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
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