We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Insurance Stocks' Q3 Earnings on Oct 27: AJG, HIG & More
Read MoreHide Full Article
Improved pricing, strong retention, new business, favorable renewals, reinsurance agreements, compelling products and service portfolios, interest rate hikes and accelerated digitalization are expected to boost insurance stocks’ third-quarter results. However, frequent occurrences of natural disasters are likely to have weighed on the upside. Some of the insurers like Arthur J. Gallagher & Co. (AJG - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) , First American Financial Corporation (FAF - Free Report) and Willis Towers Watson plc (WTW - Free Report) are set to announce quarterly results on Oct 27.
Price hikes, operational strength, higher retention, strong renewal, the appointment of retail agents and higher new business premiums are likely to have boosted the premium growth of the insurers in the third quarter. An active catastrophe environment is expected to have accelerated the policy renewal rate and provided an impetus to the pricing environment in the third quarter.
Improved reinsurance programs, favorable reserve development, better pricing and solid capital level are likely to have improved underwriting profitability and combined ratio.
Swiss Re estimates claims stemming from Hurricane Ian in the range of $50 billion to $65 billion. Risk Management Solutions (RMS) projects total private market insured losses from Hurricane Ian in the range of $53 billion to $74 billion. Per Verisk, insured losses for Hurricane Ian are projected in the range of $42 billion to $57 billion.
The interest rate environment has started to improve. Insurers, being direct beneficiaries of an improving rate environment, are poised to gain. The third quarter itself saw two rate hikes. Higher reported net asset values, higher income from other alternative investments, growth in equity portfolio dividends, higher income received from private equity partnerships and hedge funds are expected to have benefited net investment income.
Courtesy of its solid capital position, the insurers pursued strategic mergers and acquisitions, which are likely to have diversified their portfolios, sharpened their competitive edge, expanded their geographic footprint and enabled capital deployment in the third quarter.
The increased adoption of technologies is expected to have improved operational efficiency and limited costs, thus aiding margins in the third quarter. This, in turn, is likely to have driven the profit levels of the insurance players.
Let’s take a look at five insurance players scheduled to announce third-quarter results on Oct 27.
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.
Arthur J. Gallagher’s organic commission, fee, supplemental revenues, contingent revenues as well as strategic mergers and acquisitions are likely to have driven the top line in the to-be-reported quarter. Improved interest rates and increases in income from partially-owned entities accounted for using the equity method are likely to have benefited net investment income. New business, strong retention and renewal premium increases across its business lines are likely to aid third-quarter results. (Read more: Arthur J. Gallagher to Post Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Arthur J. Gallagher’s third-quarter earnings per share stands at $1.67, indicating an increase of 25.6% from the year-ago quarter reported figure. Arthur J. Gallagher has an Earnings ESP of -0.19% and a Zacks Rank 3. The insurer delivered an earnings surprise in each of the last four quarters, the average being 4.48%. This is depicted in the chart below:
Hartford Financial’s third-quarter revenues of Hartford Financial are expected to have gained on higher earned premiums from its Commercial Lines. The Commercial Lines is likely to have benefited from rate increases, wider exposure, new business generation and solid retention rates. Improved fully-insured ongoing premiums, robust sales driven by the acquisition of new cases and solid enrolment might contribute to the strong quarterly results of the Group Benefits business in the third quarter. (Read more: Hartford Financial to Post Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Hartford Financial’s third-quarter earnings of $1.29 per share implies a 2.4% increase from the prior-year quarter’s reported number. Hartford Financial has an Earnings ESP of -6.46% and carries a Zacks Rank #3. The bottom line beat estimates in each of the last four quarters, the average surprise being 34.08%. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
Kinsale Capital Group continues to benefit from dislocation within the broader property and casualty insurance industry, rate increases and premium growth. It expects to maintain profitability and growth with its strategy of prudent underwriting, combined with technology-driven low costs and a focus on the E&S market in the long term.
The Zacks Consensus Estimate for Kinsale Capital's third-quarter earnings per share is pegged at $1.42, indicating a decrease of 10.7% from the prior-year quarter. Kinsale Capital has an Earnings ESP of -22.72% and carries a Zacks Rank #4 (Sell). The insurer delivered an earnings surprise in each of the last four quarters, the average being 25.65%. This is depicted in the chart below:
Kinsale Capital Group, Inc. Price and EPS Surprise
First American Financial’s Title Insurance and Services segment is expected to have benefited from higher direct premiums and escrow fees, higher average deal size in commercial business and the impact of strong home price appreciation on residential purchase transactions as well as the acquisition of ServiceMac. Higher operating revenues in the home warranty business are expected to have driven the Specialty Insurance business.
The Zacks Consensus Estimate for First American Financial’s third-quarter earnings of $1.50 per share implies a decline of 30.2% from the prior-year quarter’s reported number. First American Financial has an Earnings ESP of 0.00% and carries a Zacks Rank #3. The insurer delivered an earnings surprise in three of the last four quarters and missed in the other quarter, the average being 19.53%. This is depicted in the chart below:
First American Financial Corporation Price and EPS Surprise
Willis Towers’ third-quarter revenues are likely to have witnessed the impact of increased advisory work, new software sales, growth in Medicare Advantage revenues, expansion of local portfolios and lower expenses. In the third quarter, the wealth businesses are likely to have gained from new client acquisition and strong market demand for specialist work in response to market volatility and legislative change. Career businesses, comprising Work & Rewards and Employee Experience businesses, are likely to have improved, given the strong client demand for advisory work, data products and software licenses. (Read more: Willis Towers to Report Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Willis Towers’ earnings per share is pegged at $2.14, suggesting an increase of 23.7% from the year-ago reported figure. Willis Towers has an Earnings ESP of -0.58% and carries a Zacks Rank of 3. The insurer delivered an earnings surprise in each of the last four quarters, the average being 5.82%. This is depicted in the chart below:
Willis Towers Watson Public Limited Company Price and EPS Surprise
Image: Bigstock
Insurance Stocks' Q3 Earnings on Oct 27: AJG, HIG & More
Improved pricing, strong retention, new business, favorable renewals, reinsurance agreements, compelling products and service portfolios, interest rate hikes and accelerated digitalization are expected to boost insurance stocks’ third-quarter results. However, frequent occurrences of natural disasters are likely to have weighed on the upside. Some of the insurers like Arthur J. Gallagher & Co. (AJG - Free Report) , The Hartford Financial Services Group, Inc. (HIG - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) , First American Financial Corporation (FAF - Free Report) and Willis Towers Watson plc (WTW - Free Report) are set to announce quarterly results on Oct 27.
Price hikes, operational strength, higher retention, strong renewal, the appointment of retail agents and higher new business premiums are likely to have boosted the premium growth of the insurers in the third quarter. An active catastrophe environment is expected to have accelerated the policy renewal rate and provided an impetus to the pricing environment in the third quarter.
Improved reinsurance programs, favorable reserve development, better pricing and solid capital level are likely to have improved underwriting profitability and combined ratio.
Swiss Re estimates claims stemming from Hurricane Ian in the range of $50 billion to $65 billion. Risk Management Solutions (RMS) projects total private market insured losses from Hurricane Ian in the range of $53 billion to $74 billion. Per Verisk, insured losses for Hurricane Ian are projected in the range of $42 billion to $57 billion.
The interest rate environment has started to improve. Insurers, being direct beneficiaries of an improving rate environment, are poised to gain. The third quarter itself saw two rate hikes. Higher reported net asset values, higher income from other alternative investments, growth in equity portfolio dividends, higher income received from private equity partnerships and hedge funds are expected to have benefited net investment income.
Courtesy of its solid capital position, the insurers pursued strategic mergers and acquisitions, which are likely to have diversified their portfolios, sharpened their competitive edge, expanded their geographic footprint and enabled capital deployment in the third quarter.
The increased adoption of technologies is expected to have improved operational efficiency and limited costs, thus aiding margins in the third quarter. This, in turn, is likely to have driven the profit levels of the insurance players.
Let’s take a look at five insurance players scheduled to announce third-quarter results on Oct 27.
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.
Arthur J. Gallagher’s organic commission, fee, supplemental revenues, contingent revenues as well as strategic mergers and acquisitions are likely to have driven the top line in the to-be-reported quarter. Improved interest rates and increases in income from partially-owned entities accounted for using the equity method are likely to have benefited net investment income. New business, strong retention and renewal premium increases across its business lines are likely to aid third-quarter results. (Read more: Arthur J. Gallagher to Post Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Arthur J. Gallagher’s third-quarter earnings per share stands at $1.67, indicating an increase of 25.6% from the year-ago quarter reported figure. Arthur J. Gallagher has an Earnings ESP of -0.19% and a Zacks Rank 3. The insurer delivered an earnings surprise in each of the last four quarters, the average being 4.48%. This is depicted in the chart below:
Arthur J. Gallagher & Co. Price and EPS Surprise
Arthur J. Gallagher & Co. price-eps-surprise | Arthur J. Gallagher & Co. Quote
Hartford Financial’s third-quarter revenues of Hartford Financial are expected to have gained on higher earned premiums from its Commercial Lines. The Commercial Lines is likely to have benefited from rate increases, wider exposure, new business generation and solid retention rates. Improved fully-insured ongoing premiums, robust sales driven by the acquisition of new cases and solid enrolment might contribute to the strong quarterly results of the Group Benefits business in the third quarter. (Read more: Hartford Financial to Post Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Hartford Financial’s third-quarter earnings of $1.29 per share implies a 2.4% increase from the prior-year quarter’s reported number. Hartford Financial has an Earnings ESP of -6.46% and carries a Zacks Rank #3. The bottom line beat estimates in each of the last four quarters, the average surprise being 34.08%. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote
Kinsale Capital Group continues to benefit from dislocation within the broader property and casualty insurance industry, rate increases and premium growth. It expects to maintain profitability and growth with its strategy of prudent underwriting, combined with technology-driven low costs and a focus on the E&S market in the long term.
The Zacks Consensus Estimate for Kinsale Capital's third-quarter earnings per share is pegged at $1.42, indicating a decrease of 10.7% from the prior-year quarter. Kinsale Capital has an Earnings ESP of -22.72% and carries a Zacks Rank #4 (Sell). The insurer delivered an earnings surprise in each of the last four quarters, the average being 25.65%. This is depicted in the chart below:
Kinsale Capital Group, Inc. Price and EPS Surprise
Kinsale Capital Group, Inc. price-eps-surprise | Kinsale Capital Group, Inc. Quote
First American Financial’s Title Insurance and Services segment is expected to have benefited from higher direct premiums and escrow fees, higher average deal size in commercial business and the impact of strong home price appreciation on residential purchase transactions as well as the acquisition of ServiceMac. Higher operating revenues in the home warranty business are expected to have driven the Specialty Insurance business.
The Zacks Consensus Estimate for First American Financial’s third-quarter earnings of $1.50 per share implies a decline of 30.2% from the prior-year quarter’s reported number. First American Financial has an Earnings ESP of 0.00% and carries a Zacks Rank #3. The insurer delivered an earnings surprise in three of the last four quarters and missed in the other quarter, the average being 19.53%. This is depicted in the chart below:
First American Financial Corporation Price and EPS Surprise
First American Financial Corporation price-eps-surprise | First American Financial Corporation Quote
Willis Towers’ third-quarter revenues are likely to have witnessed the impact of increased advisory work, new software sales, growth in Medicare Advantage revenues, expansion of local portfolios and lower expenses. In the third quarter, the wealth businesses are likely to have gained from new client acquisition and strong market demand for specialist work in response to market volatility and legislative change. Career businesses, comprising Work & Rewards and Employee Experience businesses, are likely to have improved, given the strong client demand for advisory work, data products and software licenses. (Read more: Willis Towers to Report Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for Willis Towers’ earnings per share is pegged at $2.14, suggesting an increase of 23.7% from the year-ago reported figure. Willis Towers has an Earnings ESP of -0.58% and carries a Zacks Rank of 3. The insurer delivered an earnings surprise in each of the last four quarters, the average being 5.82%. This is depicted in the chart below:
Willis Towers Watson Public Limited Company Price and EPS Surprise
Willis Towers Watson Public Limited Company price-eps-surprise | Willis Towers Watson Public Limited Company Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.