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Q2 Beat or Miss: What's Ahead for These 5 Insurance Stocks?
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The second-quarter earnings season for Insurance companies is likely to be characterized by strong underwriting fundamentals, accelerated digitalization, strong retention, rate hikes and reinsurance agreements. The high interest rate environment, investment gains,favorable renewals and organic business growth in commercial space are expected to have boosted the performance of the industry players during this period.
The Insurance space belongs to the Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), overall earnings of which are projected to increase 14.7% from the year-ago quarter’s reported figure. Revenues are expected to inch up 7.2%, as indicated by our latest Earnings Preview.
Leading insurance companies like MetLife, Inc. (MET - Free Report) , Aflac Incorporated (AFL - Free Report) , American International Group, Inc. (AIG - Free Report) , The Allstate Corporation (ALL - Free Report) and Everest Group, Ltd. (EG - Free Report) are scheduled to release their results on Jul 31, 2024. Before checking the key projections for these stocks, let's take a look at the general factors that are likely to shape the companies’ upcoming results.
Influences on Q2 Insurance Stock Results
The insurers are expected to have continued with their robust underwriting practices in the second quarter, leading to improved profitability. Effective risk assessment and pricing strategies are likely to have offset challenges posed by natural disasters. A higher frequency of small to mid-sized severe convective storm events is expected to have been countered with growing insurance coverage.
Analysts expect U.S. economic growth to have picked up in the second quarter, resulting in a better business environment for the insurance companies. The considerable slowdown in inflation, growth in inventories and a comparatively resilient labor market are likely to have supported economic expansion, resulting in insurance business growth in commercial space. Continuous growth in global travel is expected to have driven higher auto insurance premiums.
The tamed inflation is likely to have provided some relief to growth in the prices of materials in property damage and healthcare, leading to reduced claim costs growth, which gave an impetus to profit margins. Also, the high interest rate environment is likely to have benefited insurers' portfolios, enhancing their financial positions.
Insurance companies are expected to have benefited from improved operating efficiency in the second quarter, driven by accelerated digitalization and the rise of insurtech. The adoption of cutting-edge technologies, including artificial intelligence, blockchain, advanced analytics, cloud computing, telematics and robotic process automation, has streamlined operations and reduced costs. These advancements are likely to have bolstered the margins of insurance companies during the quarter.
Insurance Stocks Reporting on Jul 31
Against the backdrop discussed above, let’s find out how the following five companies are placed ahead of their second-quarter earnings release tomorrow.
Our proprietary model clearly indicates that a company needs to have the right combination of two key elements — 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 uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
MetLife: The Zacks Consensus Estimate for net investment income is pegged at $5.1 billion for the quarter under review, suggesting a 1.5% year-over-year increase. The Zacks Consensus Estimate for Group Benefits business' adjusted earnings is $413.9 million, indicating 11.3% growth from the prior-year quarter’s reported number. However, the RIS segment's performance is likely to have been impacted by a decline in recurring interest margins and less favorable underwriting margins.
The Zacks Consensus Estimate for the second-quarter earnings and top line stands at $2.13 per share and $18.2 billion, respectively, indicating an earnings increase of 9.8% but a revenue decline of 2.4% from the corresponding year-ago quarter’s actuals. As far as earnings surprises are concerned, MetLife’s earnings beat the Zacks Consensus Estimate once in the last four quarters, met on one occasion and missed others, the average surprise being 0.7%. (Read more: Can MetLife Tackle Lower Premiums in Q2 Earnings?)
Our proven model doesn’t conclusively predict an earnings beat for MetLife this time around. This is because the stock has an Earnings ESP of -0.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aflac: The Zacks Consensus Estimate for Aflac’s net earned premiums indicates a 6.3% year-over-year decline. The consensus mark for adjusted revenues in the Aflac Japan segment signals a 10.1% fall from the year-ago level. However, the consensus estimate for the adjusted expense ratio in Aflac U.S. indicates a 51 bps improvement year over year, aiding the bottom line.
The Zacks Consensus Estimate for the second-quarter earnings and top line stands at $1.59 per share and $4.4 billion, respectively, indicating an earnings growth of 0.6% and a revenue decrease of 15.4% from the corresponding year-ago quarter’s actuals. Aflac’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed once, the average surprise being 7.3%.
Our proven model doesn’t conclusively predict an earnings beat for Aflac this time around as the stock has an Earnings ESP of +0.54% but a Zacks Rank #4 (Sell).
AIG: The Zacks Consensus Estimate for General Insurance’s adjusted pre-tax income for the second quarter indicates a year-over-year decrease of 4.7%, affecting AIG’s second-quarter earnings. The consensus mark for total premiums indicates a 35.9% decrease from the year-ago period. However, growth in overall Life and Retirement business’ profit levels will likely partially offset the negatives.
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom line is pegged at $1.39 per share, indicating a decline of 20.6% year over year. The consensus mark for the top line is pegged at $12.2 billion, signaling a 6.9% decline from a year ago. As far as earnings surprises are concerned, AIG’s bottom line beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 9.2%.
American International Group, Inc. Price and EPS Surprise
The Allstate Corporation: This leading property-casualty insurer’s second-quarter revenues are expected to have been supported by premium growth. The consensus mark for net premiums earned from Property-Liability and Protection Services segments suggests year-over-year increases of 11.4% and 10.6%, respectively. Rate increases and strong policy retention rates are likely to aid its results. However, Allstate’s second-quarter earnings may have taken a small hit from a decreased adjusted net income in the Health and Benefits business.
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top line is pegged at 33 cents per share and $15.6 billion, respectively, indicating an earnings improvement of 107.5% and a revenue increase of 10.1% from the corresponding year-ago quarter’s readings. ALL’s bottom line beat the Zacks Consensus Estimate in three of the last four quarters, missing the mark once, the average surprise being 41.9%.
Our proven model predicts a likely earnings beat for Allstate this time around. This is because the stock has an Earnings ESP of +36.50% and a Zacks Rank #3.
Everest Group: The Zacks Consensus Estimate for net premiums earned for the second quarter indicates a year-over-year increase of 20.1%. Also, the consensus mark for net investment income implies more than 27% growth from the year-ago period. However, the consensus estimate for the combined ratio indicates a 122 bps increase from the year-ago level, partially offsetting the profit growth levels.
The Zacks Consensus Estimate for the second-quarter 2024 earnings and revenues stands at $16.97 per share and $4.4 billion, respectively, indicating an earnings increase of 11.6% and revenue growth of 20.3% from the respective year-earlier quarter’s readings. As far as earnings surprises are concerned, EG’s bottom line beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 37.5%.
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Q2 Beat or Miss: What's Ahead for These 5 Insurance Stocks?
The second-quarter earnings season for Insurance companies is likely to be characterized by strong underwriting fundamentals, accelerated digitalization, strong retention, rate hikes and reinsurance agreements. The high interest rate environment, investment gains,favorable renewals and organic business growth in commercial space are expected to have boosted the performance of the industry players during this period.
The Insurance space belongs to the Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), overall earnings of which are projected to increase 14.7% from the year-ago quarter’s reported figure. Revenues are expected to inch up 7.2%, as indicated by our latest Earnings Preview.
Leading insurance companies like MetLife, Inc. (MET - Free Report) , Aflac Incorporated (AFL - Free Report) , American International Group, Inc. (AIG - Free Report) , The Allstate Corporation (ALL - Free Report) and Everest Group, Ltd. (EG - Free Report) are scheduled to release their results on Jul 31, 2024. Before checking the key projections for these stocks, let's take a look at the general factors that are likely to shape the companies’ upcoming results.
Influences on Q2 Insurance Stock Results
The insurers are expected to have continued with their robust underwriting practices in the second quarter, leading to improved profitability. Effective risk assessment and pricing strategies are likely to have offset challenges posed by natural disasters. A higher frequency of small to mid-sized severe convective storm events is expected to have been countered with growing insurance coverage.
Analysts expect U.S. economic growth to have picked up in the second quarter, resulting in a better business environment for the insurance companies. The considerable slowdown in inflation, growth in inventories and a comparatively resilient labor market are likely to have supported economic expansion, resulting in insurance business growth in commercial space. Continuous growth in global travel is expected to have driven higher auto insurance premiums.
The tamed inflation is likely to have provided some relief to growth in the prices of materials in property damage and healthcare, leading to reduced claim costs growth, which gave an impetus to profit margins. Also, the high interest rate environment is likely to have benefited insurers' portfolios, enhancing their financial positions.
Insurance companies are expected to have benefited from improved operating efficiency in the second quarter, driven by accelerated digitalization and the rise of insurtech. The adoption of cutting-edge technologies, including artificial intelligence, blockchain, advanced analytics, cloud computing, telematics and robotic process automation, has streamlined operations and reduced costs. These advancements are likely to have bolstered the margins of insurance companies during the quarter.
Insurance Stocks Reporting on Jul 31
Against the backdrop discussed above, let’s find out how the following five companies are placed ahead of their second-quarter earnings release tomorrow.
Our proprietary model clearly indicates that a company needs to have the right combination of two key elements — 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 uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
MetLife: The Zacks Consensus Estimate for net investment income is pegged at $5.1 billion for the quarter under review, suggesting a 1.5% year-over-year increase. The Zacks Consensus Estimate for Group Benefits business' adjusted earnings is $413.9 million, indicating 11.3% growth from the prior-year quarter’s reported number. However, the RIS segment's performance is likely to have been impacted by a decline in recurring interest margins and less favorable underwriting margins.
The Zacks Consensus Estimate for the second-quarter earnings and top line stands at $2.13 per share and $18.2 billion, respectively, indicating an earnings increase of 9.8% but a revenue decline of 2.4% from the corresponding year-ago quarter’s actuals. As far as earnings surprises are concerned, MetLife’s earnings beat the Zacks Consensus Estimate once in the last four quarters, met on one occasion and missed others, the average surprise being 0.7%. (Read more: Can MetLife Tackle Lower Premiums in Q2 Earnings?)
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
Our proven model doesn’t conclusively predict an earnings beat for MetLife this time around. This is because the stock has an Earnings ESP of -0.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aflac: The Zacks Consensus Estimate for Aflac’s net earned premiums indicates a 6.3% year-over-year decline. The consensus mark for adjusted revenues in the Aflac Japan segment signals a 10.1% fall from the year-ago level. However, the consensus estimate for the adjusted expense ratio in Aflac U.S. indicates a 51 bps improvement year over year, aiding the bottom line.
The Zacks Consensus Estimate for the second-quarter earnings and top line stands at $1.59 per share and $4.4 billion, respectively, indicating an earnings growth of 0.6% and a revenue decrease of 15.4% from the corresponding year-ago quarter’s actuals. Aflac’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed once, the average surprise being 7.3%.
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
Our proven model doesn’t conclusively predict an earnings beat for Aflac this time around as the stock has an Earnings ESP of +0.54% but a Zacks Rank #4 (Sell).
AIG: The Zacks Consensus Estimate for General Insurance’s adjusted pre-tax income for the second quarter indicates a year-over-year decrease of 4.7%, affecting AIG’s second-quarter earnings. The consensus mark for total premiums indicates a 35.9% decrease from the year-ago period. However, growth in overall Life and Retirement business’ profit levels will likely partially offset the negatives.
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom line is pegged at $1.39 per share, indicating a decline of 20.6% year over year. The consensus mark for the top line is pegged at $12.2 billion, signaling a 6.9% decline from a year ago. As far as earnings surprises are concerned, AIG’s bottom line beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 9.2%.
American International Group, Inc. Price and EPS Surprise
American International Group, Inc. price-eps-surprise | American International Group, Inc. Quote
AIG has an Earnings ESP of 0.00% and a Zacks Rank of 3. (Read more: Will AIG’s Q2 Earnings Hit a Pothole?)
The Allstate Corporation: This leading property-casualty insurer’s second-quarter revenues are expected to have been supported by premium growth. The consensus mark for net premiums earned from Property-Liability and Protection Services segments suggests year-over-year increases of 11.4% and 10.6%, respectively. Rate increases and strong policy retention rates are likely to aid its results. However, Allstate’s second-quarter earnings may have taken a small hit from a decreased adjusted net income in the Health and Benefits business.
The Zacks Consensus Estimate for the to-be-reported quarter’s bottom and top line is pegged at 33 cents per share and $15.6 billion, respectively, indicating an earnings improvement of 107.5% and a revenue increase of 10.1% from the corresponding year-ago quarter’s readings. ALL’s bottom line beat the Zacks Consensus Estimate in three of the last four quarters, missing the mark once, the average surprise being 41.9%.
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Our proven model predicts a likely earnings beat for Allstate this time around. This is because the stock has an Earnings ESP of +36.50% and a Zacks Rank #3.
Everest Group: The Zacks Consensus Estimate for net premiums earned for the second quarter indicates a year-over-year increase of 20.1%. Also, the consensus mark for net investment income implies more than 27% growth from the year-ago period. However, the consensus estimate for the combined ratio indicates a 122 bps increase from the year-ago level, partially offsetting the profit growth levels.
The Zacks Consensus Estimate for the second-quarter 2024 earnings and revenues stands at $16.97 per share and $4.4 billion, respectively, indicating an earnings increase of 11.6% and revenue growth of 20.3% from the respective year-earlier quarter’s readings. As far as earnings surprises are concerned, EG’s bottom line beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 37.5%.
Everest Group, Ltd. Price and EPS Surprise
Everest Group, Ltd. price-eps-surprise | Everest Group, Ltd. Quote
Everest Group has an Earnings ESP of 0.00% and is a Zacks #3 Ranked player.
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