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Insurance Stock Q3 Earnings Slated on Oct 25: CB, CINF, MMC
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The Q3 earnings season is in full swing with results from 23.2% of the S&P 500 Index members already on board. Earnings of these 116 members (accounting for 30% of the index’s total market capitalization) are up 3.3% on 1.8% higher revenues as per the latest Earnings Preview report. While 80.2% of these companies delivered positive earnings surprises, 62.9% managed to beat revenue estimates.
The Finance sector (one of the 16 Zacks sectors) has started the Q3 earnings season on a strong note. In fact, the financial performance of 33.3% companies from this sector that have already reported their quarterly results indicates 7.9% earnings growth due to a 5.1% increase in revenues, on a year-over-year basis. Moreover, the beat ratios of 90% for the bottom line and 86.7% for the top line compare favorably with the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and financial transaction services to name a few. Insurers (particularly the property and casualty companies) are expected to witness an improvement in underwriting results courtesy of a benign cat loss environment. The industry is expected to see another profitable quarter backed by capital gains and reserve releases. We also expect to see favorable reserve development owing to low catastrophe losses over the past few years and prudent reserving practices. Insurers are expected to benefit from wider exposure to the key areas of the economy, such as new vehicle sales and construction. Moreover, continued growth in workers compensation premiums and premiums related to residential construction should drive premium growth.
However, a still low interest rate environment will continue to weigh on investment yields and consequently hurt investment income. Lower investment income might adveresely affect quarterly revenues.
Nonetheless, a broader invested asset base and alternative asset classes should offer some respite. We note that insurers that have managed to accumulate excess capital due to lower catastrophe losses in recent years are deploying the same to buy back shares. This strategy should boost their bottom line in Q3.
With several companies set to report their quarterly results this week, we expect a clearer insight into the performance of the sector. Meanwhile, let’s take a look at how these three insurers might fare when they report their Q3 numbers on Oct 25.
Chubb Limited (CB - Free Report) is one of the world’s largest providers of property and casualty insurance and reinsurance. The company delivered a negative earnings surprise of 0.44% in the last quarter. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise. Chubb has an Earnings ESP of +1.52% and a Zacks Rank #3, which makes us reasonably confident of an earnings beat this quarter.
Chubb is likely to report a rise in net premiums written owing to strategic initiatives undertaken and new business written for its middle market business. However, expenses are expected to have increased. (Read more: Chubb Limited Q3 Earnings: Is a Beat in the Cards?)
With respect to the surprise trend, Chubb surpassed expectations in two of the last four quarters, with an average beat of 1.79%. The Zacks Consensus Estimate for Q3 is pegged at $2.64.
Cincinnati Financial Corporation (CINF - Free Report) markets property and casualty insurance as its main business. The company delivered a positive earnings surprise of 9.62% in the last quarter. Cincinnati Financial has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.
Several growth initiatives as well as a gradual improvement in insurance rates are likely to drive the increase in revenues. We expect growth in each of the company’s segments to be driven by quality new business produced by its agencies. However, the life insurance segment might be adversely affected by the persistent volatility in group benefits associated with the Affordable Care Act (ACA). (Read More: Cincinnati Financial: What to Expect in Q3 Earnings?)
With respect to the surprise trend, Cincinnati Financial surpassed expectations in each of the last four quarters, with an average beat of 24.20%. The Zacks Consensus Estimate for Q3 is pegged at 85 cents.
Marsh & McLennan Companies Inc. (MMC - Free Report) is a global professional services firm providing risk and insurance services, risk consulting, and employee benefits consulting services to clients worldwide. The company delivered in-line results in the last quarter. Marsh & McLennan has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). Please note that the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
Revenues are likely to be driven by the company’s vast geographical footprint and accretion from numerous strategic acquisitions. Disciplined expense management should lead to an improvement in margin while share buybacks are expected to boost the bottom line. However, Marsh & McLennan’s earnings during the quarter are expected suffer from the prolonged period of low interest rates which will hurt investment income. (Read more: Marsh & McLennan: What's Expected in Q3 Earnings?)
With respect to the surprise trend, Marsh & McLennan surpassed expectations in three of the last four quarters, with an average beat of 2.45%. The Zacks Consensus Estimate for Q3 is pegged at 91 cents.
Keep an eye on our full earnings articles to see how these companies finally fared.
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Insurance Stock Q3 Earnings Slated on Oct 25: CB, CINF, MMC
The Q3 earnings season is in full swing with results from 23.2% of the S&P 500 Index members already on board. Earnings of these 116 members (accounting for 30% of the index’s total market capitalization) are up 3.3% on 1.8% higher revenues as per the latest Earnings Preview report. While 80.2% of these companies delivered positive earnings surprises, 62.9% managed to beat revenue estimates.
The Finance sector (one of the 16 Zacks sectors) has started the Q3 earnings season on a strong note. In fact, the financial performance of 33.3% companies from this sector that have already reported their quarterly results indicates 7.9% earnings growth due to a 5.1% increase in revenues, on a year-over-year basis. Moreover, the beat ratios of 90% for the bottom line and 86.7% for the top line compare favorably with the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and financial transaction services to name a few. Insurers (particularly the property and casualty companies) are expected to witness an improvement in underwriting results courtesy of a benign cat loss environment. The industry is expected to see another profitable quarter backed by capital gains and reserve releases. We also expect to see favorable reserve development owing to low catastrophe losses over the past few years and prudent reserving practices. Insurers are expected to benefit from wider exposure to the key areas of the economy, such as new vehicle sales and construction. Moreover, continued growth in workers compensation premiums and premiums related to residential construction should drive premium growth.
However, a still low interest rate environment will continue to weigh on investment yields and consequently hurt investment income. Lower investment income might adveresely affect quarterly revenues.
Nonetheless, a broader invested asset base and alternative asset classes should offer some respite. We note that insurers that have managed to accumulate excess capital due to lower catastrophe losses in recent years are deploying the same to buy back shares. This strategy should boost their bottom line in Q3.
With several companies set to report their quarterly results this week, we expect a clearer insight into the performance of the sector. Meanwhile, let’s take a look at how these three insurers might fare when they report their Q3 numbers on Oct 25.
Chubb Limited (CB - Free Report) is one of the world’s largest providers of property and casualty insurance and reinsurance. The company delivered a negative earnings surprise of 0.44% in the last quarter. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise. Chubb has an Earnings ESP of +1.52% and a Zacks Rank #3, which makes us reasonably confident of an earnings beat this quarter.
Chubb is likely to report a rise in net premiums written owing to strategic initiatives undertaken and new business written for its middle market business. However, expenses are expected to have increased. (Read more: Chubb Limited Q3 Earnings: Is a Beat in the Cards?)
With respect to the surprise trend, Chubb surpassed expectations in two of the last four quarters, with an average beat of 1.79%. The Zacks Consensus Estimate for Q3 is pegged at $2.64.
CHUBB LTD Price and EPS Surprise
CHUBB LTD Price and EPS Surprise | CHUBB LTD Quote
Cincinnati Financial Corporation (CINF - Free Report) markets property and casualty insurance as its main business. The company delivered a positive earnings surprise of 9.62% in the last quarter. Cincinnati Financial has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.
Several growth initiatives as well as a gradual improvement in insurance rates are likely to drive the increase in revenues. We expect growth in each of the company’s segments to be driven by quality new business produced by its agencies. However, the life insurance segment might be adversely affected by the persistent volatility in group benefits associated with the Affordable Care Act (ACA). (Read More: Cincinnati Financial: What to Expect in Q3 Earnings?)
With respect to the surprise trend, Cincinnati Financial surpassed expectations in each of the last four quarters, with an average beat of 24.20%. The Zacks Consensus Estimate for Q3 is pegged at 85 cents.
CINCINNATI FINL Price and EPS Surprise
CINCINNATI FINL Price and EPS Surprise | CINCINNATI FINL Quote
Marsh & McLennan Companies Inc. (MMC - Free Report) is a global professional services firm providing risk and insurance services, risk consulting, and employee benefits consulting services to clients worldwide. The company delivered in-line results in the last quarter. Marsh & McLennan has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). Please note that the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
Revenues are likely to be driven by the company’s vast geographical footprint and accretion from numerous strategic acquisitions. Disciplined expense management should lead to an improvement in margin while share buybacks are expected to boost the bottom line. However, Marsh & McLennan’s earnings during the quarter are expected suffer from the prolonged period of low interest rates which will hurt investment income. (Read more: Marsh & McLennan: What's Expected in Q3 Earnings?)
With respect to the surprise trend, Marsh & McLennan surpassed expectations in three of the last four quarters, with an average beat of 2.45%. The Zacks Consensus Estimate for Q3 is pegged at 91 cents.
MARSH &MCLENNAN Price and EPS Surprise
MARSH &MCLENNAN Price and EPS Surprise | MARSH &MCLENNAN Quote
Keep an eye on our full earnings articles to see how these companies finally fared.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>