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Insurance Stocks Earnings Slated on Apr 27: AFL, AJG & More
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The Q1 earnings season started off on an encouraging note with multiple companies reporting better earnings and revenue growth compared with the past few quarters. We are now in the thick of the reporting season.
Per the latest Earnings Preview, total earnings for the 95 S&P 500 members that have reported results (as of Apr 21) are up 14.3% from the year-ago period, courtesy of a 4.6% rise in revenues. Notably, 72.6% of the companies that have reported their quarterly numbers have surpassed earnings estimates, while 62.1% have exceeded top-line expectations.
One of the 16 Zacks sectors, the Finance sector, is highly diversified and includes several industries like insurance, banks and securities exchanges. It has delivered a strong performance so far. Of the 30% companies from this sector that have revealed their quarterly results, 23% show earnings growth on 7.7% increase in revenues on a year-over-year basis. The beat ratio is 71.4% for the bottom line and 60.4% for the top line.
For the insurance sector overall, the results for the first quarter reflect effects of an increase in disposable income on the back of continued growth in the economy. Also, declining unemployment should lead to a rise in demand for insurance products.
On the other hand, interest rates – a major factor affecting the industry – have remained low since 2007. Despite the recent rate hikes by the Federal Reserve, interest rates remain at very low levels, so much so that the effect of hikes on insurers’ investment income is negligible. Also, life insures continue to face friction, given their rate-sensitive products and investments.
Prudent underwriting practices should support earnings. However, we do not expect pricing to have been strong, given the softness in the industry.
Nonetheless, core business growth, geographic expansion, strategic acquisitions and effective capital deployment via share repurchase should prove beneficial for the players in the industry.
Let’s take a sneak peek into earnings of these insurance players slated for release on Apr 27.
Aflac Inc. (AFL - Free Report) has an Earnings ESP of 0.00% as the Most Accurate estimate of $1.62 is in line with the Zacks Consensus Estimate. Though the company has a Zacks Rank #3 (Hold), its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Last quarter, Aflac missed the Zacks Consensus Estimate by 6.10%. This time again the company is unlikely to come up with a beat. With respect to the surprise trend, Aflac surpassed expectations in three of the last four quarters, with an average surprise of 1.77%.
Aflac’s business in Japan has been suffering from a persistent low interest rate environment and the same must have impacted earnings in the to-be-reported quarter. Nevertheless, sales from this segment will benefit from an increase in third-sector sales given the company’s emphasis on promoting these products that are less interest rate sensitive. (Read more: Will Aflac Q1 Earnings Gain on Product Mix Change?)
Marsh & McLennan Companies, Inc. (MMC - Free Report) has an Earnings ESP of -1.01% as the Most Accurate estimate of 98 cents per share is below the Zacks Consensus Estimate of 99 cents. This makes surprise prediction difficult even though the company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Last quarter, Marsh & McLennan surpassed the Zacks Consensus Estimate by 5.95%. With respect to the surprise trend, Marsh & McLennan surpassed expectations in two of the last four quarters, with an average surprise of 2.33%.
The synergistic effect of a number of acquisitions made by the company over the past many quarters and recent growth efforts will likely lead to revenue accretion. In the previous quarter, the company incurred a restructuring charge of $33 million. The company had at that time announced its expectation of additional restructuring charges of approximately $10 million in the first half of 2017. A part of this charge might be allocated to the first quarter.
The Hartford Financial Services Group, Inc. (HIG - Free Report) has an Earnings ESP of -0.98% as the Most Accurate estimate of $1.01 cents per share is below the Zacks Consensus Estimate of $1.02. The company Zacks Rank #3, along with a negative ESP makes surprise prediction difficult.
Last quarter, The Hartford surpassed the Zacks Consensus Estimate by 12.5%. This time, however, the company is unlikely to come up with a beat.
With respect to the surprise trend, The Hartford missed expectations in two of the last four quarters, with an average negative surprise of 10.86%.
We expect the company’s Group Benefit segment to deliver a solid performance in the first quarter. A better product suite due to the addition of dental and vision services for the small case market as well as new voluntary offerings should support the upside.
Management expects Talcott Resolution to have performed well in the quarter. The unit is estimated to return $600 million of capital in 2017.
Its Personal Lines segment is expected to deliver a strong performance, continuing the trend displayed previously. The performance in the business should be boosted by prior-year reserves and current accident year loss picks. (Read more: What's in Store for The Hartford this Earnings Season?)
Hartford Financial Services Group, Inc. (The) Price and EPS Surprise
Reinsurance Group of America, Inc. (RGA - Free Report) has an Earnings ESP of +1.42% as the Most Accurate estimate of $2.14 per share is above the Zacks Consensus Estimate of $2.11. The company’s Zacks Rank #2, along with a positive Earnings ESP makes us confident of an earnings beat in its upcoming release.
Last quarter, Reinsurance Group surpassed the Zacks Consensus Estimate by 5.2%. With respect to the surprise trend, Reinsurance Group beat expectations in three of the last four quarters, with an average positive surprise of 6.40%.
Reinsurance Group of America, Incorporated Price and EPS Surprise
Arthur J. Gallagher & Co. (AJG - Free Report) has an Earnings ESP of +2.56% as the Most Accurate estimate of 40 cents per share is above the Zacks Consensus Estimate of 39 cents. The company’s Zacks Rank #3, along with a positive Earnings ESP makes us confident of an earnings beat in its upcoming release.
Last quarter, Arthur J. Gallagher posted in-line earnings. With respect to the surprise trend, Arthur J. Gallagher surpassed expectations in three of the last four quarters, with an average positive surprise of 4.90%.
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Insurance Stocks Earnings Slated on Apr 27: AFL, AJG & More
The Q1 earnings season started off on an encouraging note with multiple companies reporting better earnings and revenue growth compared with the past few quarters. We are now in the thick of the reporting season.
Per the latest Earnings Preview, total earnings for the 95 S&P 500 members that have reported results (as of Apr 21) are up 14.3% from the year-ago period, courtesy of a 4.6% rise in revenues. Notably, 72.6% of the companies that have reported their quarterly numbers have surpassed earnings estimates, while 62.1% have exceeded top-line expectations.
One of the 16 Zacks sectors, the Finance sector, is highly diversified and includes several industries like insurance, banks and securities exchanges. It has delivered a strong performance so far. Of the 30% companies from this sector that have revealed their quarterly results, 23% show earnings growth on 7.7% increase in revenues on a year-over-year basis. The beat ratio is 71.4% for the bottom line and 60.4% for the top line.
For the insurance sector overall, the results for the first quarter reflect effects of an increase in disposable income on the back of continued growth in the economy. Also, declining unemployment should lead to a rise in demand for insurance products.
On the other hand, interest rates – a major factor affecting the industry – have remained low since 2007. Despite the recent rate hikes by the Federal Reserve, interest rates remain at very low levels, so much so that the effect of hikes on insurers’ investment income is negligible. Also, life insures continue to face friction, given their rate-sensitive products and investments.
Prudent underwriting practices should support earnings. However, we do not expect pricing to have been strong, given the softness in the industry.
Nonetheless, core business growth, geographic expansion, strategic acquisitions and effective capital deployment via share repurchase should prove beneficial for the players in the industry.
Let’s take a sneak peek into earnings of these insurance players slated for release on Apr 27.
Aflac Inc. (AFL - Free Report) has an Earnings ESP of 0.00% as the Most Accurate estimate of $1.62 is in line with the Zacks Consensus Estimate. Though the company has a Zacks Rank #3 (Hold), its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Last quarter, Aflac missed the Zacks Consensus Estimate by 6.10%. This time again the company is unlikely to come up with a beat. With respect to the surprise trend, Aflac surpassed expectations in three of the last four quarters, with an average surprise of 1.77%.
Aflac’s business in Japan has been suffering from a persistent low interest rate environment and the same must have impacted earnings in the to-be-reported quarter. Nevertheless, sales from this segment will benefit from an increase in third-sector sales given the company’s emphasis on promoting these products that are less interest rate sensitive. (Read more: Will Aflac Q1 Earnings Gain on Product Mix Change?)
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated Price and EPS Surprise | Aflac Incorporated Quote
Marsh & McLennan Companies, Inc. (MMC - Free Report) has an Earnings ESP of -1.01% as the Most Accurate estimate of 98 cents per share is below the Zacks Consensus Estimate of 99 cents. This makes surprise prediction difficult even though the company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Last quarter, Marsh & McLennan surpassed the Zacks Consensus Estimate by 5.95%. With respect to the surprise trend, Marsh & McLennan surpassed expectations in two of the last four quarters, with an average surprise of 2.33%.
The synergistic effect of a number of acquisitions made by the company over the past many quarters and recent growth efforts will likely lead to revenue accretion. In the previous quarter, the company incurred a restructuring charge of $33 million. The company had at that time announced its expectation of additional restructuring charges of approximately $10 million in the first half of 2017. A part of this charge might be allocated to the first quarter.
Also, foreign exchange movement might have a negative impact on earnings. (Read more: Will Marsh & McLennan Stock Disappoint in Q1 Earnings?)
Marsh & McLennan Companies, Inc. Price and EPS Surprise
Marsh & McLennan Companies, Inc. Price and EPS Surprise | Marsh & McLennan Companies, Inc. Quote
The Hartford Financial Services Group, Inc. (HIG - Free Report) has an Earnings ESP of -0.98% as the Most Accurate estimate of $1.01 cents per share is below the Zacks Consensus Estimate of $1.02. The company Zacks Rank #3, along with a negative ESP makes surprise prediction difficult.
Last quarter, The Hartford surpassed the Zacks Consensus Estimate by 12.5%. This time, however, the company is unlikely to come up with a beat.
With respect to the surprise trend, The Hartford missed expectations in two of the last four quarters, with an average negative surprise of 10.86%.
We expect the company’s Group Benefit segment to deliver a solid performance in the first quarter. A better product suite due to the addition of dental and vision services for the small case market as well as new voluntary offerings should support the upside.
Management expects Talcott Resolution to have performed well in the quarter. The unit is estimated to return $600 million of capital in 2017.
Its Personal Lines segment is expected to deliver a strong performance, continuing the trend displayed previously. The performance in the business should be boosted by prior-year reserves and current accident year loss picks. (Read more: What's in Store for The Hartford this Earnings Season?)
Hartford Financial Services Group, Inc. (The) Price and EPS Surprise
Hartford Financial Services Group, Inc. (The) Price and EPS Surprise | Hartford Financial Services Group, Inc. (The) Quote
Reinsurance Group of America, Inc. (RGA - Free Report) has an Earnings ESP of +1.42% as the Most Accurate estimate of $2.14 per share is above the Zacks Consensus Estimate of $2.11. The company’s Zacks Rank #2, along with a positive Earnings ESP makes us confident of an earnings beat in its upcoming release.
Last quarter, Reinsurance Group surpassed the Zacks Consensus Estimate by 5.2%. With respect to the surprise trend, Reinsurance Group beat expectations in three of the last four quarters, with an average positive surprise of 6.40%.
Reinsurance Group of America, Incorporated Price and EPS Surprise
Reinsurance Group of America, Incorporated Price and EPS Surprise | Reinsurance Group of America, Incorporated Quote
Arthur J. Gallagher & Co. (AJG - Free Report) has an Earnings ESP of +2.56% as the Most Accurate estimate of 40 cents per share is above the Zacks Consensus Estimate of 39 cents. The company’s Zacks Rank #3, along with a positive Earnings ESP makes us confident of an earnings beat in its upcoming release.
Last quarter, Arthur J. Gallagher posted in-line earnings. With respect to the surprise trend, Arthur J. Gallagher surpassed expectations in three of the last four quarters, with an average positive surprise of 4.90%.
Arthur J. Gallagher & Co. Price and EPS Surprise
Arthur J. Gallagher & Co. Price and EPS Surprise | Arthur J. Gallagher & Co. Quote
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>