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Key Predictions for Q4 Earnings Reports of CI, MMC, XL, VR
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The fourth-quarter earnings season is in full swing with 133 members of the elite S&P 500 index having already reported financial numbers so far. Per the latest Earnings Preview, performances of these index members indicate that total earnings have increased 12.3% on 8.8% higher revenues. The beat ratio is impressive with 81.2% companies surpassing bottom-line expectations and 78.9%, outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has delivered a strong performance till now.
Per Earnings Preview, earnings are expected to grow 8.4% on 2.4% higher revenues.
Integral to the Finance sector, the insurance industry is likely to witness better results this yet-to-be-reported quarter compared with the third. Underwriting profitability continued to be hurt in the fourth quarter by the wildfires in California. This downside added to the woes with the catastrophe modeling firm AIR Worldwide estimating losses at approximately $10.5 billion.
However, such a massive loss led insures to brave the price hike that remained flat due to a not-so-active catastrophe environment. This in turn has helped improving the premiums and driving the top line as well.
Also, prudent underwriting practices aided insurers to weather the cat event.
Net investment income, an important component of an insurer’s top line, is anticipated to have increased on the back of an improving rate environment. Though the same witnesses progress at a slower pace, the impact of rate increase is clearly visible in the insurer’s investment results. The Fed delivered its promise of three hikes in 2017, the last one made in December.
Diverse product offerings, a wide geographic footprint and strong client retention likely have enhanced insurers’ performance in the quarter to be reported.
With 400 companies (121 S&P 500 members) set to announce earnings this week, let’s find out where the following insurers stand before their quarterly releases on Feb 1.
Cigna Corp’s (CI - Free Report) fourth-quarter performance should reflect growth in total enrollment and specialty relationships, continued effective medical cost management and operating expense discipline, and strong capital management.
The Zacks Consensus Estimate of a loss of 26 cents per share for the yet-to-be-reported quarter reflects a 108.9% year-over-year slump. Cigna sports a bullish Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP. However, combined with an Earnings ESP of -0.11% leaves surprise prediction inconclusive as the company needs a positive ESP to be confident about an earnings surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Marsh & McLennan Companies, Inc. (MMC - Free Report) is projected to benefit from increased revenues at its both operating segments namely Risk and Insurance Services and Consulting.
A combination of organic and inorganic growth measures is likely to boost revenues. The Zacks Consensus Estimate for net operating revenues is pegged at $3.6 billion, representing 6.5% year-over-year growth.
The Zacks Consensus Estimate is pegged at 95 cents for the soon-to-be-reported quarter, up 6.7% year over year. Marsh & McLennan has an Earnings ESP of +0.18% and a favorable Zacks Rank #3. Such a right combination of the two key ingredients makes us confident of an earnings beat. (Read more: Marsh & McLennan Q4 Earnings: Is a Beat in Store?)
Marsh & McLennan Companies, Inc. Price and EPS Surprise
Earnings of XL Group plc will likely be weighed on by cat loss stemming from California wildfires as well as a rise in operating expenses. Nonetheless, improving premiums at both its Insurance and Reinsurance segments is projected to limit this downside.
The Zacks Consensus Estimate is pegged at 49 cents for the yet-to-be-reported quarter, up 4.3% year over year. XL Group has a bearish Zacks Rank #5 (Strong Sell) and further combined with an Earnings ESP of 0.00% makes surprise prediction difficult this time around. (Read more: Will Catastrophe Loss Impact XL Group's Q4 Earnings?)
The Zacks Consensus Estimate for Validus Holdings, Ltd. is pegged at 87 cents, up 8.7% year over year. Though the company is a Zacks #3 Ranked player, its Earnings ESP of 0.00% makes surprise prediction difficult.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Key Predictions for Q4 Earnings Reports of CI, MMC, XL, VR
The fourth-quarter earnings season is in full swing with 133 members of the elite S&P 500 index having already reported financial numbers so far. Per the latest Earnings Preview, performances of these index members indicate that total earnings have increased 12.3% on 8.8% higher revenues. The beat ratio is impressive with 81.2% companies surpassing bottom-line expectations and 78.9%, outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has delivered a strong performance till now.
Per Earnings Preview, earnings are expected to grow 8.4% on 2.4% higher revenues.
Integral to the Finance sector, the insurance industry is likely to witness better results this yet-to-be-reported quarter compared with the third. Underwriting profitability continued to be hurt in the fourth quarter by the wildfires in California. This downside added to the woes with the catastrophe modeling firm AIR Worldwide estimating losses at approximately $10.5 billion.
However, such a massive loss led insures to brave the price hike that remained flat due to a not-so-active catastrophe environment. This in turn has helped improving the premiums and driving the top line as well.
Also, prudent underwriting practices aided insurers to weather the cat event.
Net investment income, an important component of an insurer’s top line, is anticipated to have increased on the back of an improving rate environment. Though the same witnesses progress at a slower pace, the impact of rate increase is clearly visible in the insurer’s investment results. The Fed delivered its promise of three hikes in 2017, the last one made in December.
Diverse product offerings, a wide geographic footprint and strong client retention likely have enhanced insurers’ performance in the quarter to be reported.
With 400 companies (121 S&P 500 members) set to announce earnings this week, let’s find out where the following insurers stand before their quarterly releases on Feb 1.
Cigna Corp’s (CI - Free Report) fourth-quarter performance should reflect growth in total enrollment and specialty relationships, continued effective medical cost management and operating expense discipline, and strong capital management.
The Zacks Consensus Estimate of a loss of 26 cents per share for the yet-to-be-reported quarter reflects a 108.9% year-over-year slump. Cigna sports a bullish Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP. However, combined with an Earnings ESP of -0.11% leaves surprise prediction inconclusive as the company needs a positive ESP to be confident about an earnings surprise.
(Read more: Will Higher Membership, Revenues Aid Cigna Q4 Earnings?)
Cigna Corporation Price and EPS Surprise
Cigna Corporation Price and EPS Surprise | Cigna Corporation Quote
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Marsh & McLennan Companies, Inc. (MMC - Free Report) is projected to benefit from increased revenues at its both operating segments namely Risk and Insurance Services and Consulting.
A combination of organic and inorganic growth measures is likely to boost revenues. The Zacks Consensus Estimate for net operating revenues is pegged at $3.6 billion, representing 6.5% year-over-year growth.
The Zacks Consensus Estimate is pegged at 95 cents for the soon-to-be-reported quarter, up 6.7% year over year. Marsh & McLennan has an Earnings ESP of +0.18% and a favorable Zacks Rank #3. Such a right combination of the two key ingredients makes us confident of an earnings beat. (Read more: Marsh & McLennan Q4 Earnings: Is a Beat in Store?)
Marsh & McLennan Companies, Inc. Price and EPS Surprise
Marsh & McLennan Companies, Inc. Price and EPS Surprise | Marsh & McLennan Companies, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings of XL Group plc will likely be weighed on by cat loss stemming from California wildfires as well as a rise in operating expenses. Nonetheless, improving premiums at both its Insurance and Reinsurance segments is projected to limit this downside.
The Zacks Consensus Estimate is pegged at 49 cents for the yet-to-be-reported quarter, up 4.3% year over year. XL Group has a bearish Zacks Rank #5 (Strong Sell) and further combined with an Earnings ESP of 0.00% makes surprise prediction difficult this time around. (Read more: Will Catastrophe Loss Impact XL Group's Q4 Earnings?)
XL Group Ltd. Price and EPS Surprise
XL Group Ltd. Price and EPS Surprise | XL Group Ltd. Quote
The Zacks Consensus Estimate for Validus Holdings, Ltd. is pegged at 87 cents, up 8.7% year over year. Though the company is a Zacks #3 Ranked player, its Earnings ESP of 0.00% makes surprise prediction difficult.
Validus Holdings, Ltd. Price and EPS Surprise
Validus Holdings, Ltd. Price and EPS Surprise | Validus Holdings, Ltd. Quote
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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