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5 Insurers Poised to Outperform Earnings Estimates in Q2
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A progressing rate environment, and a strengthening economy have been tailwinds for insurers. With the hike approved by the Federal Reserve in June, marking the sixth increase since December 2016, the rate currently stands at 2%. The second quarter thus continues to enjoy the positive impact of a favorable rate environment, driving the insurer’s investment results as well as the performance of life insurers.
Though insurers have lowered their exposure to interest-sensitive product lines to weather the low rate environment, the accelerated pace of rate hikes should benefit them.
Also, courtesy of the lower tax incidence owing to the implementation of the Tax Cuts and Jobs Act implemented at the start of this year, the insurers’ margin and bottom line should have got an additional boost.
Insurers, property and casualty in particular, continue to benefit from a benign catastrophe environment, albeit there were a few cat events like rain storms in the United States and Canada during the second quarter. A Morgan Stanley analyst estimates global insured cat loss of about $7.1 billion in the second quarter per a carriermanagement.com report. The analyst also noted that the count is much lower than the general tally of around $14 billion that insurers have usually suffered as a result of natural calamities in any given second quarter.
Insurers, after being badly hit in 2017 due to a number of unprecedented catastrophes, braved price hikes that remained soft for quite some time. Price hikes coupled with prudent underwriting practices and adherence to reinsurance covers are helping insurers deliver better underwriting results.
Also, a progressing economy reflects a better employment scenario with more disposable income and a better consumer sentiment. Per the CEO of Bank of America, as quoted in CNBC, GDP could be about 4% in the second quarter of 2018 given business fieldling policies.
Job growth has been solid through the second quarter of 2018 with an average of nearly 0.211 million. While unemployment rate in June was 4%.
This, in turn, might have supported more policy writings, driving the premiums higher. Premiums contribute a lion’s share to an insurer’s top line.
Also, a diversified product suite, portfolio realignment, geographic expansion, cost-control measures coupled with share buybacks and strategic integrations owing to surplus capital, should have bolstered better performances.
Ways to Pick the Perfect Insurance Stocks
With tailwinds rallying around the industry, investors can identify several stocks poised to deliver a positive earnings surprise in the upcoming reports.
Choosing the right stock for one’s portfolio from too many participants is certainly a tough task for investors. But an easy way to streamline the list is by selecting stocks with a positive Earnings ESPand a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which help surpassing the estimates.
Per our proprietary methodology, Earnings ESP is the determining factor for zeroing in on stocks with the maximum chances of beating on earnings in the next announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to come across stocks with potential to outshine earnings estimates this reporting cycle.
Our research shows that the stocks with the perfect combination of the two key ingredients have 70% chances of a positive earnings surprise.
For investors seeking to apply this proven modelto their portfolios, we have highlighted four insurance stocks which might stand out from the crowd with an earnings beat in the upcoming releases.
Northbrook, IL-based Allstateengages in property and casualty insurance plus life insurance businesses in the United States and Canada.
With a Zacks Rank #3 and an Earnings ESP of +1.49%, Allstatelooks well-poised for a positive surprise. The Zacks Consensus Estimate for the secondquarter is pegged at $1.71 per share, up 23.9% year over year. With respect to the surprise trend, the company’s earnings surpassed expectations in the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstatewill announce second-quarter results after the closing bell on Aug 1.
Zurich, Switzerland-based Chubb Limitedprovides insurance and reinsurance products worldwide.
The company has an Earnings ESP of +1.16% and a Zacks Rank of 3. It is therefore likely to pull off another quarter of a positive earnings surprise. The Zacks Consensus Estimate for the second quarter is pegged at $2.63 per share, up 5.2% year over year. The company outperformed expectations in the trailing four quarters.
Chubbis scheduled to report second-quarter earnings numbers after the closing bell on Jul 24.
Based in Cincinnati, OH,American Financial provides property and casualty insurance products in the United States.
American Financialcarries a Zacks Rank #2 and an Earnings ESP of +1.69%. The Zacks Consensus Estimate for the second quarter is pegged at $1.88 per share, up 16.8% year over year. The company exceeded expectations in the preceding four quarters.
American Financialwill release second-quarter results on Aug 1 after the closing bell.
Torchmark Corporation
Headquartered at McKinney, TX, Torchmark Corporationprovides various life and health insurance products and annuities in the United States, Canada and New Zealand.
The company has an Earnings ESP of +0.34% and is a Zacks #3 Ranked player. Torchmarklooks well set for a likely positive surprise. The consensus mark for the to-be-reported quarter stands at $1.49 per share, up 25.2% year over year. The company outpaced estimates in the last four quarters.
Torchmarkis scheduled to announce second-quarter financial figures after the market closes on Jul 25.
Health Insurance Innovations, Inc.
Tampa, FL-basedHealth Insurance Innovations operates as a cloud-based technology platform and distributor of individual and family health insurance plans as well as supplemental products in the United States.
Health Insurance Innovations is a #3 Ranked stock and has an Earnings ESP of +0.41%. The Zacks Consensus Estimate for the quarter to be reported is pegged at 61 cents per share, up 15.2% year over year. The company exceeded expectations in the preceding four quarters.
Health Insurance Innovations will release second-quarter results on Aug 1 after market close.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
Image: Bigstock
5 Insurers Poised to Outperform Earnings Estimates in Q2
A progressing rate environment, and a strengthening economy have been tailwinds for insurers. With the hike approved by the Federal Reserve in June, marking the sixth increase since December 2016, the rate currently stands at 2%. The second quarter thus continues to enjoy the positive impact of a favorable rate environment, driving the insurer’s investment results as well as the performance of life insurers.
Though insurers have lowered their exposure to interest-sensitive product lines to weather the low rate environment, the accelerated pace of rate hikes should benefit them.
Also, courtesy of the lower tax incidence owing to the implementation of the Tax Cuts and Jobs Act implemented at the start of this year, the insurers’ margin and bottom line should have got an additional boost.
Insurers, property and casualty in particular, continue to benefit from a benign catastrophe environment, albeit there were a few cat events like rain storms in the United States and Canada during the second quarter. A Morgan Stanley analyst estimates global insured cat loss of about $7.1 billion in the second quarter per a carriermanagement.com report. The analyst also noted that the count is much lower than the general tally of around $14 billion that insurers have usually suffered as a result of natural calamities in any given second quarter.
Insurers, after being badly hit in 2017 due to a number of unprecedented catastrophes, braved price hikes that remained soft for quite some time. Price hikes coupled with prudent underwriting practices and adherence to reinsurance covers are helping insurers deliver better underwriting results.
Also, a progressing economy reflects a better employment scenario with more disposable income and a better consumer sentiment. Per the CEO of Bank of America, as quoted in CNBC, GDP could be about 4% in the second quarter of 2018 given business fieldling policies.
Job growth has been solid through the second quarter of 2018 with an average of nearly 0.211 million. While unemployment rate in June was 4%.
This, in turn, might have supported more policy writings, driving the premiums higher. Premiums contribute a lion’s share to an insurer’s top line.
Also, a diversified product suite, portfolio realignment, geographic expansion, cost-control measures coupled with share buybacks and strategic integrations owing to surplus capital, should have bolstered better performances.
Ways to Pick the Perfect Insurance Stocks
With tailwinds rallying around the industry, investors can identify several stocks poised to deliver a positive earnings surprise in the upcoming reports.
Choosing the right stock for one’s portfolio from too many participants is certainly a tough task for investors. But an easy way to streamline the list is by selecting stocks with a positive Earnings ESPand a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which help surpassing the estimates.
Per our proprietary methodology, Earnings ESP is the determining factor for zeroing in on stocks with the maximum chances of beating on earnings in the next announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to come across stocks with potential to outshine earnings estimates this reporting cycle.
Our research shows that the stocks with the perfect combination of the two key ingredients have 70% chances of a positive earnings surprise.
For investors seeking to apply this proven modelto their portfolios, we have highlighted four insurance stocks which might stand out from the crowd with an earnings beat in the upcoming releases.
The Allstate Corporation (ALL - Free Report)
Northbrook, IL-based Allstateengages in property and casualty insurance plus life insurance businesses in the United States and Canada.
With a Zacks Rank #3 and an Earnings ESP of +1.49%, Allstatelooks well-poised for a positive surprise. The Zacks Consensus Estimate for the secondquarter is pegged at $1.71 per share, up 23.9% year over year. With respect to the surprise trend, the company’s earnings surpassed expectations in the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstatewill announce second-quarter results after the closing bell on Aug 1.
Chubb Limited (CB - Free Report)
Zurich, Switzerland-based Chubb Limitedprovides insurance and reinsurance products worldwide.
The company has an Earnings ESP of +1.16% and a Zacks Rank of 3. It is therefore likely to pull off another quarter of a positive earnings surprise. The Zacks Consensus Estimate for the second quarter is pegged at $2.63 per share, up 5.2% year over year. The company outperformed expectations in the trailing four quarters.
Chubbis scheduled to report second-quarter earnings numbers after the closing bell on Jul 24.
American Financial Group, Inc. (AFG - Free Report)
Based in Cincinnati, OH,American Financial provides property and casualty insurance products in the United States.
American Financialcarries a Zacks Rank #2 and an Earnings ESP of +1.69%. The Zacks Consensus Estimate for the second quarter is pegged at $1.88 per share, up 16.8% year over year. The company exceeded expectations in the preceding four quarters.
American Financialwill release second-quarter results on Aug 1 after the closing bell.
Torchmark Corporation
Headquartered at McKinney, TX, Torchmark Corporationprovides various life and health insurance products and annuities in the United States, Canada and New Zealand.
The company has an Earnings ESP of +0.34% and is a Zacks #3 Ranked player. Torchmarklooks well set for a likely positive surprise. The consensus mark for the to-be-reported quarter stands at $1.49 per share, up 25.2% year over year. The company outpaced estimates in the last four quarters.
Torchmarkis scheduled to announce second-quarter financial figures after the market closes on Jul 25.
Health Insurance Innovations, Inc.
Tampa, FL-basedHealth Insurance Innovations operates as a cloud-based technology platform and distributor of individual and family health insurance plans as well as supplemental products in the United States.
Health Insurance Innovations is a #3 Ranked stock and has an Earnings ESP of +0.41%. The Zacks Consensus Estimate for the quarter to be reported is pegged at 61 cents per share, up 15.2% year over year. The company exceeded expectations in the preceding four quarters.
Health Insurance Innovations will release second-quarter results on Aug 1 after market close.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
See This Ticker Free >>