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Insurers Set to Report Q3 Earnings on Nov 1: CI, MET, LNC, Y
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Given a favorable operating backdrop, the insurance industry is likely to witness better results this earnings season. However, the occurrences of catastrophe events are anticipated to have weighed on this upside. A diversified portfolio, wide geographic footprint, strategic consolidations as well as lower taxes are expected to have enhanced insurers’ performance in the quarter to be reported.
The insurance industry has been reaping benefits from an improving rate environment, favoring net investment income, which is an important component of insurers’ revenues. Insurers invest a big chunk of their premiums collected to be able to provide funds at the time of claims or upon maturity (in case of life insurance). Given the accelerated pace of rate hikes, insurers should gain from an increase in yields on their investment income.
Due to a benign catastrophe environment, insurers witnessed 19 back-to-back quarters of soft pricing market. However, following last year’s destruction caused by a series of hurricanes, insurers started to raise prices from fourth-quarter 2017 onward. These in turn likely have aided improvement in premiums in the third quarter.
Per insurancenetnews, in the United States, the composite rate during the third quarter of 2018 increased 2.5%, matching the rate increase of the second quarter. However, the magnitude of price gains was uneven for different business lines. For instance, trucking and commercial auto saw rate hikes of more than 6%. General liability rates inched up in the range of 1-3%
Nonetheless, property and business interruption coverages slipped 1% sequentially. The rate decrease remained with workers’ compensation as rates declined on average by 3% in the third quarter, in line with the second-quarter drop.
Though the third quarter of 2018 was not as devastating as the year-ago period, the phase still bore the brunt of Hurricane Florence weighing on the underwriting profitability and deteriorating combined ratios. Catastrophe modeler Risk Management Solutions expects cat loss between $15 million and $20 billion, stemming from Hurricane Florence.
A lower level of tax incidence, courtesy of the new tax rate effective first-quarter 2018, has been boosting the margins. This in turn, will not only aid margin expansion but also lead to dividend payouts owing to higher net profit available to shareholders.
Also, the insurance industry boasts an all-time high capital level, which continued to help it pursue strategic mergers and acquisitions.
Let’s find out how the following insurers are placed ahead of their third-quarter releases on Nov 1.
Cigna Corporation’s (CI - Free Report) third quarter results likely have benefited from strong performance across each of its priority growth platforms — commercial employer, U.S. seniors, Global Supplemental Benefits and Group Disability & Life. Growth in medical customers and specialty relationships, continued effective medical cost management, operating expense discipline and accretion from a low tax rate should have aided the upside. (Read more: Will Cigna Q3 Earnings Gain on Revenue Growth?)
The Zacks Consensus Estimate for earnings of $3.45 per share in the yet-to-be-reported quarter reflects a 21.9% year-over-year rise. Cigna’s Zacks Rank #3 (Hold), which increases the predictive power of ESP, when combined with an Earnings ESP of +0.37% makes us confident of an earnings beat this period to be reported.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the last four reported quarters with an average of 15.61%. This is depicted in the chart below:
MetLife, Inc.’s (MET - Free Report) third quarter earnings should have benefited from strong performances across its segments. While U.S. segment should report an increase in premium and fees, Asia segment should gain from volume growth. Higher direct marketing, which should lead to volume growth likely have benefited Latin America segment. EMEA adjusted earnings should have gained from expense margin improvement, as well as volume growth. (Read more: What's in Store for MetLife Stock in Q3 Earnings?)
The Zacks Consensus Estimate of $1.25 earnings per share for the third quarter highlights an increase of 14.7% year over year. MetLife carries a solid Zacks Rank of 3 but has an Earnings ESP of 0.00%, which complicates the stock’s surprise prediction.
The company’s earnings beat estimates in each of the trailing four reported quarters with an average of 12.34%. The same is depicted in the chart below:
Lincoln National Corporation’s (LNC - Free Report) annuities business should gain from higher fee income from account value growth and lower expenses. Sales at Life Insurance segment should have increased led by rolling out of new products in the recent months. Total deposit at Retirement Plan Services segment should increase from growth in both first-year sales and recurring deposits. (Read more: Lincoln National Q3 Earnings, What to Expect?)
The Zacks Consensus Estimate of $2.17 earnings per share during the third quarter represents a 6.9% year-over-year improvement. The company’s Zacks Rank #2 (Buy) and an Earnings ESP of 0.00% make surprise prediction difficult.
The company’s earnings outpaced estimates in three of the last four reported quarters, the average beat being 2.53%. The same is depicted in the chart below:
Lincoln National Corporation Price and EPS Surprise
The Zacks Consensus Estimate of Alleghany Corporation’s third quarter earnings is pegged at $3.50 per share, translating to a skyrocketing 115.9% year-over-year increase. The company’s Zacks Rank of 3 along with an Earnings ESP of 0.00% makes surprise prediction difficult.
The company’s earnings exceeded estimates in the previous four reported quarters with an average positive surprise of 26.02%. The same is depicted in the chart below:
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
Image: Bigstock
Insurers Set to Report Q3 Earnings on Nov 1: CI, MET, LNC, Y
Given a favorable operating backdrop, the insurance industry is likely to witness better results this earnings season. However, the occurrences of catastrophe events are anticipated to have weighed on this upside. A diversified portfolio, wide geographic footprint, strategic consolidations as well as lower taxes are expected to have enhanced insurers’ performance in the quarter to be reported.
The insurance industry has been reaping benefits from an improving rate environment, favoring net investment income, which is an important component of insurers’ revenues. Insurers invest a big chunk of their premiums collected to be able to provide funds at the time of claims or upon maturity (in case of life insurance). Given the accelerated pace of rate hikes, insurers should gain from an increase in yields on their investment income.
Due to a benign catastrophe environment, insurers witnessed 19 back-to-back quarters of soft pricing market. However, following last year’s destruction caused by a series of hurricanes, insurers started to raise prices from fourth-quarter 2017 onward. These in turn likely have aided improvement in premiums in the third quarter.
Per insurancenetnews, in the United States, the composite rate during the third quarter of 2018 increased 2.5%, matching the rate increase of the second quarter. However, the magnitude of price gains was uneven for different business lines. For instance, trucking and commercial auto saw rate hikes of more than 6%. General liability rates inched up in the range of 1-3%
Nonetheless, property and business interruption coverages slipped 1% sequentially. The rate decrease remained with workers’ compensation as rates declined on average by 3% in the third quarter, in line with the second-quarter drop.
Though the third quarter of 2018 was not as devastating as the year-ago period, the phase still bore the brunt of Hurricane Florence weighing on the underwriting profitability and deteriorating combined ratios. Catastrophe modeler Risk Management Solutions expects cat loss between $15 million and $20 billion, stemming from Hurricane Florence.
A lower level of tax incidence, courtesy of the new tax rate effective first-quarter 2018, has been boosting the margins. This in turn, will not only aid margin expansion but also lead to dividend payouts owing to higher net profit available to shareholders.
Also, the insurance industry boasts an all-time high capital level, which continued to help it pursue strategic mergers and acquisitions.
Let’s find out how the following insurers are placed ahead of their third-quarter releases on Nov 1.
Cigna Corporation’s (CI - Free Report) third quarter results likely have benefited from strong performance across each of its priority growth platforms — commercial employer, U.S. seniors, Global Supplemental Benefits and Group Disability & Life. Growth in medical customers and specialty relationships, continued effective medical cost management, operating expense discipline and accretion from a low tax rate should have aided the upside. (Read more: Will Cigna Q3 Earnings Gain on Revenue Growth?)
The Zacks Consensus Estimate for earnings of $3.45 per share in the yet-to-be-reported quarter reflects a 21.9% year-over-year rise. Cigna’s Zacks Rank #3 (Hold), which increases the predictive power of ESP, when combined with an Earnings ESP of +0.37% makes us confident of an earnings beat this period to be reported.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the last four reported quarters with an average of 15.61%. This is depicted in the chart below:
Cigna Corporation Price and EPS Surprise
Cigna Corporation Price and EPS Surprise | Cigna Corporation Quote
MetLife, Inc.’s (MET - Free Report) third quarter earnings should have benefited from strong performances across its segments. While U.S. segment should report an increase in premium and fees, Asia segment should gain from volume growth. Higher direct marketing, which should lead to volume growth likely have benefited Latin America segment. EMEA adjusted earnings should have gained from expense margin improvement, as well as volume growth. (Read more: What's in Store for MetLife Stock in Q3 Earnings?)
The Zacks Consensus Estimate of $1.25 earnings per share for the third quarter highlights an increase of 14.7% year over year. MetLife carries a solid Zacks Rank of 3 but has an Earnings ESP of 0.00%, which complicates the stock’s surprise prediction.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s earnings beat estimates in each of the trailing four reported quarters with an average of 12.34%. The same is depicted in the chart below:
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise | MetLife, Inc. Quote
Lincoln National Corporation’s (LNC - Free Report) annuities business should gain from higher fee income from account value growth and lower expenses. Sales at Life Insurance segment should have increased led by rolling out of new products in the recent months. Total deposit at Retirement Plan Services segment should increase from growth in both first-year sales and recurring deposits. (Read more: Lincoln National Q3 Earnings, What to Expect?)
The Zacks Consensus Estimate of $2.17 earnings per share during the third quarter represents a 6.9% year-over-year improvement. The company’s Zacks Rank #2 (Buy) and an Earnings ESP of 0.00% make surprise prediction difficult.
The company’s earnings outpaced estimates in three of the last four reported quarters, the average beat being 2.53%. The same is depicted in the chart below:
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation Price and EPS Surprise | Lincoln National Corporation Quote
The Zacks Consensus Estimate of Alleghany Corporation’s third quarter earnings is pegged at $3.50 per share, translating to a skyrocketing 115.9% year-over-year increase. The company’s Zacks Rank of 3 along with an Earnings ESP of 0.00% makes surprise prediction difficult.
The company’s earnings exceeded estimates in the previous four reported quarters with an average positive surprise of 26.02%. The same is depicted in the chart below:
Alleghany Corporation Price and EPS Surprise
Alleghany Corporation Price and EPS Surprise | Alleghany Corporation Quote
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>