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Q3 Earnings Push Insurance ETFs Higher

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The insurance industry has performed strongly this reporting cycle with robust earnings from leading players. Prominent players such as MetLife (MET - Free Report) , Prudential Financial (PRU - Free Report) , Chubb Corp (CB - Free Report) , Allstate (ALL - Free Report) , Aflac (AFL - Free Report) and Travelers (TRV - Free Report) either surpassed the estimates for earnings or revenues or both (see: all the Financial ETFs here).

Insurance Earnings in Focus

MetLife, the U.S. life insurance behemoth, reported earnings of $1.27 per share, which missed the Zacks Consensus Estimate by 14 cents and declined 8% from the year-ago quarter. Revenues rose 3% year over year to $16.9 billion and were well above the consensus estimate of $16.92 billion. PRU, the second-largest U.S. life insurer, beat earnings estimates and missed on revenues. Earnings per share of $3.22 were well above the Zacks Consensus Estimate of $3.08 and 2.2% higher than the year-ago earnings. Revenues of $12.93 billion lagged the estimated $14.31 billion and declined 10.4% year over year.

One of the leading property and casualty insurers, Chubb, outpaced the Zacks Consensus Estimate on both the top and the bottom line by $715 million and 6 cents, respectively. Another property and casualty insurer, Allstate also topped the Zacks Consensus Estimate on earnings and revenues by 12.7% and 19.9%, respectively. On a year-over-year basis, its earnings improved 47% while revenues were up 5.7%.

Earnings per share of $1.16 reported by Aflac, a seller of supplement health insurance, trumped the Zacks Consensus Estimate by 9 cents and increased from the year-ago earnings of $1.03. Revenues declined from $5.58 billion in the year-ago period to $5.54 billion and fell shy of the estimate by 0.51% (read: 9 High-Flying ETFs of 2019).

Personal property and casualty insurer, Travelers posted earnings per share of $1.43, missing the Zacks Consensus Estimate by 95 cents but declining 43.7% year over year. Revenues grew 4% year over year to $8 billion and were ahead of the estimated $7.86 billion.

ETFs in Focus

The Q3 earnings of insurance industry players had a positive impact on the related ETFs that saw smooth trading over the past month. SPDR S&P Insurance ETF (KIE - Free Report) andiShares U.S. Insurance ETF (IAK - Free Report) gained 2.1% and 1.2%, respectively. Both funds have a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Below, we highlight them in detail.

KIE

This fund follows the S&P Insurance Select Industry Index, holding 49 stocks in its basket. Each of the in-focus firms accounts for around 2% share. About 44.5% of the portfolio is allocated to property and casualty insurance, while life & health insurance accounts for 26.2% share. The ETF has managed $927.9 million in its asset base and trades in a good average daily volume of about 424,000 shares. The product has an expense ratio of 0.35% (read: Why Financials ETFs Are On Fire).

IAK

With AUM of $103.1 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 43 bps in annual fees. Volume is light, trading in roughly 7,000 shares per day. In total, the fund holds 61 securities in its basket with the in-focus six firms occupying the top eight positions and collectively making up 37.8% of the assets. Here also, property & casualty insurance accounts for the largest share at 49.8%, while life & health insurance and multiline insurance round off the top three spots with double-digit exposure each.

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