The second-quarter earnings season is in full swing, with 317 members of the S&P 500 index having reported their financial results already as per the Earnings Preview report. Earnings of these index members are down 3.3% on 0.9% lower revenues. Nonetheless, the beat ratio is 72.9% for the bottom line and 53.6% for the top line.
About 80% of the companies (having 75.7% market capitalization) in the Finance sector have already reported their results. Total earnings are down 4.2%, though revenues managed to increase 1.1%. The beat ratio is 66.7% for earnings and 52.8% for revenues. Both compare unfavorably with the S&P index.
The property and casualty (P&C) insurance industry is part of the broader finance sector. Let’s see how the second quarter has turned up for insurers so far. This quarter witnessed varied catastrophes, including a wildfire in Canada, flooding in Europe, earthquakes in Japan and Ecuador, and hailstorms in Texas. The industry is estimated to incur an expected loss of $15 billion to over $20 billion due to 25 weather events that occurred in the quarter. These have weighed on the underwriting results of insurers, and hurt their underwriting income and combined ratio. The bottom lines of the P&C insurers that have already reported suffered due to these catastrophe events. The Allstate Corporation (ALL - Free Report) has estimated $542 million in catastrophe loss.
However, prudent underwriting approaches have likely limited capital erosion.
Then again, to the disappointment of the sector, the interest rate remains unchanged as the Federal Reserve stayed away from raising the same due to weak employment data and Brexit induced uncertainties. Therefore, investment income, which forms a major component of insurers’ revenues, remained under pressure. But a broader invested asset base and alternative asset classes bring some respite.
Insurers in this well-capitalized industry remain well poised on the back of their expanded and diversified product and service portfolio, which is driving premiums higher. Also, effective capital deployment involving share buybacks should boost the bottom line.
As many as 1090 companies are due to report their quarterly results this week, including 116 S&P 500 members. Among these, let’s see what’s in store for three P&C insurers that are reporting on Aug 3.
The Allstate Corporation is the second-largest P&C insurer and the largest publicly held personal lines carrier in the U.S. The company also provides a range of life insurance and investment products to its diverse customer base. The company delivered a +12.00% earnings surprise last quarter. Allstate has an Earnings ESP of +7.55% and a Zacks Rank #3 (Hold). The Most Accurate estimate is pegged at 57 cents and the Zacks Consensus Estimate stands lower at 53 cents.
Allstate’s strong foothold in the personal lines business and solid risk-adjusted capitalization will support top-line growth. Share buyback by the company will aid the bottom line. However, the performance will likely suffer due to $542 million catastrophe-related loss. Also, declining net investment income, increasing claim severity and slowdown in growth of Allstate brand's total policies in force are the other headwinds. (Read: Will Allstate Beat on Q2 Earnings Despite Cat Loss?)
With respect to the surprise trend, Allstate surpassed expectations in three of the last four quarters, with an average beat of 3.62%.
ProAssurance Corporation (PRA - Free Report) provides professional liability insurance products primarily to physicians, dentists, other healthcare providers and healthcare facilities through its subsidiaries. To some extent, the company also engages in legal professional liability business in the Midwest. ProAssurance delivered a 0.00% earnings surprise last quarter. For the second quarter, ProAssurance has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate is pegged at 53 cents. The company currently carries a Zacks Rank #3.
With respect to the surprise trend, ProAssurance surpassed expectations in one of the last four quarters, with an average beat of 0.56%.
Heritage Insurance Holdings, Inc. (HRTG - Free Report) through its subsidiaries writes personal and commercial residential premium. Heritage Insurance delivered a 55.56% negative earnings surprise last quarter. The company has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 45 cents. So, although the company carries a favorable Zacks Rank #3, surprise prediction is difficult.
With respect to the surprise trend, Heritage Insurance surpassed expectations in three of the last four quarters.
Keep an eye on our full earnings articles to see how these companies finally fared.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
The second-quarter earnings season is in full swing, with 317 members of the S&P 500 index having reported their financial results already as per the Earnings Preview report. Earnings of these index members are down 3.3% on 0.9% lower revenues. Nonetheless, the beat ratio is 72.9% for the bottom line and 53.6% for the top line.
About 80% of the companies (having 75.7% market capitalization) in the Finance sector have already reported their results. Total earnings are down 4.2%, though revenues managed to increase 1.1%. The beat ratio is 66.7% for earnings and 52.8% for revenues. Both compare unfavorably with the S&P index.
The property and casualty (P&C) insurance industry is part of the broader finance sector. Let’s see how the second quarter has turned up for insurers so far. This quarter witnessed varied catastrophes, including a wildfire in Canada, flooding in Europe, earthquakes in Japan and Ecuador, and hailstorms in Texas. The industry is estimated to incur an expected loss of $15 billion to over $20 billion due to 25 weather events that occurred in the quarter. These have weighed on the underwriting results of insurers, and hurt their underwriting income and combined ratio. The bottom lines of the P&C insurers that have already reported suffered due to these catastrophe events. The Allstate Corporation (ALL - Free Report) has estimated $542 million in catastrophe loss.
However, prudent underwriting approaches have likely limited capital erosion.
Then again, to the disappointment of the sector, the interest rate remains unchanged as the Federal Reserve stayed away from raising the same due to weak employment data and Brexit induced uncertainties. Therefore, investment income, which forms a major component of insurers’ revenues, remained under pressure. But a broader invested asset base and alternative asset classes bring some respite.
Insurers in this well-capitalized industry remain well poised on the back of their expanded and diversified product and service portfolio, which is driving premiums higher. Also, effective capital deployment involving share buybacks should boost the bottom line.
As many as 1090 companies are due to report their quarterly results this week, including 116 S&P 500 members. Among these, let’s see what’s in store for three P&C insurers that are reporting on Aug 3.
The Allstate Corporation is the second-largest P&C insurer and the largest publicly held personal lines carrier in the U.S. The company also provides a range of life insurance and investment products to its diverse customer base. The company delivered a +12.00% earnings surprise last quarter. Allstate has an Earnings ESP of +7.55% and a Zacks Rank #3 (Hold). The Most Accurate estimate is pegged at 57 cents and the Zacks Consensus Estimate stands lower at 53 cents.
Allstate’s strong foothold in the personal lines business and solid risk-adjusted capitalization will support top-line growth. Share buyback by the company will aid the bottom line. However, the performance will likely suffer due to $542 million catastrophe-related loss. Also, declining net investment income, increasing claim severity and slowdown in growth of Allstate brand's total policies in force are the other headwinds. (Read: Will Allstate Beat on Q2 Earnings Despite Cat Loss?)
With respect to the surprise trend, Allstate surpassed expectations in three of the last four quarters, with an average beat of 3.62%.
ProAssurance Corporation (PRA - Free Report) provides professional liability insurance products primarily to physicians, dentists, other healthcare providers and healthcare facilities through its subsidiaries. To some extent, the company also engages in legal professional liability business in the Midwest. ProAssurance delivered a 0.00% earnings surprise last quarter. For the second quarter, ProAssurance has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate is pegged at 53 cents. The company currently carries a Zacks Rank #3.
With respect to the surprise trend, ProAssurance surpassed expectations in one of the last four quarters, with an average beat of 0.56%.
Heritage Insurance Holdings, Inc. (HRTG - Free Report) through its subsidiaries writes personal and commercial residential premium. Heritage Insurance delivered a 55.56% negative earnings surprise last quarter. The company has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 45 cents. So, although the company carries a favorable Zacks Rank #3, surprise prediction is difficult.
With respect to the surprise trend, Heritage Insurance surpassed expectations in three of the last four quarters.
Keep an eye on our full earnings articles to see how these companies finally fared.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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