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7 Insurers Poised to Beat Estimates This Earnings Season
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The Finance sector is set to report financial numbers from this week. Per the latest Earnings Preview, the sector’s earnings are expected to decrease 21.3% while revenues are estimated to decline 1.3%.
Integral to the Finance sector, insurers are likely to have benefited from compelling products and service portfolio, prudent underwriting, improved pricing and adoption of technologies. However, catastrophe losses and lower interest rate might have weighed on the positives.
Property and casualty (P&C) insurers have faced the brunt of hurricanes Hanna, Isaias, Laura and Sally. The third quarter of a year generally witnesses several catastrophes as the hurricane season typically starts in June and lasts through November, gathering strength in August and September. Notably, Colorado State University expects ‘extremely active Atlantic hurricane season in 2020 and hurricane activity will be about 190% of the average season’. Some P&C insurers have already come up with their third-quarter cat loss estimates. Catastrophe loss is expected to have dragged underwriting profit. The first half of 2020 already absorbed total economic losses of $75 billion or insured losses of $30 billion stemming from 207 catastrophe events across the globe.
However, better pricing, exposure growth and prudent underwriting are likely to have aided the P&C insurers to mitigate the downside. Frequent natural disasters should have accelerated the policy renewal rate and kept the momentum of increased pricing alive in the third quarter. Most of the commercial insurance lines are likely to have witnessed rate increase in the quarter. Also, reinsurance covers, favorable reserve development and sturdy capital level are likely to have helped in absorbing losses.
Given the slowdown in economic growth due to the pandemic, contributions from employers and employees are likely to have declined. Sales are also expected to have remained sluggish. Nonetheless, redesigning the product portfolio like moving away from guaranteed savings products toward protection products of unit-linked savings products, and refraining from selling long-duration term life insurance are likely to have helped Life insurers maintain sales and profitability.
A near-zero interest rate environment might have weighed on investments of the insurers.
Nonetheless, adoption of technologies is expected to have helped ensure smooth functionality amid coronavirus-induced challenges and saved costs.
The insurance industry gained 9.8% in the third quarter, outperforming the S&P 500 Index’s rise of 8.5% and the Finance sector’s increase of 3.6%.
Potential Q3 Outperformers
With the help of our Zacks Stock Screener, we have identified a few stocks poised to outshine the Zacks Consensus Estimate in third-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a favorable Zacks Rank — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Also, these stocks have a solid earnings history.
The Progressive Corporation (PGR - Free Report) provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States.
Earnings ESP: +0.60%
Zacks Rank #3 (Hold)
Average four-quarter positive surprise: 13.16%
CNO Financial Group (CNO - Free Report) develops, markets and administers health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States.
Earnings ESP: +2.52%
Zacks Rank #3
Average four-quarter positive surprise: 20.09%
Prudential Financial (PRU - Free Report) provides insurance, investment management, and other financial products and services.
Earnings ESP: +1.74%
Zacks Rank #3
Average four-quarter positive surprise: 6.74%
Manulife Financial Corporation (MFC - Free Report) provides financial advice, insurance and wealth as well as asset management solutions for individuals, groups and institutions in Asia, Canada, the United States and internationally.
Voya Financial (VOYA - Free Report) operates as a retirement, investment and employee benefits company in the United States.
Earnings ESP: +3.75%
Zacks Rank #3
Average four-quarter positive surprise: 6.92%
Aflac Incorporated (AFL - Free Report) provides supplemental health and life insurance products.
Earnings ESP: +3.46%
Zacks Rank #3
Average four-quarter positive surprise: 10.92%
Unum Group (UNM - Free Report) provides financial protection benefit solutions in the United States, the United Kingdom, Poland and internationally.
Earnings ESP: +9.19%
Zacks Rank #3
Average four-quarter positive surprise: 0.66%
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7 Insurers Poised to Beat Estimates This Earnings Season
The Finance sector is set to report financial numbers from this week. Per the latest Earnings Preview, the sector’s earnings are expected to decrease 21.3% while revenues are estimated to decline 1.3%.
Integral to the Finance sector, insurers are likely to have benefited from compelling products and service portfolio, prudent underwriting, improved pricing and adoption of technologies. However, catastrophe losses and lower interest rate might have weighed on the positives.
Property and casualty (P&C) insurers have faced the brunt of hurricanes Hanna, Isaias, Laura and Sally. The third quarter of a year generally witnesses several catastrophes as the hurricane season typically starts in June and lasts through November, gathering strength in August and September. Notably, Colorado State University expects ‘extremely active Atlantic hurricane season in 2020 and hurricane activity will be about 190% of the average season’. Some P&C insurers have already come up with their third-quarter cat loss estimates. Catastrophe loss is expected to have dragged underwriting profit. The first half of 2020 already absorbed total economic losses of $75 billion or insured losses of $30 billion stemming from 207 catastrophe events across the globe.
However, better pricing, exposure growth and prudent underwriting are likely to have aided the P&C insurers to mitigate the downside. Frequent natural disasters should have accelerated the policy renewal rate and kept the momentum of increased pricing alive in the third quarter. Most of the commercial insurance lines are likely to have witnessed rate increase in the quarter. Also, reinsurance covers, favorable reserve development and sturdy capital level are likely to have helped in absorbing losses.
Given the slowdown in economic growth due to the pandemic, contributions from employers and employees are likely to have declined. Sales are also expected to have remained sluggish. Nonetheless, redesigning the product portfolio like moving away from guaranteed savings products toward protection products of unit-linked savings products, and refraining from selling long-duration term life insurance are likely to have helped Life insurers maintain sales and profitability.
A near-zero interest rate environment might have weighed on investments of the insurers.
Nonetheless, adoption of technologies is expected to have helped ensure smooth functionality amid coronavirus-induced challenges and saved costs.
The insurance industry gained 9.8% in the third quarter, outperforming the S&P 500 Index’s rise of 8.5% and the Finance sector’s increase of 3.6%.
Potential Q3 Outperformers
With the help of our Zacks Stock Screener, we have identified a few stocks poised to outshine the Zacks Consensus Estimate in third-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a favorable Zacks Rank — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Also, these stocks have a solid earnings history.
The Progressive Corporation (PGR - Free Report) provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States.
Earnings ESP: +0.60%
Zacks Rank #3 (Hold)
Average four-quarter positive surprise: 13.16%
CNO Financial Group (CNO - Free Report) develops, markets and administers health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States.
Earnings ESP: +2.52%
Zacks Rank #3
Average four-quarter positive surprise: 20.09%
Prudential Financial (PRU - Free Report) provides insurance, investment management, and other financial products and services.
Earnings ESP: +1.74%
Zacks Rank #3
Average four-quarter positive surprise: 6.74%
Manulife Financial Corporation (MFC - Free Report) provides financial advice, insurance and wealth as well as asset management solutions for individuals, groups and institutions in Asia, Canada, the United States and internationally.
Earnings ESP: +6.80%
Zacks Rank #2 (Buy)
Average four-quarter positive surprise: 6.74%
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Voya Financial (VOYA - Free Report) operates as a retirement, investment and employee benefits company in the United States.
Earnings ESP: +3.75%
Zacks Rank #3
Average four-quarter positive surprise: 6.92%
Aflac Incorporated (AFL - Free Report) provides supplemental health and life insurance products.
Earnings ESP: +3.46%
Zacks Rank #3
Average four-quarter positive surprise: 10.92%
Unum Group (UNM - Free Report) provides financial protection benefit solutions in the United States, the United Kingdom, Poland and internationally.
Earnings ESP: +9.19%
Zacks Rank #3
Average four-quarter positive surprise: 0.66%
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>