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Insurance Stocks' Q4 Earnings Due on Feb 10: CINF, MFC & More

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Insurance industry players are likely to have benefited from improved pricing, strong retention, new business, favorable renewals, reinsurance agreements, compelling products and service portfolio, and adoption of technologies. However, catastrophe losses and lower interest rate might have acted as partial offsets.

Per the latest Earnings Preview, Finance is one of the nine among the 16 major Zacks sectors likely to report year-over-year earnings growth. The sector is expected to deliver 15.8% earnings growth on 0.6% higher revenues this time around. Integral to the finance sector, are the players in the insurance industry.

The fourth quarter bore the brunt of hurricanes Delta and Zeta, and the Tropical Storm Eta apart from other windstorms. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, prudent underwriting practice, favorable reserve development and a sturdy capital level are likely to have limited the downside.

Frequent natural disasters are likely to have accelerated the policy renewal rate and kept the momentum of increased pricing alive in the fourth quarter. Most of the commercial insurance lines are likely to have witnessed rate increase in the quarter.

A higher invested asset base might have somewhat limited the adverse impact of sustained low rates for insures. Investment income is an important component of their top line lines.

Given the slowdown in economic growth due to the pandemic, contributions from employers and employees are likely to have declined.

Nonetheless, the adoption of technologies is expected to have aided smooth functionality amid coronavirus-induced challenges and saved costs.

Let’s see how the following insurers are poised prior to their fourth-quarter earnings releases on Feb 10.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Cincinnati Financial Corporation’s (CINF - Free Report) fourth-quarter performance is likely to have been aided by better pricing, renewal price increases, higher level of insured exposure and disciplined expansion of Cincinnati Re. Also, the company’s agent-focused business model is likely to have been a positive. Exposure to cat losses is expected to have weighed on underwriting profitability. Nonetheless, despite a still low interest rate environment, improving cash flow from operating activities is estimated to have aided investment income. (Read more: Will Cincinnati Financial Top Estimates in Q4 Earnings?)

The Zacks Consensus Estimate for earnings per share of $1.17 indicates 4.9% decline from the year-ago quarter reported figure. The combination of its Earnings ESP of +2.72% and a Zacks Rank #3 makes us confident of a likely earnings beat.

The company surpassed estimates in two of the last four reported quarters, with the average negative surprise being 2.60%. This is depicted in the chart below:

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Manulife Financial (MFC - Free Report) : The Zacks Consensus Estimate for earnings per share of 53 cents for the fourth quarter indicates a decrease of 3.6% year over year. The combination of its Earnings ESP of +0.95% and a Zacks Rank #3 makes us confident of a likely earnings beat.

The company’s earnings outpaced estimates in two of the last four reported quarters, with the average surprise being 6.87%. The same is depicted in the chart below:

Manulife Financial Corp Price and EPS Surprise

Manulife Financial Corp Price and EPS Surprise

Manulife Financial Corp price-eps-surprise | Manulife Financial Corp Quote

Sun Life Financial (SLF - Free Report) : The Zacks Consensus Estimate for earnings per share of 96 cents for the fourth quarter indicates a decrease of 5.9% year over year. The combination of its Earnings ESP of +12.50% and a Zacks Rank #2 (Buy) makes us confident of a likely earnings beat.

The company’s earnings outpaced estimates in the last four reported quarters, with the average surprise being 14.78%. The same is depicted in the chart below:

Sun Life Financial Inc. Price and EPS Surprise

Sun Life Financial Inc. Price and EPS Surprise

Sun Life Financial Inc. price-eps-surprise | Sun Life Financial Inc. Quote

GoHealth (GOCO - Free Report) : The Zacks Consensus Estimate for earnings per share of 46 cents for the fourth quarter indicates an increase of 2.2% year over year. It has an Earnings ESP of +9.65% and a Zacks Rank #4 (Sell).

GoHealth, Inc. Price and EPS Surprise

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