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Insurance ETFs Gain on Solid Q2 Earnings

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Performance of the insurance industry has been strong this reporting cycle, with the leading players posting robust earnings. 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) surpassed estimates either 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 $2.37 per share, which outpaced the Zacks Consensus Estimate by 76 cents and increased three-folds from the year-ago quarter. Revenues rose 17% year over year to $16.24 billion but missed the consensus estimate of $16.28 billion. PRU, the second-largest U.S. life insurer, also beat on earnings but lagged revenue estimates. Earnings per share of $3.79 topped the Zacks Consensus Estimate of $3.04 and increased two-folds from the year-ago earnings. Revenues grew 1.3% year over year to $13.1 billion but fell shy of the consensus mark of $13.83 billion.

One of the leading property and casualty insurers, Chubb, outpaced the Zacks Consensus Estimate for the top and the bottom lines by $1.4 billion and 66 cents, respectively. Earnings per share rebounded from the year-ago loss of 52 cents per share. Another property and casualty insurer, Allstate, came up with earnings per share of $3.79, topping the consensus estimate by 80 cents and improving 46.9% year over year. Revenues grew 21.6% year over year to $12.5 billion (read: A Spread of Top S&P 500 ETFs to Tap Solid Q2 Earnings Growth).

Earnings per share of $1.59 reported by Aflac, a seller of supplement health insurance, trumped the Zacks Consensus Estimate by 32 cents and increased 24.2% from the year-ago earnings. Revenues increased 2.9% year over year to $5.6 billion and beat the consensus mark by 4.5%.

Personal property and casualty insurer Travelers posted earnings per share of $3.45, exceeding the Zacks Consensus Estimate by $1.10 and improved from the year-ago loss of 20 cents. Revenues grew 17% year over year to $8.63 billion and outpaced the consensus mark of $8.29 billion.

ETFs in Focus

A string of solid second-quarter earnings from the insurance industry players had a positive impact on the related ETFs that saw smooth trading over past month. SPDR S&P Insurance ETF (KIE - Free Report) and iShares U.S. Insurance ETF (IAK - Free Report) gained 2% and 2.8%, respectively. Both funds have a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Below, we highlight them in detail.


This fund follows the S&P Insurance Select Industry Index, holding 54 stocks in its basket. Each of the in-focus firms accounts for around 2% share. About 43.4% of the portfolio is allocated to property and casualty insurance, while life & health insurance accounts for 26.1% share. The ETF has managed $458.8 million in its asset base and trades in a good average daily volume of about 681,000 shares. The product has an expense ratio of 0.35% (read: 5 Top-Ranked ETFs Looking Good After a Decent July).


With AUM of $104.2 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 42 basis points in annual fees. Volume is light, trading in roughly 5,000 shares per day. In total, the fund holds 62 securities in its basket with the in-focus six firms occupying the top eight positions and collectively making up 38% of the assets. Here also, property & casualty insurance accounts for the largest share at 50.6%, while life & health insurance and multiline insurance round off the next two spots with a double-digit exposure each.