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P&C Insurance Stocks Q4 Earnings on Jan 26: PGR, RLI & AXS

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The Zacks Property and Casualty Insurance industry players are likely to have benefited from improved pricing,  exposure growth, solid retention, favorable renewals, reinsurance agreements, and accelerated digitalization in the fourth quarter. A low-rate interest rate environment remained partial offsets.

Better pricing, reinsurance arrangements, portfolio repositioning and prudent underwriting practice are likely to drive improvement in underwriting results. The fourth quarter of 2021 witnessed a benign cat environment though it bore the brunt of a tornado in Kentucky, a wildfire in Colorado and a few storms.

Premiums are likely to have benefited from improved pricing. Occurrences of natural disasters are likely to have prompted price rise in the fourth quarter also. Per Willis Towers Watson’s 2021 Insurance Marketplace Realities report, except for one, 29 lines should witness a price rise. Reinsurance covers, favorable reserve development and solid capital level are thus likely to have aided underwriting profitability.

A still near-zero interest rate environment is likely to have weighed on investment income and yield. Thus, a higher invested asset base as well as increased investment in alternative assets likely have limited the downside.

Accelerated digitalization like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation is expected to have expedited business operations and saved costs, thus aiding margins.

Banking on the solid capital position, insurers pursued strategic mergers and acquisitions to sharpen their competitive edge, build on a niche, expand geographically, and diversify their portfolio to have a compelling product offering.

Let’s take a sneak peek into how the following insurers are poised prior to their fourth-quarter earnings reports on Jan 26.

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.

Progressive Corporation’s (PGR - Free Report) improved rates, solid policies in force and higher retention in its strong performing Vehicle and Property businesses are likely to have driven premiums. Policies in force are likely to have improved given the company’s focus on segmentation and prudent risk selection. (Read more: What's in the Cards for Progressive in Q4 Earnings?)

The Zacks Consensus Estimate for Progressive’s earnings per share of 99 cents indicates a 45.9% decrease from the year-ago quarter reported figure. The company has an Earnings ESP of +0.34% and a Zacks Rank 3.  

Progressive surpassed estimates in one of the three reported quarters of 2021 and missed in the other two. This is depicted in the chart below:

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

The Zacks Consensus Estimate for RLI Corporation’s (RLI - Free Report) earnings per share of 99 cents indicates an increase of 26.7% from the year-ago reported figure. The consensus estimate for revenues is pegged at $278.2 million, up 15.2% year over year.

RLI has an Earnings ESP of 0.00% and a Zacks Rank #3. A strong local branch-office network, a broad range of product offerings and its focus on specialty insurance lines are likely to aid RLI’s fourth-quarter results.

RLI’s earnings outpaced estimates in all the three reported quarters of 2021.

The same is depicted in the chart below:

RLI Corp. Price and EPS Surprise

RLI Corp. Price and EPS Surprise

RLI Corp. price-eps-surprise | RLI Corp. Quote

The Zacks Consensus Estimate for Axis Capital Holdings Limited (AXS - Free Report) earnings per share of $1.35 per share indicates an increase of 775% from the year-ago reported figure. The consensus estimate for revenues is pegged at $1.2 billion, indicating an upside of 3.4% year over year.

Axis Capital has an Earnings ESP of -0.74% and a Zacks Rank #2. Building on its Specialty Insurance, Reinsurance plus Accident and Health, improved portfolio mix and better pricing are likely to aid fourth-quarter results.

Axis Capital’s earnings outpaced estimates in all the three reported quarters of 2021.

The same is depicted in the chart below:



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RLI Corp. (RLI) - free report >>

Axis Capital Holdings Limited (AXS) - free report >>

The Progressive Corporation (PGR) - free report >>