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Can Hartford Financial (HIG) Sustain its Beat Streak in Q4 Earnings?
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The Hartford Financial Services Group, Inc. (HIG - Free Report) is scheduled to release fourth-quarter 2022 results on Feb 2, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for Hartford Financial’s fourth-quarter earnings per share is pegged at $1.86, indicating a decline of 7.9% from the prior-year quarter’s reported figure but is higher than our estimate of $1.77.
The consensus mark for revenues stands at $3,867 million, suggesting a 4.7% rise from the year-ago quarter’s reported number.
Earnings Surprise History
Hartford Financial boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
Our proven model predicts an earnings beat for Hartford Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: Hartford Financial has an Earnings ESP of +0.18% because the Most Accurate Estimate of $1.87 is pegged higher than the Zacks Consensus Estimate of $1.86. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
The top line of Hartford Financial is likely to have benefited on the back of higher premiums from its Commercial Lines, Personal Lines and Group Benefits businesses in the fourth quarter. Prudent rate increases, broader exposure, increased new business generation and strong retention rates might have boosted the performance of Commercial Lines business in the to-be-reported quarter.
The Zacks Consensus Estimate for earned premiums of HIG’s Commercial Lines business is pegged at $2,780 million, which indicates a rise of 10.6% from the prior-year quarter’s reported figure but is lower than our estimate of $2,798.9 million.
The Personal Lines business of Hartford Financial is expected to have gained from continued rate increases in order to mitigate inflationary pressures in the fourth quarter. Improved expense ratios in both auto and homeowners business lines might have also acted as tailwinds driving the quarterly performance of the business. The consensus mark for Personal Lines’ earned premiums stands at $739 million, suggesting 0.1% growth from the prior-year quarter’s reported number but lower than our estimate of $741.9 million.
Growing fully insured premiums and reduced excess mortality losses are likely to have driven the performance of HIG’s Group Benefits business in the fourth quarter. The Zacks Consensus Estimate for the net earned premiums of the business is pegged at $1,435 million, which indicates a rise of 4% from the year-ago quarter’s reported figure but is lower than our estimate of $1,437.8 million.
An improving interest rate environment is expected to have benefited the net investment income of Hartford Financial in the to-be-reported quarter.
However, HIG’s underwriting results might have taken a hit from the continued incidence of catastrophe losses. Inflationary headwinds paving way for an elevated average loss per claim is likely to have exerted pressure on the underwriting performance and consequently, lead to a deterioration in the combined ratio.
The consensus estimates for the combined ratio in Hartford Financial’s Commercial Lines and Personal businesses are pegged at 88% and 101%, respectively. The figures indicate deteriorations of 300 basis points (bps) and 700 bps from their corresponding prior-year quarter’s reported numbers.
However, the margins of HIG are expected to have suffered due to higher investments to boost digital capabilities, claims automation processes and administrative platform.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, too have the right combination of elements to beat on earnings this time around:
CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +6.31% and is Zacks #2 Ranked, currently. The Zacks Consensus Estimate for CNO’s fourth-quarter 2022 earnings is pegged at 56 cents per share, suggesting a decrease of 35.6% from the prior-year quarter’s reported number.
The bottom line of CNO Financial beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 26.02%.
Arch Capital Group Ltd. (ACGL - Free Report) currently has an Earnings ESP of +5.42% and a Zacks Rank of 3. The Zacks Consensus Estimate for ACGL’s fourth-quarter 2022 earnings is pegged at $1.34 per share, indicating a 5.5% increase from the prior-year quarter’s reported figure.
Arch Capital’s bottom line beat earnings estimates in three of the trailing four quarters and missed the mark once, the average surprise being 15.37%.
NMI Holdings, Inc. (NMIH - Free Report) currently has an Earnings ESP of +2.33% and a Zacks Rank of 3. The Zacks Consensus Estimate for NMIH’s fourth-quarter 2022 earnings is pegged at 86 cents per share, indicating a 17.8% increase from the prior-year quarter’s reported figure.
NMI Holdings’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 6.38%.
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Can Hartford Financial (HIG) Sustain its Beat Streak in Q4 Earnings?
The Hartford Financial Services Group, Inc. (HIG - Free Report) is scheduled to release fourth-quarter 2022 results on Feb 2, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for Hartford Financial’s fourth-quarter earnings per share is pegged at $1.86, indicating a decline of 7.9% from the prior-year quarter’s reported figure but is higher than our estimate of $1.77.
The consensus mark for revenues stands at $3,867 million, suggesting a 4.7% rise from the year-ago quarter’s reported number.
Earnings Surprise History
Hartford Financial boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing six quarters. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for Hartford Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: Hartford Financial has an Earnings ESP of +0.18% because the Most Accurate Estimate of $1.87 is pegged higher than the Zacks Consensus Estimate of $1.86. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: HIG carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note
The top line of Hartford Financial is likely to have benefited on the back of higher premiums from its Commercial Lines, Personal Lines and Group Benefits businesses in the fourth quarter. Prudent rate increases, broader exposure, increased new business generation and strong retention rates might have boosted the performance of Commercial Lines business in the to-be-reported quarter.
The Zacks Consensus Estimate for earned premiums of HIG’s Commercial Lines business is pegged at $2,780 million, which indicates a rise of 10.6% from the prior-year quarter’s reported figure but is lower than our estimate of $2,798.9 million.
The Personal Lines business of Hartford Financial is expected to have gained from continued rate increases in order to mitigate inflationary pressures in the fourth quarter. Improved expense ratios in both auto and homeowners business lines might have also acted as tailwinds driving the quarterly performance of the business. The consensus mark for Personal Lines’ earned premiums stands at $739 million, suggesting 0.1% growth from the prior-year quarter’s reported number but lower than our estimate of $741.9 million.
Growing fully insured premiums and reduced excess mortality losses are likely to have driven the performance of HIG’s Group Benefits business in the fourth quarter. The Zacks Consensus Estimate for the net earned premiums of the business is pegged at $1,435 million, which indicates a rise of 4% from the year-ago quarter’s reported figure but is lower than our estimate of $1,437.8 million.
An improving interest rate environment is expected to have benefited the net investment income of Hartford Financial in the to-be-reported quarter.
However, HIG’s underwriting results might have taken a hit from the continued incidence of catastrophe losses. Inflationary headwinds paving way for an elevated average loss per claim is likely to have exerted pressure on the underwriting performance and consequently, lead to a deterioration in the combined ratio.
The consensus estimates for the combined ratio in Hartford Financial’s Commercial Lines and Personal businesses are pegged at 88% and 101%, respectively. The figures indicate deteriorations of 300 basis points (bps) and 700 bps from their corresponding prior-year quarter’s reported numbers.
However, the margins of HIG are expected to have suffered due to higher investments to boost digital capabilities, claims automation processes and administrative platform.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, too have the right combination of elements to beat on earnings this time around:
CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +6.31% and is Zacks #2 Ranked, currently. The Zacks Consensus Estimate for CNO’s fourth-quarter 2022 earnings is pegged at 56 cents per share, suggesting a decrease of 35.6% from the prior-year quarter’s reported number.
The bottom line of CNO Financial beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 26.02%.
Arch Capital Group Ltd. (ACGL - Free Report) currently has an Earnings ESP of +5.42% and a Zacks Rank of 3. The Zacks Consensus Estimate for ACGL’s fourth-quarter 2022 earnings is pegged at $1.34 per share, indicating a 5.5% increase from the prior-year quarter’s reported figure.
Arch Capital’s bottom line beat earnings estimates in three of the trailing four quarters and missed the mark once, the average surprise being 15.37%.
NMI Holdings, Inc. (NMIH - Free Report) currently has an Earnings ESP of +2.33% and a Zacks Rank of 3. The Zacks Consensus Estimate for NMIH’s fourth-quarter 2022 earnings is pegged at 86 cents per share, indicating a 17.8% increase from the prior-year quarter’s reported figure.
NMI Holdings’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 6.38%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.