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3 Insurers Set to Outperform Estimates This Earnings Season
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Per the latest Earnings Preview, the Finance sector’s fourth-quarter 2022 earnings are expected to decline 15.5% while revenues are estimated to improve 6.1%. Results of Insurance, one of the Finance sector industries, are likely to have benefited from better pricing and exposure growth, accelerated digitalization and improving interest rate.
With the help of the Zacks Stock Screener, we have identified three insurers namely, American International Group, Inc. (AIG - Free Report) , Manulife Financial Corporation (MFC - Free Report) and Primerica, Inc. (PRI - Free Report) , which are poised to outshine the Zacks Consensus Estimate in fourth-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), #3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Impact Q4 Results
The fourth quarter of 2022 bore the brunt of winter storm Elliot. Karen Clark & Company estimates industry losses from Elliot to be about $5.4 billion. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers, favorable reserve development and prudent underwriting are likely to drive an improvement in underwriting results.
Insurers, being beneficiaries of an improving rate environment, are expected to come up with improved investment results. The fourth quarter itself saw two rate hikes. A larger investment asset base and alternative investments in private equity, hedge funds, and real estate, among others, coupled with an improving rate environment, are expected to have aided net investment income, an important component of insurers’ top line.
Life insurers have been redesigning products focusing on protection products. Also, life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with “living” benefits more than those with death benefits. Increasing awareness and demand for protection products are likely to have driven sales.
The insurance industry continues to invest in digitalization. Accelerated digitalization is likely to have saved costs and driven margin expansion.
Banking on operational efficiency resulting in a solid capital position, insurers continue to engage in strategic mergers and acquisitions, build on a niche, expand globally, diversify their portfolio and deploy capital to make dividend hikes and pay special dividends. Thus, share buybacks are expected to have provided an additional upside to the bottom line.
Potential Q4 Outperformers
American International provides insurance products for commercial, institutional, and individual customers in North America and internationally. Well-performing Commercial and Personal lines businesses are likely to drive the quarterly results. The hardening of insurance rates and new business growth bodes well for premium growth. The multi-year initiative to achieve transformational changes is likely to have aided cost savings. The company is expected to achieve run-rate savings of $1 billion by the end of 2022.
The Zacks Consensus Estimate for AIG’s fourth-quarter earnings is pegged at $1.19, suggesting a decrease of 24.7% from the year-ago reported figure. American International has an Earnings ESP of +0.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International Group, Inc. Price and EPS Surprise
Manulife Financial is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States and several Asian countries. Solid Asia business, expanding wealth management business and cost reduction initiatives are likely to aid fourth-quarter results. New business volumes and positive net flows in its wealth and asset management businesses are likely have added to the upside.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 61 cents, indicating a decline of 9% from the year-ago reported figure. MFC has an Earnings ESP of +2.20% and a Zacks Rank #2.
Primerica is the second-largest issuer of term-life insurance coverage in North America. It has been focused on emerging as a successful senior health business. Sales growth and policy persistency are likely to have benefited from solid demand for protection products. Focus on increasing the size of the life license sales force through continued recruiting and licensing are likely to have added to the upside.
The Zacks Consensus Estimate for PRI’s fourth-quarter earnings is pegged at $2.94, flat year over year. It has an Earnings ESP of +0.26% and a Zacks Rank #3.
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3 Insurers Set to Outperform Estimates This Earnings Season
Per the latest Earnings Preview, the Finance sector’s fourth-quarter 2022 earnings are expected to decline 15.5% while revenues are estimated to improve 6.1%. Results of Insurance, one of the Finance sector industries, are likely to have benefited from better pricing and exposure growth, accelerated digitalization and improving interest rate.
With the help of the Zacks Stock Screener, we have identified three insurers namely, American International Group, Inc. (AIG - Free Report) , Manulife Financial Corporation (MFC - Free Report) and Primerica, Inc. (PRI - Free Report) , which are poised to outshine the Zacks Consensus Estimate in fourth-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), #3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Impact Q4 Results
The fourth quarter of 2022 bore the brunt of winter storm Elliot. Karen Clark & Company estimates industry losses from Elliot to be about $5.4 billion. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers, favorable reserve development and prudent underwriting are likely to drive an improvement in underwriting results.
Insurers, being beneficiaries of an improving rate environment, are expected to come up with improved investment results. The fourth quarter itself saw two rate hikes. A larger investment asset base and alternative investments in private equity, hedge funds, and real estate, among others, coupled with an improving rate environment, are expected to have aided net investment income, an important component of insurers’ top line.
Life insurers have been redesigning products focusing on protection products. Also, life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with “living” benefits more than those with death benefits. Increasing awareness and demand for protection products are likely to have driven sales.
The insurance industry continues to invest in digitalization. Accelerated digitalization is likely to have saved costs and driven margin expansion.
Banking on operational efficiency resulting in a solid capital position, insurers continue to engage in strategic mergers and acquisitions, build on a niche, expand globally, diversify their portfolio and deploy capital to make dividend hikes and pay special dividends. Thus, share buybacks are expected to have provided an additional upside to the bottom line.
Potential Q4 Outperformers
American International provides insurance products for commercial, institutional, and individual customers in North America and internationally. Well-performing Commercial and Personal lines businesses are likely to drive the quarterly results. The hardening of insurance rates and new business growth bodes well for premium growth. The multi-year initiative to achieve transformational changes is likely to have aided cost savings. The company is expected to achieve run-rate savings of $1 billion by the end of 2022.
The Zacks Consensus Estimate for AIG’s fourth-quarter earnings is pegged at $1.19, suggesting a decrease of 24.7% from the year-ago reported figure. American International has an Earnings ESP of +0.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International Group, Inc. Price and EPS Surprise
American International Group, Inc. price-eps-surprise | American International Group, Inc. Quote
Manulife Financial is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States and several Asian countries. Solid Asia business, expanding wealth management business and cost reduction initiatives are likely to aid fourth-quarter results. New business volumes and positive net flows in its wealth and asset management businesses are likely have added to the upside.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 61 cents, indicating a decline of 9% from the year-ago reported figure. MFC has an Earnings ESP of +2.20% and a Zacks Rank #2.
Manulife Financial Corp Price and EPS Surprise
Manulife Financial Corp price-eps-surprise | Manulife Financial Corp Quote
Primerica is the second-largest issuer of term-life insurance coverage in North America. It has been focused on emerging as a successful senior health business. Sales growth and policy persistency are likely to have benefited from solid demand for protection products. Focus on increasing the size of the life license sales force
through continued recruiting and licensing are likely to have added to the upside.
The Zacks Consensus Estimate for PRI’s fourth-quarter earnings is pegged at $2.94, flat year over year. It has an Earnings ESP of +0.26% and a Zacks Rank #3.
Primerica, Inc. Price and EPS Surprise
Primerica, Inc. price-eps-surprise | Primerica, Inc. Quote