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Insurers' Q2 Earnings to Watch on Jul 19: AWH, MTG, RLI
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The second-quarter earnings season is gearing up with 36 members of the S&P 500 having reported already, as per the Earnings Preview report. Earnings so far have declined 3.9% on 0.1% lower revenues. However, the beat ratio is 66.7% for the bottom line and 41.7% for the top line.
About 7.8% of the companies in the Finance sector have already reported their results. Total earnings have declined 5.4%, though revenues managed a 0.4% improvement. The beat ratio is 57.1% for earnings and 42.9% for revenues.
The insurance industry is part of the broader finance sector. Let’s see how the second quarter has turned up for insurers so far. This quarter witnessed varied catastrophe, including a wildfire in Canada, flooding in Europe, earthquakes in Japan and Ecuador and hailstorms in Texas. Underwriting results were affected with underwriting income and combined ratio witnessing deterioration.
Despite a slight rise in interest by the Fed last December, the interest rate environment still remains low. This in turn will keep investment results under pressure. Nonetheless, the slight rate rise is a breather for life insurers which suffered spread compression on products like fixed annuities and universal life due to sustained low rates.
Nonetheless, insurers in this well capitalized industry remain well poised on the back of their expanded and diversified product and service portfolio, driving premiums higher.
With the second-quarter earnings season unfolding in a big way this week, let see what’s in store for three insurance companies that will report on Jul 19.
MGIC Investment Corp. (MTG - Free Report) provides mortgage insurance and risk management products and services to mortgage lenders and structured finance services to investors. The company delivered a 17.39% negative surprise last quarter. MGIC Investment has an Earnings ESP of negative 10.0% and a Zacks Rank #5 (Strong Sell). The Zacks Consensus Estimate for the quarter is pegged at 20 cents.
MGIC Investment is likely to have witnessed lower new insurance written in the second quarter owing to the revised premium rates. However, growth in its insurance in force portfolio may have driven higher revenues. (Read more: MGIC Investment Q2 Earnings: What's in the Cards?)
With respect to the surprise trend, MGIC Investment surpassed expectations in three of the last four quarters, with an average beat of 10.04%.
RLI Corp. (RLI - Free Report) is a specialty property-casualty (P&C) underwriter that caters primarily to niche markets. The company delivered a 3.85% positive surprise in the last quarter. For the second quarter of 2016, RLI Corp has an Earnings ESP of 0.00%. It currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at 63 cents.
RLI Corp. is expected to benefit from improved premiums owing to its impressive business expansion and stable rate environment. However, increased expenses may have limited bottom-line improvement. (Read more: Will RLI Corp. Pull a Surprise this Earnings Season?)
With respect to the surprise trend, RLI Corp. surpassed expectations in three of the last four quarters, with an average beat of 11.54%.
Allied World Assurance Company Holdings, AG (AWH - Free Report) provides innovative property, casualty and specialty insurance and reinsurance solutions. Allied World delivered a 10.17% positive earnings surprise last quarter. Allied World has an Earnings ESP of -15.91% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at 44 cents.
Allied World’s underwriting results are likely to suffer due to the occurrence of several catastrophe events. Also, a low interest rate environment might thwart the improvement in investment results. However, strategic acquisitions focus on expense reduction and share repurchases should favor the quarter’s results. (Read: Allied World Q2 Earnings Beat Unlikely, Stock at Risk?)
With respect to the surprise trend, Allied World surpassed expectations in two of the last four quarters, with an average miss of 12.82%.
Keep an eye on our full earnings articles to see how these companies finally fared.
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Insurers' Q2 Earnings to Watch on Jul 19: AWH, MTG, RLI
The second-quarter earnings season is gearing up with 36 members of the S&P 500 having reported already, as per the Earnings Preview report. Earnings so far have declined 3.9% on 0.1% lower revenues. However, the beat ratio is 66.7% for the bottom line and 41.7% for the top line.
About 7.8% of the companies in the Finance sector have already reported their results. Total earnings have declined 5.4%, though revenues managed a 0.4% improvement. The beat ratio is 57.1% for earnings and 42.9% for revenues.
The insurance industry is part of the broader finance sector. Let’s see how the second quarter has turned up for insurers so far. This quarter witnessed varied catastrophe, including a wildfire in Canada, flooding in Europe, earthquakes in Japan and Ecuador and hailstorms in Texas. Underwriting results were affected with underwriting income and combined ratio witnessing deterioration.
Despite a slight rise in interest by the Fed last December, the interest rate environment still remains low. This in turn will keep investment results under pressure. Nonetheless, the slight rate rise is a breather for life insurers which suffered spread compression on products like fixed annuities and universal life due to sustained low rates.
Nonetheless, insurers in this well capitalized industry remain well poised on the back of their expanded and diversified product and service portfolio, driving premiums higher.
With the second-quarter earnings season unfolding in a big way this week, let see what’s in store for three insurance companies that will report on Jul 19.
MGIC Investment Corp. (MTG - Free Report) provides mortgage insurance and risk management products and services to mortgage lenders and structured finance services to investors. The company delivered a 17.39% negative surprise last quarter. MGIC Investment has an Earnings ESP of negative 10.0% and a Zacks Rank #5 (Strong Sell). The Zacks Consensus Estimate for the quarter is pegged at 20 cents.
MGIC Investment is likely to have witnessed lower new insurance written in the second quarter owing to the revised premium rates. However, growth in its insurance in force portfolio may have driven higher revenues. (Read more: MGIC Investment Q2 Earnings: What's in the Cards?)
With respect to the surprise trend, MGIC Investment surpassed expectations in three of the last four quarters, with an average beat of 10.04%.
MGIC INVSTMT CP Price and EPS Surprise
MGIC INVSTMT CP Price and EPS Surprise | MGIC INVSTMT CP Quote
RLI Corp. (RLI - Free Report) is a specialty property-casualty (P&C) underwriter that caters primarily to niche markets. The company delivered a 3.85% positive surprise in the last quarter. For the second quarter of 2016, RLI Corp has an Earnings ESP of 0.00%. It currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at 63 cents.
RLI Corp. is expected to benefit from improved premiums owing to its impressive business expansion and stable rate environment. However, increased expenses may have limited bottom-line improvement. (Read more: Will RLI Corp. Pull a Surprise this Earnings Season?)
With respect to the surprise trend, RLI Corp. surpassed expectations in three of the last four quarters, with an average beat of 11.54%.
RLI CORP Price and EPS Surprise
RLI CORP Price and EPS Surprise | RLI CORP Quote
Allied World Assurance Company Holdings, AG (AWH - Free Report) provides innovative property, casualty and specialty insurance and reinsurance solutions. Allied World delivered a 10.17% positive earnings surprise last quarter. Allied World has an Earnings ESP of -15.91% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at 44 cents.
Allied World’s underwriting results are likely to suffer due to the occurrence of several catastrophe events. Also, a low interest rate environment might thwart the improvement in investment results. However, strategic acquisitions focus on expense reduction and share repurchases should favor the quarter’s results. (Read: Allied World Q2 Earnings Beat Unlikely, Stock at Risk?)
With respect to the surprise trend, Allied World surpassed expectations in two of the last four quarters, with an average miss of 12.82%.
ALLIED WORLD AS Price and EPS Surprise
ALLIED WORLD AS Price and EPS Surprise | ALLIED WORLD AS Quote
Keep an eye on our full earnings articles to see how these companies finally fared.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>