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P&C Insurers Q3 Earnings to Watch on Nov 3: AFSI, THG & More
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The Q3 earnings season is in full swing with 66.4% of the S&P 500 Index members already having reported their results. Earnings of these 332 members (accounting for 74.1% of the index’s total market capitalization) are up 1.9% on 1.3% higher revenues, per the latest Earnings Preview report. While 72.9% of these companies delivered positive earnings surprises, 55.4% managed to beat revenue estimates.
The Finance sector (one of the 16 Zacks sectors) has started the Q3 earnings season on a strong note. In fact, the financial performance of 86.7% companies from this sector that have already reported their quarterly results indicates 10.9% earnings growth due to a 6% increase in revenues, on a year-over-year basis. Moreover, the beat ratios of 71.8% for the bottom line and 73.1% for the top line compare favorably with the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and financial transaction services to name a few.
Insurers, particularly the property and casualty (P&C) companies, are expected to witness an improvement in underwriting results – underwriting income and combined ratio – courtesy of a benign cat loss environment. This, along with prudent reserving practices, should lead to favorable reserve development.
The industry is expected to see another profitable quarter backed by capital gains and reserve releases. Exposure to key areas of the economy, such as new vehicle sales and construction, should benefit property and casualty insurers.
However, a still low interest rate environment will continue to weigh on investment yields and consequently hurt investment income. Lower investment income might hurt quarterly revenues as it is one of the major contributors of top-line growth.
Nonetheless, a broader invested asset base and alternative asset classes should offer some respite. We note that insurers that have managed to accumulate excess capital due to lower catastrophe losses in recent years are deploying the same to buy back shares. This strategy should boost their bottom line in Q3.
Insurance - Property and Casualty Industry Price Index
Let’s take a look at how these four P&C insurers might fare when they report their Q3 numbers on Nov 3.
AmTrust Financial Services, Inc. is an underwriter and provider of P&C insurance in the U.S. and internationally. The company delivered a positive earnings surprise of 14.08% in the last quarter. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise. AmTrust has a Zacks Rank #4 (Sell). As a caution, we advise investors against considering Sell-rated stocks (Zacks Rank #4 and 5) going into an earnings announcement. This apart, the company has an Earnings ESP of -5.63%, which makes prediction difficult. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
In terms of surprise trend, AmTrust beat expectations in all of the last four quarters, with an average beat of 14.37%. The Zacks Consensus Estimate for Q3 is pegged at 71 cents per share.
The Hanover Insurance Group, Inc. (THG - Free Report) is a provider of various property and casualty insurance products and services in the United States and internationally. The company delivered a positive earnings surprise of 1.64% in the last quarter. Though The Hanover Insurance has a favorable Zacks Rank #2. Our surprise prediction is complicated by its Earnings ESP of 0.00%. You can see the complete list of today’s Zacks Rank #1 stocks here.
In terms of surprise trend, The Hanover Insurance surpassed expectations in all of the last four quarters, with an average beat of 8.72%. The Zacks Consensus Estimate for Q3 is pegged at $1.78 per share.
The Navigators Group, Inc. is an underwriter of ocean marine, P&C, professional liability, and specialty insurance products and services in the U.S. and internationally. The company delivered a positive earnings surprise of 1.64% in the last quarter. Though The Navigators Group has a favorable Zacks Rank #2 its Earnings ESP of 0.00% makes surprise prediction difficult.
In terms of surprise trend, The Navigators Group outpaced expectations in all of the last four quarters, with an average beat of 8.72%. The Zacks Consensus Estimate for Q3 is pegged at $1.78 per share.
Third Point Reinsurance Ltd. is a provider of various specialty P&C reinsurance products in the Americas, Europe, the Middle East, Africa, and Asia. The company posted a negative earnings surprise of 23.88% in the last quarter. Third Point Reinsurance carries a Zacks Rank #5 and an Earnings ESP of 0.00%.
In terms of surprise trend, Third Point Reinsurance missed expectations in two of the last four quarters, with an average miss of 8.98%. The Zacks Consensus Estimate for Q3 is pegged at 66 cents per share.
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P&C Insurers Q3 Earnings to Watch on Nov 3: AFSI, THG & More
The Q3 earnings season is in full swing with 66.4% of the S&P 500 Index members already having reported their results. Earnings of these 332 members (accounting for 74.1% of the index’s total market capitalization) are up 1.9% on 1.3% higher revenues, per the latest Earnings Preview report. While 72.9% of these companies delivered positive earnings surprises, 55.4% managed to beat revenue estimates.
The Finance sector (one of the 16 Zacks sectors) has started the Q3 earnings season on a strong note. In fact, the financial performance of 86.7% companies from this sector that have already reported their quarterly results indicates 10.9% earnings growth due to a 6% increase in revenues, on a year-over-year basis. Moreover, the beat ratios of 71.8% for the bottom line and 73.1% for the top line compare favorably with the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and financial transaction services to name a few.
Insurers, particularly the property and casualty (P&C) companies, are expected to witness an improvement in underwriting results – underwriting income and combined ratio – courtesy of a benign cat loss environment. This, along with prudent reserving practices, should lead to favorable reserve development.
The industry is expected to see another profitable quarter backed by capital gains and reserve releases. Exposure to key areas of the economy, such as new vehicle sales and construction, should benefit property and casualty insurers.
However, a still low interest rate environment will continue to weigh on investment yields and consequently hurt investment income. Lower investment income might hurt quarterly revenues as it is one of the major contributors of top-line growth.
Nonetheless, a broader invested asset base and alternative asset classes should offer some respite. We note that insurers that have managed to accumulate excess capital due to lower catastrophe losses in recent years are deploying the same to buy back shares. This strategy should boost their bottom line in Q3.
Insurance - Property and Casualty Industry Price Index
Insurance - Property and Casualty Industry Price Index
Let’s take a look at how these four P&C insurers might fare when they report their Q3 numbers on Nov 3.
AmTrust Financial Services, Inc. is an underwriter and provider of P&C insurance in the U.S. and internationally. The company delivered a positive earnings surprise of 14.08% in the last quarter. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise. AmTrust has a Zacks Rank #4 (Sell). As a caution, we advise investors against considering Sell-rated stocks (Zacks Rank #4 and 5) going into an earnings announcement. This apart, the company has an Earnings ESP of -5.63%, which makes prediction difficult. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
In terms of surprise trend, AmTrust beat expectations in all of the last four quarters, with an average beat of 14.37%. The Zacks Consensus Estimate for Q3 is pegged at 71 cents per share.
AMTRUST FIN SVC Price and EPS Surprise
AMTRUST FIN SVC Price and EPS Surprise | AMTRUST FIN SVC Quote
The Hanover Insurance Group, Inc. (THG - Free Report) is a provider of various property and casualty insurance products and services in the United States and internationally. The company delivered a positive earnings surprise of 1.64% in the last quarter. Though The Hanover Insurance has a favorable Zacks Rank #2. Our surprise prediction is complicated by its Earnings ESP of 0.00%. You can see the complete list of today’s Zacks Rank #1 stocks here.
In terms of surprise trend, The Hanover Insurance surpassed expectations in all of the last four quarters, with an average beat of 8.72%. The Zacks Consensus Estimate for Q3 is pegged at $1.78 per share.
HANOVER INSURAN Price and EPS Surprise
HANOVER INSURAN Price and EPS Surprise | HANOVER INSURAN Quote
The Navigators Group, Inc. is an underwriter of ocean marine, P&C, professional liability, and specialty insurance products and services in the U.S. and internationally. The company delivered a positive earnings surprise of 1.64% in the last quarter. Though The Navigators Group has a favorable Zacks Rank #2 its Earnings ESP of 0.00% makes surprise prediction difficult.
In terms of surprise trend, The Navigators Group outpaced expectations in all of the last four quarters, with an average beat of 8.72%. The Zacks Consensus Estimate for Q3 is pegged at $1.78 per share.
NAVIGATORS GRP Price and EPS Surprise
NAVIGATORS GRP Price and EPS Surprise | NAVIGATORS GRP Quote
Third Point Reinsurance Ltd. is a provider of various specialty P&C reinsurance products in the Americas, Europe, the Middle East, Africa, and Asia. The company posted a negative earnings surprise of 23.88% in the last quarter. Third Point Reinsurance carries a Zacks Rank #5 and an Earnings ESP of 0.00%.
In terms of surprise trend, Third Point Reinsurance missed expectations in two of the last four quarters, with an average miss of 8.98%. The Zacks Consensus Estimate for Q3 is pegged at 66 cents per share.
THIRD PT REINSR Price and EPS Surprise
THIRD PT REINSR Price and EPS Surprise | THIRD PT REINSR Quote
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>