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CNA Financial (CNA) Q2 Earnings Coming Up: What's in Store?

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CNA Financial (CNA - Free Report) is slated to report second-quarter 2019 results on Aug 5, before market open. The company delivered positive surprise in three of the last four quarters.

Let’s see how things are shaping up for this announcement.

Premiums are likely to be supported by increase in new business, renewal premium change and solid retention. The Zacks Consensus Estimate for the metric is pegged at $1.8 billion, implying an increase of 1.2% from the year-ago period.

International premiums are likely to be low, given re-underwriting and reinsurance actions taken to revive the underperforming operations within international.

Improved interest rates, higher limited partnership returns and stable fixed income returns are likely to aid net investment income in the to-be reported quarter. The Zacks Consensus Estimate for investment income is pegged at $502 million.

Revenues are likely to benefit from improved premiums and higher investment income.

A benign catastrophe environment is likely to aid underwriting profitability. Combined ratio is estimated at 94%.

CNA Financial continues to efficiently manage its long-term care book of business through product claim management, thereby mitigating risk and aiding rate increase.

The Life & Group segment is expected to benefit from solid persistency.

Expenses are likely to increase on higher net claims and benefits plus amortization of deferred acquisition costs. This rise in expenses could restrict operating margin expansion.

The Zacks Consensus Estimate for earnings stands at $1.01, implying nearly 2% increase from the year-earlier quarter figure.

What Our Quantitative Model States

Our proven model does not conclusively show that CNA Financial is likely to beat on earnings this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: CNA Financial has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate as well as the Zacks Consensus Estimate is pegged at $1.01. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

CNA Financial Corporation Price and EPS Surprise

Zacks Rank: CNA Financial carries a Zacks Rank #4 (Sell)

We caution against Zacks Rank 4 or 5 (Strong Sell) stocks going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks from the insurance industry with the perfect mix of elements to outshine estimates in their upcoming release are as follows:

Voya Financial (VOYA - Free Report) is set to report second-quarter earnings on Aug 6. The company has an Earnings ESP of +1.42% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group (AFG - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank of 3. The company is scheduled to release second-quarter earnings on Aug 6.

American International Group (AIG - Free Report) has an Earnings ESP of +0.09% and a Zacks Rank of 2. The company is slated to announce second-quarter earnings on Aug 7.

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