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The Zacks Analyst Blog Highlights: The Progressive, American Financial Group, ProAssurance and Assurant

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For Immediate Release

Chicago, IL – April 15, 2020 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: The Progressive Corp. PGR, American Financial Group Inc. AFG, ProAssurance Corp. PRA and Assurant, Inc. AIZ.

Here are highlights from Tuesday’s Analyst Blog:

4 Insurance Stocks Poised to Surpass Q1 Earnings Estimates

The insurance industry, which broadly encompasses life and property plus casualty (PC) insurers, has been suffering a blow from the COVID-19-led adversity. Life insurance industry has been particularly hit by the very low interest rate levels, given their exposure to products that provide guaranteed minimum returns. PC insurers are witnessing low investment income, induced by soft investment yields and equity market declines. Property and casualty insurers have higher exposure to equity investments than life insurers.  

In the current economic environment, property and casualty insurers should be better off than life insurers. These companies have been enjoying top-line growth with vast and diversified businesses. Premium rates increase in Personal and Commercial lines of insurance have been rising over the last several quarters, which are likely to have driven premiums in the to-be reported quarter, the major component of an insurer’s revenues.

Also, the players with wide exposure to auto insurance business should be relatively better-placed. Precautionary measures to contain the spread of the COVID-19 pandemic prompted Americans to stay home. This, in turn, led to a reduction in driving and frequency of accidents. It bodes well for players dealing in automobile insurance business in the form of lower claims outgo, attributable to a decline in road accident rate.

Many notable insurance companies including The Travelers, The Allstate, Chubb, Geico, The Hartford Insurance, Progressive Corp., Kemper Corp. among others are paying back a portion of the premiums to their customers and extending other supportive offerings like no penalty for late premium payment, provision of other free services etc. Thus, auto insurers are likely to gain traction from profitability owing to this trend.  

Apart from the worldwide coronavirus outbreak, the PC industry did not witness any major cat event in the first quarter, which will save the claim costs for insurers and drive their underwriting margins.

Insurers are also well-equipped with strong capital levels, which must have been properly deployed for share buybacks, thereby lending an extra impetus to their earnings per share.

In the first quarter, the PC industry has declined 20.8% compared with the  Zacks S&P 500 composite's decrease of 19.5%.

Selecting the Winners

This is the right time for you to pick some banking stocks that are well-positioned to beat on earnings in their upcoming releases.

Zeroing in on stocks with earnings beat potential might be a daunting task unless one knows the art of shortlisting to reach the best bets. One way to do it is by choosing stocks with the ideal combination of the two key ingredients: a top Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of beating estimates in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this perfect mix of elements, chances of a positive earnings surprise are as high as 70%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Major Insurers

Here are four insurance stocks that are poised to deliver a positive surprise in their upcoming announcements:

The Progressive Corp. has an Earnings ESP of +0.06% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereThe stock's earnings surpassed estimates in each of the last four quarters, the average being 28.56%.

American Financial Group Inc. has an Earnings ESP of +3.94% and a Zacks Rank of 3, at present. The stock’s earnings beat estimates in three of the trailing four quarters, missing the same in one. The average positive surprise is 4.96%.

ProAssurance Corp. has an Earnings ESP of +3.70% and a Zacks Rank #2. The company’s earnings trumped estimates in two of the previous four quarters, falling shy of the mark in the other two. The positive surprise is 16.38%, on average.

Assurant, Inc. has an Earnings ESP of +4.28% and is Zacks #3 Ranked. Its earnings topped estimates in three of the preceding four quarters, lagging the same in one, the average offbeat being 1.75%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.