Published on 24 Apr 2024 on Zacks via Yahoo Finance

Watch These 5 Insurance Stocks for Q1 Earnings: Beat or Miss?

The insurance industry players are likely to have gained from continued improved pricing, exposure growth, portfolio streamlining, solid retention, renewals, reinsurance agreements and accelerated digitalization. Catastrophe losses and an increase in claims frequency are likely to have weighed on the upside. Some of the insurers due to report their first-quarter results on Apr 25 are Arthur J. Gallagher & Co. AJG, Willis Towers Watson plc WTW, The Hartford Financial Services Group, Inc. HIG, Cincinnati Financial Corporation CINF and Kinsale Capital Group KNSL.

Factors Likely to Shape Insurers’ Q1 Performance

Exposure growth across business lines and improved pricing are likely to have fueled premiums in the first quarter of 2024. Solid retention added to the upside. Catastrophes continued to provide impetus to policy renewal rates and aided in better pricing in the first quarter. Per a report in Insurance Journal, global commercial insurance rates improved by 1% on average in the first quarter of 2024 per Marsh.Gallagher Re’s National Catastrophe and Climate Report estimates global insured losses from natural catastrophes to be $20 billion in the first quarter of 2024, a decline from $33 billion incurred in the year-ago quarter, per a report published in Risk and Insurance.Underwriting profit is likely to have benefited from better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers and favorable reserve development.Auto premiums are likely to have improved, given increased travel across the world. A low unemployment rate is likely to have aided commercial insurance and group insurance.A larger investment asset base, a higher reinvestment rate given an improved rate environment as well as alternative investments are expected to have aided net investment income.Accelerated digitalization is expected to have saved costs, driving margins. A solid capital position aided insurers in strategic mergers and acquisitions to sharpen their competitive edge, build on a niche, expand geographically and diversify their portfolio. Sustained wealth distribution to shareholders via dividend hikes, special dividends and share repurchases instill confidence in the insurers.Let’s find out how the following insurers are placed before their first-quarter 2024 results on Apr 25.According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Arthur J. Gallagher’s first-quarter results are likely to benefit from better performance in both segments, aided by new business, strong retention and increasing renewal premiums across its business lines. Revenues associated with acquisitions, the organic change in base commissions and fee revenues are likely to have favored commission and fee revenues. However, total expenses are likely to have increased mainly because of higher compensation, operating costs, interest expenses, amortization and changes in estimated acquisition earnout payables.The Zacks Consensus Estimate for the bottom line is pegged at $3.40, indicating a 12.2% increase from the year-ago quarter’s reported figure. The company has an Earnings ESP of +0.14% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AJG’s earnings beat estimates in the last four reported quarters. The same is depicted in the chart below: