Published on 5 Feb 2024 on Zacks via Yahoo Finance

Insurance Stocks' Q4 Earnings Due on Feb 6: WTW, PRU & More

Better pricing, exposure growth, diversified portfolio, solid retention, favorable renewals, reinsurance agreements and accelerated digitalization are likely to have benefited insurance industry players such as Willis Towers Watson WTW, Prudential Financial PRU, Assurant Inc. AIZ, Cincinnati Financial Corporation CINF and American Financial Group, Inc. AFG in the fourth quarter. All these companies are due to report tomorrow.Solid retention, exposure growth across business lines and improved pricing are likely to have fueled premiums. Catastrophes continued to provide impetus to policy renewal rates and aided in better pricing in the fourth quarter. Per a report in Business Insurance, U.S. commercial insurance rates rose 5.6% on average in the fourth quarter.Per reports in Reinsurance News, JP Morgan estimates insured losses in the fourth quarter in the range of $8-$10 billion, largely attributable to Hurricane Otis. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers, favorable reserve development and prudent underwriting are likely to drive an improvement in underwriting results.Auto premiums are likely to have improved, given increased travel across the world. A stronger mortgage market is likely to have favored mortgage insurance premiums. A low unemployment rate is likely to have aided commercial insurance and group insurance.The insurers are likely to witness improved investment results. A larger investment asset base, higher reinvestment rate and alternative investments in private equity, hedge funds and real estate, among others, are expected to have aided net investment income.Accelerated digitalization is expected to have saved costs, thus aiding 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. It also helped the industry players to enhance shareholders' value via share buybacks and raising dividends.Let’s take a sneak peek into how the abovementioned insurers are poised prior to their fourth-quarter 2023 earnings on Feb 6.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.Willis Tower’s revenues in the fourth quarter are likely to have benefited from the increasing impact of ongoing investments in talent and technology and growth across all the segments. Expenses in the fourth quarter are likely to have increased, attributable to higher salaries and benefits, other operating expenses, restructuring costs, depreciation and amortization.  (Read more:  Here's What to Expect From Willis Towers' Q4 Earnings)The Zacks Consensus Estimate for WTW’s fourth-quarter earnings per share of $7.04 indicates an 11.2% increase from the year-ago quarter reported figure. The company has an Earnings ESP of +0.23% and a Zacks Rank #3.  WTW’s earnings surpassed estimates in three of the last four reported quarters while missing one. This is depicted in the chart below:

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Willis Towers Watson Public Limited Company Price and EPS Surprise