Published on 30 Apr 2024 on Zacks via Yahoo Finance

4 Insurers Set to Outperform Estimates This Earnings Season

Per the latest Earnings Preview, the Finance sector’s first-quarter 2024 earnings are expected to improve 11.6%. Revenues are estimated to rise 3.6%. Results of Insurance, one of the Finance sector industries, are likely to reflect better pricing and exposure growth, accelerated digitalization and an improved interest rate. However, cat losses are likely to have weighed on profitability.With the help of the Zacks Stock Screener, we have identified four insurers, namely, Aflac Incorporated AFL, AXIS Capital Holdings Limited AXS, Horace Mann Educators Corporation HMN and Primerica, Inc. PRI, which are poised to outshine the Zacks Consensus Estimate in first-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), #3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Factors Likely to Impact Q1 Results

First-quarter underwriting results are likely to benefit from continued better pricing, portfolio repositioning, proper segmentation, reinsurance covers and favorable reserve development.Non-life insurers, by the nature of their business, are exposed to catastrophe losses. Thus, their profitability is vulnerable to catastrophe losses. Gallagher Re’s National Catastrophe and Climate Report estimates global insured losses from natural catastrophes at $20 billion in the first quarter of 2024. Catastrophes continued to provide impetus to policy renewal rates and aided in better pricing in the first quarter. Per a report in Insurance Journal, Marsh stated that global commercial insurance rates improved by 1% on average in the first quarter of 2024.Auto premiums are likely to have improved, given increased travel across the world. On the flip side, increased severity per claim due to higher vehicle repair and medical costs is likely to have affected the loss ratio.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.Life insurers have been redesigning products, focusing on protection products. The quarter is likely to have witnessed solid sales, given a rise in demand for protection products. Life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with “living” benefits more than those with death benefits.A larger investment asset base, higher reinvestment rate and alternative investments in an improved rate environment are likely to have aided net investment income, an important component of insurers’ top line.Continued investment in technological advancements is likely to have saved costs and improved efficiency, in turn, leading to margin expansion. Share buybacks are expected to have provided an additional upside to the bottom line.