Insurers Q4 Earnings Releases on Feb 27: AFSI, NGHC, MHLD
The Q4 earnings season is nearly over as 82.2% members of the elite S&P 500 Index have reported quarterly results so far. According to the latest Earnings Preview, the performance of the 411 index members that have already announced their financial numbers this quarter indicate that total earnings increased 8% due to 4.9% higher revenues. The beat ratio is strong with 68.9% companies surpassing bottom-line expectations and 54.7% outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has delivered a strong performance this time. In fact, the performance of this sector is better than any other Zacks categorized sector. The quarterly financial performance of 91.1% companies from this sector shows 18.8% earnings growth on 5% increase in revenues, both on a year-over-year basis. Moreover, the beat ratio of 72% for the bottom line and 54.9% for the top line is higher than the beat ratio of the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and securities exchanges to name a few.
The insurance industry was severely affected by catastrophe losses in 2016 compared with benign cat activity in 2015. It was also hit hard by Hurricane Matthew and earthquake in New Zealand. Companies that have already reported their results have accounted for the catastrophe loss and noted the adverse impact on underwriting results due to the same. However, prudent underwriting practices and reserve development have offered some respite.
Though the Fed raised the interest rate, it was toward the end of Q4. Insurers, therefore, are unlikely to have benefited from the rate hike.
Nonetheless, the broader invested asset base and alternative asset classes are positives. Also, spread compression on products like fixed annuities and universal life is likely to have improved.
To sum up, core business growth, geographic expansion and strategic acquisitions, an improving employment scenario and better payroll should prove beneficial for insurance companies in Q4.
Let’s find out how these three insurers might perform when they come up with their quarterly numbers on Feb 27.
AmTrust Financial Services, Inc. AFSI is an underwriter and provider of property and casualty insurance in the United States and internationally. In the last reported quarter, AmTrust Financial beat the Zacks Consensus Estimate by 2.82%. Though the company has a Zacks Rank #3 (Hold), its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 73 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
According to our proven model a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 for an earnings beat.
With respect to the surprise trend, AmTrust Financial beat expectations in three of the last four quarters with an average positive surprise of 7.83%.
AmTrust Financial Services, Inc. Price and EPS Surprise
AmTrust Financial Services, Inc. Price and EPS Surprise | AmTrust Financial Services, Inc. Quote
National General Holdings Corp. NGHC is a specialty personal lines insurance holding company that provides personal and commercial automobile, supplemental health, homeowners and umbrella, and other niche insurance products in the United States. In the last reported quarter, National General Holdings missed the Zacks Consensus Estimate by 16.2%. Though the company has a favorable Zacks Rank #3, its Earnings ESP of 0.00% complicates surprise prediction. Both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 25 cents per share.
With respect to the surprise trend, National General Holdings surpassed expectations in three of the last four quarters with an average positive surprise of 13.24%.
National General Holdings Corp Price and EPS Surprise
National General Holdings Corp Price and EPS Surprise | National General Holdings Corp Quote
Maiden Holdings, Ltd., MHLD provides reinsurance solutions to regional and specialty insurers in the United States, Europe, and internationally. In the last reported quarter, Maiden Holdings beat the Zacks Consensus Estimate by 5.41%. Though the company has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 99 cents per share.
With respect to the surprise trend, Maiden Holdings beat expectations in two of the last four quarters but with an average negative surprise of 2.45%.
Maiden Holdings, Ltd. Price and EPS Surprise
Maiden Holdings, Ltd. Price and EPS Surprise | Maiden Holdings, Ltd. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
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AmTrust Financial Services, Inc. (AFSI): Free Stock Analysis Report
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