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4 Multiline Insurers Well Poised to Beat Q2 Earnings Estimates

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·4 min read
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The U.S. multiline insurers look well-poised for growth before reporting their second-quarter 2021 results. Well-diversified portfolios, improved pricing environment, reduced mortality rates, below-average catastrophe losses, prudent underwriting results and technological advancements are likely to have acted as catalysts for the companies in the to-be-reported quarter. Gradual reopening of the economy paves the way for undertaking mergers and acquisitions.

Premiums in the second quarter are likely to have benefited from product diversification, which reduces concentration risks for multiline insurers.

Given still low interest rate level, investment yields of multiline insurers having exposure to rate-sensitive products are likely to have remained under pressure in the to-be-reported quarter.

With the pandemic receding slowly and vaccination programs in full swing across the United States, mortality rates have been declining. Lower mortality rates are a good sign for multiline insurers having exposure to life business. Per New York Times, cases, hospitalizations and deaths across the nation have significantly dropped from the fatal winter surge. Decline in mortality rates is likely to have resulted in lowered claim payments, which are expected to drive an insurer’s underwriting results and lead to improvement in combined ratio in the to-be-reported quarter.

Considering a not so active catastrophe environment, multiline insurers with exposure to property and casualty (P&C) line of business might breathe a sigh of relief in the to-be-reported quarter. RBC Capital Markets’ analysts predict the second quarter to witness 30-50% below average natural catastrophe losses in the range of $10-$14 billion, per a report published in ARTEMIS. Incidence of natural disasters usually ramps up the policy renewal rate, thereby leading to a better pricing environment for multiline insurers.

The industry continues to make significant investments in technology like blockchain, AI, advanced analytics, telematics, cloud computing and robotic process automation. These advancements are expected to result in accelerated claim payments and automation in processes, which may have driven margin expansion in the to-be-reported quarter.

The Zacks Multiline Insurance industry declined 2.3% in the second quarter, against the Finance sector and the S&P 500 Index’s growth of 5.9% and 7.3%, respectively.

Zacks Investment Research
Zacks Investment Research


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Selecting the Top Players

This is the right time to pick some multiline insurance stocks that are well-poised to beat on earnings in their upcoming releases.

The Zacks Stock Screener has helped us to identify a few stocks poised to outperform the Zacks Consensus Estimate in second-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 beat expectations. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our Top 4 Picks

Here are four multiline insurance stocks that have the right mix of elements to deliver positive earnings surprises in second-quarter 2021:

MetLife, Inc. MET has an Earnings ESP of +2.05% and a Zacks Rank #2, currently. The consensus mark for the second-quarter earnings indicates an improvement of 91.6% from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

American International Group, Inc. AIG currently has a Zacks Rank of 3 and an Earnings ESP of +7.56%. The consensus mark for the second-quarter earnings suggests growth of 80.3% from the year-ago reported figure.

Assurant, Inc. AIZ has an Earnings ESP of +4.93% and a Zacks Rank #3, currently. The Zacks Consensus Estimate for second-quarter earnings stands at $2.30 per share.

Lemonade, Inc. LMND currently has a Zacks Rank of 3 and an Earnings ESP of +10.48%. The consensus mark for the second-quarter earnings indicates an improvement of 50.3% from the prior-year quarter.


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American International Group, Inc. (AIG) : Free Stock Analysis Report

MetLife, Inc. (MET) : Free Stock Analysis Report

Assurant, Inc. (AIZ) : Free Stock Analysis Report

Lemonade, Inc. (LMND) : Free Stock Analysis Report

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