The Finance sector is set to report financial numbers from this week. Per the latest Earnings Preview, the sector’s earnings are expected to decrease 41.2% while revenues are estimated to decline 1.8%.
Integral to the Finance sector, insurers are likely to have faced operational challenges owing to the pandemic. In fact, insurers had stated that their second-quarter results will be impacted significantly due to coronavirus-induced restrictions. The soon-to-be-reported quarter is likely to have witnessed decline in new sales. Chubb Limited CB estimates COVID-19 pandemic losses of about $1.157 billion in the second quarter of 2020.
Property and casualty insurers are likely to have maintained underwriting profitability on better pricing and underwriting practice. The Marsh’s Global Insurance Market Index estimated commercial policy pricing to increase 6% in the second quarter of 2020 per a report published by FINSMES. Most of the commercial insurance lines are likely to have witnessed rate increase in the second quarter, except for workers compensation. Also, reinsurance covers, favorable reserve development and sturdy capital level are likely have helped in absorbing losses.
Changes in product portfolio like moving away from guaranteed savings products toward protection products of unit-linked savings products, and refraining from selling long-duration term life insurance are likely to have helped Life insurers maintain sales and profitability.
A near-zero interest rate environment might have weighed on investment income and yield.
Nonetheless, adoption of technologies like artificial intelligence is expected to have helped insurers curb operational costs and aided margin expansion.
The insurance industry gained 4% in the second quarter, underperforming the S&P 500 Index’s rise of 19.6% and the Finance sector’s increase of 12%.
Potential Q2 Outperformers
With the help of our Zacks Stock Screener, we have identified a few stocks poised to outshine the Zacks Consensus Estimate in second-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a favorable Zacks Rank — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Also, these stocks have a solid earnings surprise history.
Everest Re Group RE provides reinsurance and insurance products in the United States, Bermuda, and internationally.
Earnings ESP: +85.36%
Zacks Rank #3 (Hold)
Average four-quarter positive surprise: 30.89%
Aflac Incorporated AFL provides supplemental health and life insurance products.
Earnings ESP: +3.68%
Zacks Rank #3
Average four-quarter positive surprise: 6.25%
Arthur J. Gallagher AJG provides insurance brokerage, consulting, and third party claims settlement and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, and the United Kingdom.
Earnings ESP: +1.76%
Zacks Rank #2 (Buy)
Average four-quarter positive surprise: 5.10%
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radian Group RDN engages in the mortgage and real estate services business in the United States.
Earnings ESP: +42.63%
Zacks Rank #3
Average four-quarter positive surprise: 13.56%
Cigna Corporation CI provides insurance and related products and services.
Earnings ESP: +4.27%
Zacks Rank #2
Average four-quarter positive surprise: 6.92%
MetLife MET engages in the insurance, annuities, employee benefits, and asset management businesses worldwide.
Earnings ESP: +2.51%
Zacks Rank #3
Average four-quarter positive surprise: 11.45%
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Aflac Incorporated (AFL) : Free Stock Analysis Report
Cigna Corporation (CI) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
MetLife, Inc. (MET) : Free Stock Analysis Report
Arthur J. Gallagher Co. (AJG) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
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