Advertisement
U.S. markets close in 1 hour 42 minutes
  • S&P 500

    5,253.69
    +5.20 (+0.10%)
     
  • Dow 30

    39,787.28
    +27.20 (+0.07%)
     
  • Nasdaq

    16,381.93
    -17.59 (-0.11%)
     
  • Russell 2000

    2,123.73
    +9.39 (+0.44%)
     
  • Crude Oil

    83.00
    +1.65 (+2.03%)
     
  • Gold

    2,242.40
    +29.70 (+1.34%)
     
  • Silver

    25.00
    +0.24 (+0.98%)
     
  • EUR/USD

    1.0797
    -0.0033 (-0.30%)
     
  • 10-Yr Bond

    4.2020
    +0.0060 (+0.14%)
     
  • GBP/USD

    1.2623
    -0.0015 (-0.12%)
     
  • USD/JPY

    151.4030
    +0.1570 (+0.10%)
     
  • Bitcoin USD

    70,926.71
    +2,249.40 (+3.28%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Insurance Stock Earnings Roster for Feb 3: MET, ALL & More

Looking at the fourth-quarter 2020 earnings picture so far, it is quite clear that the Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification) has once again shown better resilience than many others amid the coronavirus-led economic rout.

Per the latest Earnings Preview, Finance is one of the six among the 16 major Zacks sectors, which is set to report year-over-year revenue growth. The sector is expected to deliver 15.3% earnings growth but a 1.1% revenue dip this time around.

Integral to the finance sector, the players in the insurance industry (in the property and casualty space) are likely to have benefited from better pricing, exposure growth, prudent underwriting, solid products and a service portfolio and an increased adoption of technologies.

A drop in the driving and claims activity in the auto insurance market is likely to have offset the adverse effects of the coronavirus pandemic on premiums in the to-be-reported quarter. Personal auto insurers are thus expected to have improved the claims ratio.

However, catastrophe losses and lower interest rate might have weighed on the P&C insurers who also had to bear the brunt of hurricanes Delta and Zeta, and the Tropical Storm Eta in the fourth quarter apart from other windstorms.

Frequent natural disasters accelerated the policy renewal rate and kept the pricing momentum alive even in the final quarter of 2020. Homeowners insurance companies are likely to have seen major claims resulting from catastrophes. Nevertheless, companies in this space are expected to have benefited from improved pricing , exposure management and enhanced reinsurance programs. The leading homeowners’ insurers also invested in technology to improve underwriting and pricing as well as predictive modeling and pricing analytics.

Both property & casualty and personal lines rates were up in the fourth quarter, per MarketScout’s latest data. The fourth-quarter composite rate for US property and casualty was up 7.1% from 6.25% in third-quarter 2020. Additionally, the composite rate for personal lines climbed 6.3% in the fourth quarter. In fact, rates are up modestly across all sectors of personal insurance.

Further, most commercial insurance lines are likely to have witnessed a rate increase in the to-be-reported quarter. Per Willis Towers Watson’s Commercial Lines Insurance Pricing Survey, 23 U.S. commercial insurance lines are expected to witness a price rise while five might see either increases, decreases or flat renewals. Moreover, reinsurance covers, favorable reserve development and a sturdy capital level are expected to have provided extra support.

A near-zero interest rate environment might have weighed on the insurers’ investment income. Investment income is an important component of their top line lines. The Fed rate was unchanged at 0-0.25% and there are no indications of raises until 2023.

Nonetheless, uptake of technologies is expected to have led to smooth functionality amid coronavirus-induced challenges as well as cost savings, thereby aiding margins.

Let’s take a look at five insurers that are scheduled to announce fourth-quarter results on Feb 3.

MetLife, Inc.’s MET U.S. business is likely to have benefited from a strong performance across its Group Benefits, and Retirement and Income Solutions (RIS) sub-segments.

In its Asia business, higher variable investment income, and solid underwriting and expense margins are likely to have aided the segment in the to-be-reported quarter.

However, lower interest rates might have weighed on the company’s investment income. (Read more:MetLife to Report Q4 Earnings: What's in the Cards?)

MetLife does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — which increases the odds of an earnings beat. The stock has an Earnings ESP of 0.00% and a Zacks Rank of 3 at present.

Earnings surpassed estimates in three of the trailing four quarters (and missed the mark in one), the average positive surprise being 10.43%.

MetLife, Inc. Price and EPS Surprise

MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise

MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote

The Allstate Corp.’s ALL property and liability business is likely to report an increase in premiums across Auto, Homeowners and other personal lines in the December-quarter results. The same is, however, partly offset by weak premiums in the commercial line business.

The company is likely to have borne pre-tax catastrophe losses of $345 million for the fourth quarter. Allstate’s Service Businesses revenues are likely to have improved owing to higher policies in force, largely on growth in Allstate Protection Plans. (Read more: Will Increase in Premiums Aid Allstate Earnings in Q4?)

Our proven model predicts an earnings beat for Allstate this time around as the company is currently Zacks #3 Ranked and has an Earnings ESP of +5.72%.

The Allstate Corporation Price and EPS Surprise

The Allstate Corporation Price and EPS Surprise
The Allstate Corporation Price and EPS Surprise

The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote

Earnings of the stock surpassed estimates in each of the last four quarters, the average being 38.59%.

At Aflac Inc.’s AFL Japan business, total sales are likely to have declined from the ramped-down activity due to the impact of COVID-19 and a year-over-year comparison as Japan Post had delivered an impressive performance in 2019.

Also, the company’s U.S. segment, which relies heavily on face-to-face agent-client interaction, is likely to have been hit hard by the restrictions imposed on physical communications. Management had earlier anticipated that a combination of reduced sales and persistency is likely to weigh on the segmental revenues during the second half of 2020. (Read more: Aflac to Report Q4 Earnings: Is a Beat in the Cards?)

Aflac is currently a #3 Ranked stock and has an Earnings ESP of +3.46%.
The stock’s bottom line surpassed estimates in each of the trailing four quarters, the average being 14.84%.

Aflac Incorporated Price and EPS Surprise

Aflac Incorporated Price and EPS Surprise
Aflac Incorporated Price and EPS Surprise

Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote

Lincoln National Corp.’s LNC Annuities segment, strategic near-term actions to reprice certain products and shift sales from fixed annuity products in response to the low interest rate environment not only induced lower deposits last year but also caused negative net flows in its September quarter. This trend is likely to have continued in the December quarter as well. As a result, annuity sales are also expected to have dropped in the quarter to be reported.

The company’s Group Protection segment is likely to reflect an increase in sales, driven by its continued focus on cross selling its array of complimentary employee paid products to its existing customers. (Read more: What's in Store for Lincoln National's Q4 Earnings?

National presently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

The company’s bottom line surpassed estimates in one of the preceding four quarters (missed the same in the remaining three), the average negative surprise being 41.4%.

Lincoln National Corporation Price and EPS Surprise

Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation Price and EPS Surprise

Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote

American Financial Group, Inc. AFG through its subsidiaries engages primarily in property and casualty insurance with focus on specialized commercial products for businesses. The company is also involved in the sale of traditional fixed, fixed-indexed and variable-indexed annuities in financial institutions and the retail, registered investment advisor and education markets.

American Financial currently has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Earnings of the company surpassed estimates in three of the previous four reported quarters (missing the mark on a single occasion), the average surprise being 5.85%.

American Financial Group, Inc. Price and EPS Surprise

American Financial Group, Inc. Price and EPS Surprise
American Financial Group, Inc. Price and EPS Surprise

American Financial Group, Inc. price-eps-surprise | American Financial Group, Inc. Quote

"Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>
"


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Allstate Corporation (ALL) : Free Stock Analysis Report

Lincoln National Corporation (LNC) : Free Stock Analysis Report

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

To read this article on Zacks.com click here.

Zacks Investment Research

Advertisement