Insurance Stocks' Q4 Earnings Due on Feb 6: WTW, PRU & More
Better pricing, exposure growth, diversified portfolio, solid retention, favorable renewals, reinsurance agreements and accelerated digitalization are likely to have benefited insurance industry players such as Willis Towers Watson WTW, Prudential Financial PRU, Assurant Inc. AIZ, Cincinnati Financial Corporation CINF and American Financial Group, Inc. AFG in the fourth quarter. All these companies are due to report tomorrow.
Solid retention, exposure growth across business lines and improved pricing are likely to have fueled premiums. Catastrophes continued to provide impetus to policy renewal rates and aided in better pricing in the fourth quarter. Per a report in Business Insurance, U.S. commercial insurance rates rose 5.6% on average in the fourth quarter.
Per reports in Reinsurance News, JP Morgan estimates insured losses in the fourth quarter in the range of $8-$10 billion, largely attributable to Hurricane Otis. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers, favorable reserve development and prudent underwriting are likely to drive an improvement in underwriting results.
Auto premiums are likely to have improved, given increased travel across the world. 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.
The insurers are likely to witness improved investment results. A larger investment asset base, higher reinvestment rate and alternative investments in private equity, hedge funds and real estate, among others, are expected to have aided net investment income.
Accelerated digitalization is expected to have saved costs, thus aiding margins. A solid capital position aided insurers in strategic mergers and acquisitions to sharpen their competitive edge, build on a niche, expand geographically and diversify their portfolio. It also helped the industry players to enhance shareholders' value via share buybacks and raising dividends.
Let’s take a sneak peek into how the abovementioned insurers are poised prior to their fourth-quarter 2023 earnings on Feb 6.
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Willis Tower’s revenues in the fourth quarter are likely to have benefited from the increasing impact of ongoing investments in talent and technology and growth across all the segments. Expenses in the fourth quarter are likely to have increased, attributable to higher salaries and benefits, other operating expenses, restructuring costs, depreciation and amortization. (Read more: Here's What to Expect From Willis Towers' Q4 Earnings)
The Zacks Consensus Estimate for WTW’s fourth-quarter earnings per share of $7.04 indicates an 11.2% increase from the year-ago quarter reported figure. The company has an Earnings ESP of +0.23% and a Zacks Rank #3.
WTW’s earnings surpassed estimates in three of the last four reported quarters while missing one. This is depicted in the chart below:
Willis Towers Watson Public Limited Company Price and EPS Surprise
Willis Towers Watson Public Limited Company price-eps-surprise | Willis Towers Watson Public Limited Company Quote
Prudential’s U.S. business is likely to have benefited from higher spread income, while international businesses are likely to have benefited from higher net investment spread results and improved underwriting results. Assets under management are likely to have benefited from equity market appreciation, lower interest rates and tightening credit spreads, partially offset by net outflows.
Expenses are likely to have increased because of higher general and administrative expenses, and interest credited to policyholders’ account balances. The Individual Retirement Strategies business is likely to have benefited from a rise in net investment income due to improved reinvestment rates and growth in indexed variable annuities and other income. The company estimates earnings per share to be $2.75 for the fourth quarter of 2023.
The Zacks Consensus Estimate for the bottom line is pegged at $2.67, indicating a 10.3% increase from the year-ago quarter’s reported figure. The company has an Earnings ESP of -1.60% and a Zacks Rank #3. (Read more: Prudential to Report Q4 Earnings: Here's What to Expect)
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. price-eps-surprise | Prudential Financial, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PRU’s earnings beat estimates in one of the last four reported quarters and missed in the other three. The same is depicted in the chart below:
Assurant’s fourth-quarter revenues are likely to have benefited from improved net earned premiums and higher net investment income. Net earned premiums are expected to have benefited from higher premiums in the Global Housing and Global Lifestyle segments. Total benefits, losses and expenses might have escalated because of higher policyholder benefits, underwriting, and selling, general and administrative expenses. (Read more: Assurant to Report Q4 Earnings: Here's What to Expect)
The Zacks Consensus Estimate for AIZ’s fourth-quarter bottom line is pegged at $3.70, indicating a 14.5% increase from the year-ago quarter reported figure. The company has an Earnings ESP of -2.54% and a Zacks Rank #2 (Buy).
AIZ’s earnings surpassed estimates in the last four quarters. This is depicted in the chart below:
Assurant, Inc. Price and EPS Surprise
Assurant, Inc. price-eps-surprise | Assurant, Inc. Quote
Cincinnati Financial’s fourth-quarter premiums are likely to have benefited from growth initiatives, increased exposure, better pricing, increased property casualty agency and new business written premiums, higher standard lines new business and higher premiums from Cincinnati Re.
Total benefits and expenses are likely to have increased mainly due to higher insurance losses and contract holders’ benefits and higher underwriting, acquisition and insurance expenses as well as other operating expenses. Despite catastrophe losses that induce volatility in profits, underwriting results are likely to benefit from better pricing. (Read more: Cincinnati Financial to Report Q4 Earnings: What to Expect)
The Zacks Consensus Estimate for the bottom line is pegged at $1.92, indicating a 51.2% increase from the year-ago quarter reported figure. The company has an Earnings ESP of +0.99% and a Zacks Rank #2.
CINF’s earnings beat estimates in three of the last four quarters and missed in one. This is depicted in the chart below:
Cincinnati Financial Corporation Price and EPS Surprise
Cincinnati Financial Corporation price-eps-surprise | Cincinnati Financial Corporation Quote
American Financial’s fourth-quarter results are likely to benefit from strong performance across Property and transportation, Specialty casualty, Specialty financial and other specialty businesses. An improved renewal rate and price increase are likely to favor results. However, exposure to cat loss and rising expenses are likely to have weighed on profitability.
The Zacks Consensus Estimate for AFG’s bottom line is pegged at $2.81, indicating a 6% decrease from the year-ago quarter reported figure. The company has an Earnings ESP of -1.14% and a Zacks Rank 2.
AFG’s earnings surpassed estimates in two of the last four quarters while missing in the other two. This is depicted in the chart below:
American Financial Group, Inc. Price and EPS Surprise
American Financial Group, Inc. price-eps-surprise | American Financial Group, Inc. Quote
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Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Assurant, Inc. (AIZ) : Free Stock Analysis Report
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report
