Q1 Earnings Fail to Drive Insurance ETFs

The insurance industry has performed well this reporting cycle with robust earnings from leading players. Prominent players such as Chubb Corp CB and Allstate ALL surpassed earnings and revenue estimates. While American International AIG and Travelers TRV missed earnings estimates, MetLife MET, Prudential Financial (PRU) and Aflac AFL lagged revenue estimates (see: all the Financial ETFs here).

Insurance Earnings in Focus

MetLife, the U.S. life insurance behemoth, reported robust earnings of $1.36 per share, which beat the Zacks Consensus Estimate by 19 cents but declined 7% from the year-ago quarter. Revenues inched up 1% year over year to $15.14 billion but were well below estimates of $15.67 billion. PRU, the second-largest U.S. life insurer, beat earnings estimates by 9 cents. Earnings improved 10% year over year. Revenues increased 7.2% year over year to $12.87 billion, falling short of the consensus estimate of $13.68 billion.

One of the leading property and casualty insurers, Chubb, outpaced the Zacks Consensus Estimate on both the top and the bottom lines by $656 million and 10 cents, respectively. Another property and casualty insurer, Allstate, also topped the Zacks Consensus Estimate on earnings and revenues by 15.8% and 19.4%, respectively. On a year-over-year basis, earnings soared 80.5% while revenues grew 6.5% (read: 3 Top Ranked Sector ETFs to Buy as Fed Hikes Rates).

AIG, one of the largest commercial insurers in the United States and Canada, missed earnings estimates by 16.13%. Earnings per share of $1.60 reported by Aflac, a seller of supplement health insurance, trumped the Zacks Consensus Estimate by 8.25% and increased 25% from the year-ago quarter. However, revenues rose 2.9% year over year to $5.4 billion but fell short of estimates by 0.54%.

Personal property and casualty insurer, Travelers posted earnings per share of $2.46, missing the Zacks Consensus Estimate by 22 cents but improving 13.9% year over year. Revenues grew 5% year over year to $7.29 billion and were ahead of the estimated $7.24 billion.

ETFs in Focus

Insurance ETFs have witnessed rough trading over the past month as Q1 results failed to impress. SPDR S&P Insurance ETF KIE is down 1.2% while iShares U.S. Insurance ETF IAK shed 1%. Both the funds have a Zacks ETF Rank #3 (Hold). Below, we have highlighted them in detail.

KIE

This fund follows the S&P Insurance Select Industry Index, holding 51 stocks in its basket. Each of the in-focus firms accounts for around 2% share. About 41.2% of the portfolio is allocated to the property and casualty insurance, while life & health insurance accounts for 25% share. The ETF has managed $894 million in its asset base and trades in a good average daily volume of about 427,000 shares. The product has an expense ratio of 0.35% (read: ETFs to Benefit or Lose from Rising Yields).

IAK

With AUM of $117.9 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 44 bps in annual fees. Volume is light, trading in roughly 18,000 shares per day. In total, the fund holds 63 securities in its basket with the in-focus seven firms occupying the top seven positions and collectively making up for 43.8% of the assets. Here also, property & casualty insurance accounts for the largest share at 46.2%, while life & health insurance and multiline insurance round off the top three with a double-digit exposure each.

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ISHARS-US INSUR (IAK): ETF Research Reports
 
SPDR-KBW INSUR (KIE): ETF Research Reports
 
Aflac Incorporated (AFL) : Free Stock Analysis Report
 
American International Group, Inc. (AIG) : Free Stock Analysis Report
 
MetLife, Inc. (MET) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
Chubb Limited (CB) : Free Stock Analysis Report
 
The Allstate Corporation (ALL) : Free Stock Analysis Report
 
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