Slew of Strong Earnings Pushes Insurance ETFs Higher
The insurance industry’s performance has been strong this reporting cycle, with the leading companies posting robust earnings. Prominent players such as Prudential Financial PRU, Chubb Corp CB, Allstate ALL and Aflac AFL either surpassed estimates for earnings or revenues or both. However, Travelers’ TRV earnings came on par and revenues lagged while MetLife MET missed the estimates on both fronts (see: all the Financial ETFs here).
Insurance Earnings in Focus
Prudential, the second-largest U.S. life insurer, came up with earnings per share of $1.85, which topped the Zacks Consensus Estimate of $1.72 but declined 41.1% from the year-ago earnings. Revenues of $13.1 billion topped the consensus mark $12.93 billion but fell 7.3% year over year.
Another leading property and casualty insurer, Chubb, outpaced the Zacks Consensus Estimate for the bottom line by 10 cents but lagged on revenues by $170 million. Allstate also topped the consensus estimate for earnings by $1.05 per share but lagged the revenue estimate by 2.87%. On a year-over-year basis, its earnings increased 12.8% and revenues were down 3%.
Earnings per share of $1.28 reported by Aflac, the largest provider of supplemental insurance, trumped the Zacks Consensus Estimate by 25 cents and increased from the year-ago earnings of $1.13. Revenues decreased from $5.51 billion a year ago to $5.41 billion and missed the consensus mark by 1.26%.
Personal property and casualty insurer, Travelers posted a net loss per share of 20 cents, which matched the Zacks Consensus Estimate. The company had earned $2.02 per share in the year-ago quarter. Revenues declined 5.4% year over year to $7.4 billion and missed the consensus mark of $7.75 billion (read: 10 Best-Performing Stocks in Nasdaq ETF as Index Tops 11,000).
MetLife, the U.S. life insurance behemoth, disappointed investors with less-than-expected earnings of 83 cents. The bottom line missed the Zacks Consensus Estimate by 13 cents and declined 39.9% from the year-ago quarter. Revenues dropped 15.9% year over year to $13.8 billion and fell shy of the estimated $15.36 billion.
ETFs in Focus
A slew of strong earnings had a positive impact on the insurance ETFs, which saw smooth trading over the past week and the past month. SPDR S&P Insurance ETF KIE and iShares U.S. Insurance ETF IAK have gained 10.1% and 8.8%, respectively, in a month. Both funds have a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Below we highlight 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 46.7% of the portfolio is allocated to property and casualty insurance, while life & health insurance accounts for 24.4% share. The ETF has managed $573.2 million in its asset base and trades in a good average daily volume of about 339,000 shares. The product has an expense ratio of 0.35% (read: Top and Flop ETFs to Start Third Quarter).
IAK
With AUM of $65.2 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 42 bps in annual fees. Volume is light, trading in roughly 14,000 shares per day. In total, the fund holds 62 securities in its basket, with the in-focus six firms occupying the top eight positions and collectively making up 36.6% of the assets. Here also, property & casualty insurance accounts for the largest share at 55%, while life & health insurance, and multiline insurance round off the top three spots with double-digit exposure each.
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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
Aflac Incorporated (AFL) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
MetLife, Inc. (MET) : Free Stock Analysis Report
SPDR SP Insurance ETF (KIE): ETF Research Reports
iShares U.S. Insurance ETF (IAK): ETF Research Reports
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