The insurance industry broadly encompasses life, property and casualty, multi-line insurers and insurance brokers. While insurers on the whole are likely to have been affected by low interest rates in the first quarter, increase in premium rates for Commercial and Property lines are likely to have benefited property and casualty insurers.
However, life insurers are more likely to bear the brunt of low interest rate level, given their exposure to products that offer guaranteed minimum returns. P&C insurers too have been witnessing weak investment income, induced by soft investment yields and equity market declines. Notably, property and casualty insurers are more exposed to equity investments than life insurers.
Against the economic backdrop prevalent since the coronavirus outbreak, property and casualty insurers appear to be better placed than life insurers. These companies have been benefiting from strong top lines on the back of their vast and diversified businesses. Premium rates in Personal and Commercial lines of insurance have been rising over the last several quarters, a trend that most likely continued in the to-be-reported quarter.
The P&C insurance industry players might have suffered weather-related catastrophe loss due to the March tornado in Nashville. Also, charges from the COVID-19 impact are expected to have dented margins.
However, insurance brokers have been gaining traction from top-line growth owing to their vast and varied business profiles. Brokers are likely to have been aided by better commissions and fees, higher consulting and brokerage services, new business generation, etc. Their bottom line is likely to have been supported by share buybacks.
However, a still low interest rate environment is expected to have weighed on investment yields and consequently, hurt investment income, which in turn, might have affected quarterly revenues.
The companies are also likely to have incurred elevated expenses due to several growth-related initiatives taken.
The latest Earnings Preview indicates that total earnings for the Finance sector, of which the insurance industry is a part, are expected to be down 29.1% while revenues are projected to be 3.1% higher year over year.
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s take a look at five insurance companies that are slated to report first-quarter 2020 results on May 6.
MetLife’s MET U.S. business segment and strong growth in voluntary products are likely to have aided Group Benefits premium. EMEA business sales are likely to have been strong across the region. Share repurchases made by MetLife in the to-be-reported quarter are likely to have bolstered its bottom line.
However, Asia business is likely to have witnessed soft sales in Korea, China and India. Low interest rates and risk asset returns are likely to have put pressure on MetLife’s investment portfolio income.
The Zacks Consensus Estimate for the company’s earnings per share is pegged at $1.45, indicating a decrease of 2% from the year-ago reported figure.
Our proven model predicts an earnings beat for MetLife’s this time around. It has a Zacks Rank #3 and an Earnings ESP of +0.45%. You can see the complete list of today’s Zacks #1 Rank stocks here.
(Read more: Is a Beat in Store for MetLife This Earnings Season?)
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
Everest Re Group’s RE first-quarter performance is likely to have benefited from higher net investment income, increased insurance premiums and share buyback. Pricing is expected to have been driven by several large global property programs. The company expects net investment income of $148 million in the first quarter of 2019.
The company expects combined ratio is expected to be below 100% for the consolidated reinsurance and insurance operations. Combined ratio includes $150 million in pre-tax net first party losses for expected claims related to the COVID 19 outbreak. The company expects most of the losses to come from Reinsurance segment.
The Zacks Consensus Estimate for earnings of $3.77 per share implies a 45.4% decrease from the prior-year reported number.
The company has a Zacks Rank #3 and an Earnings ESP of 0.00%.
(Read more: Everest Re to Report Q1 Earnings: What's in Store?)
Everest Re Group, Ltd. Price and EPS Surprise
Everest Re Group, Ltd. price-eps-surprise | Everest Re Group, Ltd. Quote
The Zacks Consensus Estimate for Manulife Financial Corp’s MFC first-quarter earnings of 40 cents per share implies 29.8% decrease from the prior-year reported number.
It has a Zacks Rank of 4 and an Earnings ESP of +3.52%.
Manulife Financial Corp Price and EPS Surprise
Manulife Financial Corp price-eps-surprise | Manulife Financial Corp Quote
The Zacks Consensus Estimate for Lincoln National Corporation’s LNC first-quarter earnings is pegged at $2.13 per share, suggesting a decline of 0.5% from the prior-year reported number.
It has a Zacks Rank #3 and an Earnings ESP of +0.59%.
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
The Zacks Consensus Estimate for RenaissanceRe Holdings Ltd.’s RNR first-quarter earnings of $3.87 per share implies a 7.5% increase from the prior-year reported number.
The company has a Zacks Rank #4 and an Earnings ESP of +11.37%.
RenaissanceRe Holdings Ltd. Price and EPS Surprise
RenaissanceRe Holdings Ltd. price-eps-surprise | RenaissanceRe Holdings Ltd. Quote
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