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Solid Q4 Earnings Boost Insurance ETFs

Sweta Killa
·4 min read

Performance of the insurance industry has been strong this reporting cycle, with leading players posting robust earnings. Prominent players such as MetLife MET, Prudential Financial PRU, Chubb Corp CB, Allstate ALL, Aflac AFL and Travelers TRV either surpassed estimates for earnings or revenues or both (see: all the Financial ETFs here).

Insurance Earnings in Focus

MetLife, the U.S. life insurance behemoth, reported earnings of $1.98 per share, which outpaced the Zacks Consensus Estimate by 58 cents and increased 46.7% from the year-ago quarter. Revenues rose 18% year over year to $18.15 billion and surpassed the consensus estimate of $16.69 billion. PRU, the second-largest U.S. life insurer, beat earnings and revenues estimates. Earnings per share of $2.33 topped the Zacks Consensus Estimate of $2.01, but was 4.5% lower than the year-ago earnings. Revenues of $17.45 billion topped the consensus mark $14.72 billion and declined 1.9% year over year.

One of the leading property and casualty insurers, Chubb, outpaced the Zacks Consensus Estimate for the top and the bottom lines by $902 million and 18 cents, respectively. Another property and casualty insurer, Allstate topped the consensus estimate for earnings by a penny but lagged revenue estimates by 4.72%. On a year-over-year basis, its earnings surged 152.4% and revenues were up 21%.

Earnings per share of $1.03 reported by Aflac, a seller of supplement health insurance, trumped the Zacks Consensus Estimate by couple of cents and increased from the year-ago earnings of $1.02. Revenues increased from $5.48 billion a year ago to $5.6 billion and beat the consensus mark by 2.44% (read: 4 Sector ETFs That Hit All-Time Highs).

Personal property and casualty insurer, Travelers posted earnings per share of $3.32, exceeding the Zacks Consensus Estimate by 9 cents and soaring 55.9% year over year. Revenues grew 4% year over year to $8 billion and outpaced the consensus mark of $7.98 billion.

ETFs in Focus

The string of solid fourth-quarter earnings from the insurance industry players had a positive impact on the related ETFs that saw smooth trading over the past week. SPDR S&P Insurance ETF KIE and iShares U.S. Insurance ETF IAK gained 4% and 4.6%, respectively. Both funds have a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Below, we highlight them in detail.

KIE

This fund follows the S&P Insurance Select Industry Index, holding 50 stocks in its basket. Each of the in-focus firms accounts for around 2% share. About 46.8% of the portfolio is allocated to property and casualty insurance, while life & health insurance accounts for 24.3% share. The ETF has managed $913.6 million in its asset base and trades in a good average daily volume of about 241,000 shares. The product has an expense ratio of 0.35%.

IAK

With AUM of $100.9 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 43 basis points in annual fees. Volume is light, trading in roughly 6,000 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 37.5% of the assets. Here also, property & casualty insurance accounts for the largest share at 50.1%, while life & health insurance and multiline insurance round off the top three spots with double-digit exposure each (read: Phase-One Trade Deal to Boost These ETF Areas).

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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 S&P Insurance ETF (KIE): ETF Research Reports
 
iShares U.S. Insurance ETF (IAK): ETF Research Reports
 
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Zacks Investment Research
 
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