5 Insurers Poised to Beat Estimates This Earnings Season

Per the latest Earnings Preview, the Finance sector’s first-quarter 2022 earnings are expected to decline 19.8% while revenues are estimated to improve 1.9%. Earnings of Insurance, one of the Finance sector industries, are estimated to drop 5.7% while revenues are expected to increase 3.2%. Improved pricing and exposure growth are likely to have driven premiums, which in turn are expected to have aided revenues.

With the help of the Zacks Stock Screener, we have identified five insurers namely, ProAssurance Corporation PRA, Voya Financial Inc. VOYA, The Hartford Financial Group Inc. HIG, Brown and Brown Inc. BRO and Aflac Incorporated AFL poised to outshine the Zacks Consensus Estimate in first-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), #3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Factors Likely to Impact Q1 Results

Insurers continued to witness improved pricing in the first quarter of 2022. An active catastrophe environment accelerated the policy renewal rate and aided in better pricing in the first quarter, though the magnitude was lower. Reinsurance programs, favorable reserve development and solid capital level are expected to have aided underwriting profitability.

Per Aon, the first quarter of 2022 insurance and reinsurance industry losses stemming from catastrophes totaled $14 billion or about $13 billion in economic losses.

A larger investment asset base and alternative investments in private equity, hedge funds, and real estate, among others are expected to have aided net investment income.

Life insurers have been redesigning products by moving away from guaranteed savings products toward protection products of unit-linked savings products. Also, life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with “living” benefits more than those with death benefits. Increasing demand for protection products is likely to have driven sales.

Accelerated digitalization ensured smooth functioning of the insurers and is also likely to have saved costs, in turn driving margin expansion.

Banking on operational efficiency resulting in a solid capital position, insurers pursued strategic mergers and acquisitions to sharpen their competitive edge, build on a niche, expand globally, and diversify their portfolio. These apart, insurers continued to boost shareholders’ value via dividend hikes, special dividends as well as share buybacks.

The insurance industry rose 10.8% in the first quarter compared with the Finance sector’s decrease of 2.4% and the S&P 500 Index’s decline of 4.7% in the said time frame.

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Potential Q1 Outperformers

ProAssurance Corporation operates as a holding company for many property and casualty insurance companies. While higher new business written and strong retention rates are expected to have benefited revenues, cost-cutting initiatives are likely to have aided margin improvement.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $9.23, indicating an increase of 924.1% from the year-ago reported figure. PRA has an Earnings ESP of +27.54% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Voya Financial operates as a retirement, investment, and employee benefits company in the United States. Solid performance across Wealth Solutions, Investment Management and Health Solutions is likely to aid quarterly results.

The Zacks Consensus Estimate for Voya’s first-quarter earnings is pegged at $1.36, indicating an increase of 32% from the year-ago reported figure. VOYA has an Earnings ESP of +0.37% and a Zacks Rank #3.

The Hartford Financial Group is one of the major multi-line insurance and investment companies in the country, providing investment products, group life and group disability insurance, property and casualty insurance and mutual funds. Expanded product offerings, efforts to strengthen the commercial business, underwriting strength in products, and cost-curbing initiatives are likely to have aided the quarterly performance.

The Zacks Consensus Estimate for Hartford Financial’s first-quarter earnings is pegged at $1.51, implying an increase of 169.6% from the year-ago reported figure. HIG has an Earnings ESP of +0.55% and a Zacks Rank #3.

Brown and Brown is one of the largest insurance brokers marketing and selling insurance products. Improving new business, solid retention and continued rate increases for most lines of coverage should continue to aid BRO to generate increasing commissions and fees across segments in the to be reported quarter.

The Zacks Consensus Estimate for Brown and Brown’s first-quarter earnings is pegged at 75 cents, indicating an upside of 7.1% from the year-ago reported figure. BRO has an Earnings ESP of +0.54% and a Zacks Rank #2.

Aflac Incorporated is a general business holding company and oversees the operations of its subsidiaries by providing management services and making capital available. Higher sales and expense-saving initiatives are likely to favor Aflac’s quarterly results. The Zacks Consensus Estimate for Aflac’s first-quarter earnings is pegged at $1.34, suggesting a decrease of 9.8% from the year-ago reported figure. AFL has an Earnings ESP of +1.76% and a Zacks Rank #3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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