Yahoo Finance 3 Insurers Poised to Beat Estimates This Earnings Season
Per the latest Earnings Preview, the Finance sector’s first-quarter 2023 earnings are expected to increase 7.5%. Revenues are estimated to rise 13.1%. Results of Insurance, one of the Finance sector industries, are likely to reflect better pricing and exposure growth, accelerated digitalization and an improving interest rate.
With the help of the Zacks Stock Screener, we have identified three insurers namely, American Equity Investment Life Insurance Company AEL, Lincoln National LNC and Primerica, Inc. PRI, which are 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, being beneficiaries of an improving rate environment, are likely to deliver improved investment results. The first quarter witnessed one rate hike by the Fed. A larger investment asset base, higher reinvestment rate and alternative investments in private equity, hedge funds and real estate among others coupled with an improving rate environment are expected to have aided net investment income. Net investment income is an important component of insurers’ top line.
Life insurers have been redesigning products with a focus on protection products. Also, life insurers have been rolling 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 awareness and demand for protection products are likely to have driven sales.
The first quarter of 2023 bore the brunt of March storms. Aon estimates insured losses in the first quarter to be $15 billion while economic losses are estimated to be $63 million. Nonetheless, better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers, favorable reserve development and prudent underwriting are likely to drive an improvement in underwriting results.
Continued investment in digitalization is likely to have saved costs and driven margin expansion. Riding on the strength of a solid capital position, insurers have been engaging in strategic buyouts, mergers, building on a niche, expanding globally, diversifying their portfolio and deploying capital to make dividend hikes and pay special dividends. Share buybacks are expected to have provided an additional upside to the bottom line.
Potential Q1 Outperformers
American Equity Investment is a leader in the development and sale of fixed index and fixed rate annuity products. Expansion into new verticals, the increasing popularity of index products in the market and an improving interest rate environment favoring investment spread are likely to aid quarterly results. Increasing expenses are likely to have weighed on margins.
The Zacks Consensus Estimate for AEL’s first-quarter earnings is pegged at $1.09, suggesting an increase of 18.5% from the year-ago reported figure. AEL has an Earnings ESP of +1.43% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Equity Investment Life Holding Company Price and EPS Surprise
American Equity Investment Life Holding Company price-eps-surprise | American Equity Investment Life Holding Company Quote
Lincoln National is a diversified life insurance and investment management company. Improving sales, driven by pricing discipline and a compelling product portfolio, increased investment returns due to a rising rate environment, and solid performance at the Group Benefits segment are likely to drive first-quarter results. However, escalating expenses might have put pressure on margins.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.83, indicating an increase of 10.2% from the year-ago reported figure. LNC has an Earnings ESP of +1.55% and a Zacks Rank #3.
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
Primerica is the second-largest issuer of term-life insurance coverage in North America. It has been focused on emerging as a successful senior health business. Sales growth and policy persistency are likely to have benefited from solid demand for protection products. Focus on increasing the size of the life license sales force through continued recruiting and licensing is likely to have aided an upside.
The Zacks Consensus Estimate for PRI’s first-quarter earnings is pegged at $3.45, implying an increase of 63.5% year over year. It has an Earnings ESP of +0.17% and a Zacks Rank #2.
Primerica, Inc. Price and EPS Surprise
Primerica, Inc. price-eps-surprise | Primerica, Inc. Quote
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Lincoln National Corporation (LNC) : Free Stock Analysis Report
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Primerica, Inc. (PRI) : Free Stock Analysis Report
