The insurance industry players are likely to have benefited from improved pricing, exposure growth, solid retention, favorable renewals, reinsurance agreements, redesigning and repricing of products and services to maintain sales and profitability as well as the adoption of technologies in the second quarter of 2022 Some of the insurers like Assurant Inc. AIZ, Prudential Financial Inc. PRU, Voya Financial Inc. VOYA, Markel Corporation MKL and NMI Holdings Inc. NMIH are set to announce quarterly results on Aug 1.
Non-life premiums are likely to have benefited from price hikes, operational strength, higher retention, strong renewal, the appointment of retail agents and higher new business premiums. Occurrences of natural disasters accelerated the policy renewal rate and aided better pricing in the second quarter.
Reinsurance covers, favorable reserve development and solid capital level are likely to have aided underwriting profitability and combined ratio.
Life insurance premiums are likely to have benefited from increasing demand for protection products, in turn driving sales. 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. A compelling product portfolio is likely to have aided sales of life insurers.
Higher reported net asset values, higher income from other alternative investments, growth in equity portfolio dividends, higher income received from private equity partnerships and hedge funds are expected to have driven net investment income. An improving interest rate environment is likely to have added to the upside.
By virtue of a solid capital position, the insurers executed strategic mergers and acquisitions, which are likely to have built on a niche, aided in expansion, and diversified their portfolio to have a compelling product offering and sharpen their competitive edge.
The increased adoption of technologies such as robotic process automation, Chatbot and RoboAdvisory, insurtech solutions and cloud computing is expected to have driven efficiency, enhanced cybersecurity, upgraded policy administration and claims systems as well as expanded automation capabilities across organizations.
Let’s take a sneak peek into how the following insurers are poised prior to their second-quarter earnings on Aug 1.
Per our proprietary model, a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Assurant’s net earned premiums are likely to have benefited from continued organic growth from strong US sales in the Global Automotive business across all distribution channels, domestic mobile subscriber growth within cable operator distribution channel, higher average insured values and premium rates in the Lender-placed Insurance business and continued growth from renters insurance in Multifamily Housing business. The Global Lifestyle segment is expected to have benefited from favorable loss experience and subscriber growth, as well as an increase in global mobile devices served, mainly from higher trade-in volumes in Connected Living. (Read more: Will Assurant Pull Off a Surprise This Earnings Season?)
The Zacks Consensus Estimate for Assurant’s second-quarter earnings of $3.21 per share implies a 7.4% increase from the prior-year quarter’s reported number. Assurant has an Earnings ESP of +2.34% and carries a Zacks Rank #1.
AIZ delivered an earnings surprise in each of the last four quarters, the average being 18.31%. This is depicted in the chart below:
Assurant, Inc. Price and EPS Surprise
Assurant, Inc. price-eps-surprise | Assurant, Inc. Quote
Prudential Financial’s international businesses are likely to have been affected by lower net investment spread, less favorable underwriting and lower earnings from joint venture investments, partially offset by business growth. The retirement business is likely to have decreased due to less favorable reserve experience. The downside is likely to have been offset by a higher net investment spread. Group Insurance business in the to-be-reported quarter is likely to have benefited from more favorable underwriting in both group life and disability, partially offset by higher expenses. Net investment income is likely to have benefited from higher income on non-coupon investments, higher average invested assets and growth of business in strength. (Read more: What’s in the Cards for Prudential in Q2 Earnings?)
The Zacks Consensus Estimate for Prudential’s second-quarter earnings per share of $2.62 indicates a 30.8% decrease from the year-ago quarter reported figure. The company has an Earnings ESP of 0.00% and a Zacks Rank 5 (Strong Sell).
PRU delivered an earnings surprise in each of the last four quarters, the average being 29.37%. This is depicted in the chart below:
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. price-eps-surprise | Prudential Financial, Inc. Quote
The Zacks Consensus Estimate for Voya Financial’s second-quarter earnings per share of $1.39 indicates a decrease of 36.8% from the year-ago reported figure.
Voya Financial has an Earnings ESP of -2.33% and a Zacks Rank #3. Higher-growth, higher-return, and capital-light businesses, boasting a solid presence, are likely to aid second-quarter results. Cost savings, expansion of distribution network and achievement of efficiencies through automation are likely to have helped the upside.
Higher fee income from business growth, favorable equity markets and net investment spread experience are likely to aid second-quarter results. Higher investment capital returns owing to overall market performance and higher fee revenues are likely to have helped the upside. Voya Financial expects continued strength across diversified investment strategies and distribution channels, which are likely to gain from fixed-income platform investment performance.
The bottom line beat estimates in three of the last four quarters, the average surprise being 19.78%. The same is depicted in the chart below:
Voya Financial, Inc. Price and EPS Surprise
Voya Financial, Inc. price-eps-surprise | Voya Financial, Inc. Quote
A favorable rating environment within most of the insurance product lines, new business opportunities in domestic and international operations, higher premiums in general liability and professional liability lines and higher renewals are likely to aid Markel’s second-quarter results. The impact of favorable premium adjustments within credit and surety, professional liability, general liability product lines and strategic buyouts are also likely to have aided growth.
The Zacks Consensus Estimate for Markel’s second-quarter earnings per share of $21.43 indicates an 11.9% increase from the year-ago quarter reported figure. Markel has an Earnings ESP of 0.00% and a Zacks Rank 3.
MKL delivered an earnings surprise in two of the last four quarters and missed in the other two. This is depicted in the chart below:
Markel Corporation Price and EPS Surprise
Markel Corporation price-eps-surprise | Markel Corporation Quote
NMI Holdings’ broad resiliency of the housing market, growth in total mortgage origination volume and increasing size of the US mortgage insurance market are likely to aid second-quarter results. NMI Holdings expects persistence to continue to improve and drive further increases in the embedded portfolio value. The growth of insurance-in-force, increased monthly policy production and higher single premium policy cancellations are likely to have helped the upside.
The Zacks Consensus Estimate for NMI Holdings’ second-quarter earnings per share of 78 cents indicates a 16.4% increase from the year-ago quarter reported figure. The company has an Earnings ESP of 0.00% and a Zacks Rank 3.
NMIH delivered an earnings surprise in each of the last four quarters, the average being 2.96%. This is depicted in the chart below:
NMI Holdings Inc Price and EPS Surprise
NMI Holdings Inc price-eps-surprise | NMI Holdings Inc Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?
From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.
See Stocks Now >>
Click to get this free report
Prudential Financial, Inc. (PRU): Free Stock Analysis Report
Assurant, Inc. (AIZ): Free Stock Analysis Report
Markel Corporation (MKL): Free Stock Analysis Report
Voya Financial, Inc. (VOYA): Free Stock Analysis Report
NMI Holdings Inc (NMIH): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.