Insurers Reporting Q2 Earnings On Jul 29: RE, ACGL, MCY, NGHC
Zacks Investment Research | Jul 25, 2019 11:20PM ET
Insurance industry players’ second-quarter results are likely to benefit from a benign catastrophe environment, improved pricing, reinsurance agreements, compelling products and service portfolio and adoption of technologies to curb operational costs. A sturdy capital level supporting strategic mergers and acquisitions should also act as catalysts. Improved employment scenario along with rising wages is expected to boost policy sales, thus driving premiums higher.
The second quarter of a year escapes the hurricane season that causes major damage and weighs on underwriting profits of insurers. Underwriting is expected to exhibit improvement on better pricing and prudent practice.
While most of the commercial insurance lines should witness rate increase, workers compensation and international liability are likely to face downward pricing pressure this time around.
Following an accelerated pace in rate hike till last year, the Fed put rate hikes on hold this year. Insurers, who are major beneficiaries of a rising rate environment because of their sensitivity to interest rates, are still expected to exhibit improvement given broader invested asset base.
Further, adoption of technologies like AI, robotic process automation, cognitive intelligence and blockchain should help insurers curb operational costs in the soon-to-be reported quarter.
Also, a sturdy capital level widens scope for capital deployment to fund growth initiatives as well as reward shareholders via dividend hikes, special dividends and share buyback.
Let’s take a sneak peek into how the following insurers are poised prior to their second-quarter earnings releases on Jul 29.
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive
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