Multi Line Insurers Q3 Earnings On Oct 27: HIG, ORI, RDN
Zacks Investment Research | Oct 25, 2016 10:47PM ET
The Q3 earnings season is underway with 23.2% of the S&P 500 Index members having reported their quarterly results so far. According to our latest Earnings Preview report, the performance of the 116 index members (accounting for 30% of the index’s total market capitalization) that have already reported their financial numbers this quarter indicate that total earnings have improved 3.3% on 1.8% higher revenues. The beat ratio is strong with 80.2% companies surpassing bottom-line expectations and 62.9% outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has started the Q3 earnings season on a strong note. In fact, the financial performance of 33.3% companies from this sector that have already reported their quarterly results indicates 7.9% earnings growth due to a 5.1% increase in revenues, on a year-over-year basis. Moreover, the beat ratios of 90% for the bottom line and 86.7% for the top line compare favorably with the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and securities exchanges to name a few.
Amid a benign catastrophe environment in Q3, underwriting results improved. Lesser cat events favored capital gains and reserve release, pressurizing pricing. Better payroll and employment scenario should also benefit insurers. Insurers are poised to outperform in the quarter on the back of their core business, geographic expansion and strategic acquisitions. Companies that are skewed toward providing health benefits may gain from expansion of the Affordable Care Act, while improvement in the housing market should benefit mortgage insurers.
However, a soft interest rate environment continued to weigh on investment results. Nonetheless, spread compression on products like fixed annuities and universal life should improve.
Insurance - Multi line Industry Price Index
The Hartford Q3 Earnings: Is a Surprise in Store? )
With respect to the surprise trend, The Hartford missed expectations in three of the last four quarters, with an average miss of 17.64%.
HARTFORD FIN SV Price and EPS Surprise
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The Zacks Consensus Estimate for the quarter is pegged at 39 cents per share.
With respect to the surprise trend, Radian beat expectations in only one of the last four quarters but the average beat was 0.53%.
RADIAN GRP INC Price and EPS Surprise
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