Continued improved pricing, exposure growth, portfolio streamlining, solid retention, renewals, reinsurance agreements and accelerated digitalization are expected to have boosted insurance stocks’ third-quarter performance. Catastrophe losses and an increase in claims frequency are likely to have weighed on the upside. Insurers yet to report their third-quarter results on Oct. 29 are Unum Group UNM, Chubb Limited CB and Skyward Specialty Insurance Group, Inc. SKWD.

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Potential Factors Driving Q3 Earnings Season

Solid retention, exposure growth across business lines and improved pricing are likely to have fueled premiums. An active catastrophe environment is expected to have accelerated the policy renewal rate and led to better pricing in the third quarter of 2024. Per Market Scout’s Market Barometer, the commercial insurance sector saw a composite rate increase of 3.8%. Per the report, the personal lines composite rate has increased 6.75% in the third quarter of 2024, indicating a little moderation from the year-ago quarter's figures.

Per reports in Reinsurance News, CNA Financial Corporation estimates pretax net catastrophe losses of $143 million for third-quarter 2024. Per the report, around 75% of the catastrophe losses are associated with four larger events, which include $55 million from Hurricane Helene, while the remaining approximately $35 million of losses is scattered across several additional events in the third quarter.

Underwriting profit is likely to have benefited from better pricing, reinsurance arrangements, portfolio repositioning, reinsurance covers and favorable reserve development.

Auto premiums are likely to have improved, given increased travel across the world. A low unemployment rate is likely to have aided commercial insurance and group insurance.

A larger investment asset base, strong cash flow from operating activities, higher bond yields, as well as an increase in interest income from fixed-maturity securities are expected to have aided net investment income.

Accelerated digitization, robotic process automation, cognitive intelligence and blockchain should help insurers curb operational costs and aid margin expansion. This digital shift is expected to have driven premium growth and boosted efficiency. The increased use of data analytics and AI integration enables brokers to offer personalized services, boost operational efficiency, improve risk assessment and streamline operations. 

A solid capital position aided insurers in strategic mergers and acquisitions to sharpen their competitive edge, expand geographically and diversify their portfolio. Sustained wealth distribution to shareholders via dividend hikes, special dividends and share repurchases instill confidence in the insurers.

Let’s find out how the following insurers are placed before their third-quarter 2024 results on Oct. 29.

Per our proprietary model, the combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Unum Group’s premium in the third quarter is likely to have benefited from favorable persistency and higher prior-period sales in each of the principal operating segments. Higher miscellaneous investment income and an increase in the level of invested assets are likely to have supported higher net investment income. The upside is likely to have been partially offset by lower investment income from inflation index-linked bonds held by Unum UK. Improved premiums and an increase in net investment income are likely to have aided top-line growth. Unum International is likely to have benefited from in-force block growth, favorable recoveries in the group long-term disability product line, higher premium income, increased Unum International sales and Unum UK sales and higher persistency. (Read more: Is a Beat in the Cards for Unum Group This Earnings Season?)

The Zacks Consensus Estimate for UNM’s bottom line is pegged at $2.09, indicating a drop of 7.7% from the year-ago quarter’s reported figure. The company has an Earnings ESP of +0.61% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

UNM’s earnings surpassed estimates in three of the last four quarters while missing in one, the average being 2.96%. This is depicted in the chart below:

Chubb’s third-quarter premiums are likely to have benefited from growth across product lines, strong premium retention, including rate and exposure increases and solid new business. The acquisition of Cigna's Asia business, coupled with the strong performance of distribution channels in different countries, is likely to have aided life insurance premiums. The high net-worth personal lines business is likely to have benefited from premium growth, stemming from growth in new business. Premiums at International Life Insurance are expected to have benefited from solid performing tied agency, brokerage, bankassurance and direct marketing distribution channels. Growing cash flow is likely to have aided net investment income. (Read more: Can Chubb Limited Retain its Beat Streak This Earnings Season?)

The Zacks Consensus Estimate for Chubb’s fourth-quarter earnings per share of $4.93 indicates a 0.4% decrease from the year-ago quarter’s reported figure. The company has an Earnings ESP of +1.79% and a Zacks Rank #3.  

CB’s earnings surpassed estimates in the last four reported quarters. This is depicted in the chart below:

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Chubb Limited (CB) : Free Stock Analysis Report

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