Continued improved pricing, exposure growth, portfolio streamlining, solid retention, renewals, reinsurance agreements and accelerated digitalization are expected to have boosted insurance stocks’ December-quarter performance. Catastrophe losses and an increase in claims frequency are likely to have weighed on the upside. Insurers yet to report their fourth-quarter results on Feb. 4 are Unum Group UNM, Willis Towers Watson Public Limited Company WTW, Prudential Financial, Inc. PRU, American Financial Group, Inc. AFG and Voya Financial Inc. VOYA.

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Factors Likely to Drive Insurers’ Q4 Performance

Solid retention, exposure growth across business lines and improved pricing are likely to have boosted premiums. An active catastrophe environment is expected to have accelerated the policy renewal rate and led to better pricing in the fourth quarter of 2024. Per recent analysis by MarketScout’s Market Barometer, the commercial insurance sector saw a composite rate increase of 2.64%. Per the report, the personal lines composite rate has increased 4% in the fourth quarter of 2024.

Per reports in Insurance News, Heritage Insurance Holdings anticipates its strongest earnings quarter of 2024 in the fourth quarter. This performance includes an estimated $57 million impact from Hurricane Milton, which comprises $40 million in retained catastrophe losses as well as $17 million net reinstatement premium. Per reports in Reinsurance News, Assurant expects to record around $50 million pre-tax in losses from natural catastrophes for the fourth quarter of 2024. The reported losses primarily stem from lender-placed insurance in Global Housing and were largely driven by Hurricane Milton.

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.

The insurance industry’s increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation expedite business operations. Insurers continue to invest heavily in technology to improve basis points, scale and efficiencies. These investments are likely to have curbed costs and aided margins of insurers in the fourth quarter.

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 fourth-quarter 2024 results on Feb. 4.

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.

Favorable persistency and better sales in the operating segments are likely to have favored premiums of Unum Group in the fourth quarter. Higher miscellaneous investment income and an increase in the level of invested assets are likely to have supported higher net investment income. Improved premiums and an increase in net investment income are likely to have aided top-line growth.

The performance of Unum U.S. and Colonial Life, two of the largest operating segments, is likely to have been driven by higher premium income, favorable persistency, improved benefit experience in the life and accident, sickness, and disability product lines, favorable recoveries in the long-term disability product line and stop loss experience. Expenses are likely to have increased because of higher policy benefits, commissions, interest and debt expense, amortization of deferred acquisition costs and other expenses. (Read more: Unum Group to Report Q4 Earnings: Is a Beat in the Cards?)

The Zacks Consensus Estimate for UNM’s bottom line is pegged at $2.13, indicating a 19% increase from the year-ago quarter’s reported figure. The company has an Earnings ESP of +0.24% and a Zacks Rank #3 at present. 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 3.17%. This is depicted in the chart below:

Willis Tower’s revenues in the fourth quarter are likely to have benefited from strong performances across all the segments. Strong client retention, new local appointments and the continued expansion of the Global Benefits Management client portfolio in International and Europe, along with increased brokerage income in North America, are likely to have aided the Organic revenue growth in Health in the to-be-reported quarter.

Wealth business revenues are likely to have benefited from higher levels of Retirement work in Europe and an increase in Investments business due to capital market improvements and growth from LifeSight solution. Increased compensation survey sales and advisory services in Work & Rewards and product revenues in Employee Experience are expected to have favored Career revenues. (Read more: Willis Towers Set to Report Q4 Earnings: What's in the Cards?)

The Zacks Consensus Estimate for WTW’s fourth-quarter earnings per share of $8.01 indicates a 7.6% increase from the year-ago quarter’s reported figure. The company has an Earnings ESP of -0.55% and a Zacks Rank #3 at present.

WTW’s earnings surpassed estimates in each of the last four quarters. This is depicted in the chart below:

Prudential’s U.S. business is likely to have gained from higher underwriting results and net investment spread results. PGIM is likely to have gained from higher net asset management fees and net other related revenues. Assets under management are expected to have benefited from the impact of lower interest rates, equity market appreciation and strong investment performance.

Expenses are likely to have increased because of higher policyholders’ benefits and amortization of deferred policy acquisition costs. The Individual Retirement Strategies business is likely to have benefited from higher net investment spread results due to growth in indexed variable annuities and higher reinvestment rates. The company estimates earnings per share to be $3.34 for the fourth quarter of 2024.

The Zacks Consensus Estimate for the bottom line is pegged at $3.28, indicating a 27.1% increase from the year-ago quarter’s reported figure. The company has an Earnings ESP of -1.07% and a Zacks Rank #3 at present. (Read more: What's in the Cards for Prudential Financial This Earnings Season?)

PRU’s earnings surpassed estimates in one of the last four quarters while missing in the other three. This is depicted in the chart below:

American Financial’s fourth-quarter results are likely to benefit from strong performance across Property and transportation, Specialty casualty, Specialty financial and other specialty businesses. An improved renewal rate and price increase are likely to favor results. However, exposure to cat loss and rising expenses are likely to have weighed on profitability.

The Zacks Consensus Estimate for AFG’s bottom line is pegged at $3.20, indicating a 12.6% increase from the year-ago quarter reported figure. The company has an Earnings ESP of +3.83% and a Zacks Rank 4 (Sell) at present.

AFG’s earnings surpassed estimates in two of the last four quarters while missing in the other two. This is depicted in the chart below:

Voya Financial's higher-growth, higher-return and capital-light businesses boasting a solid presence are likely to aid fourth-quarter results. Cost savings, expansion of the distribution network and achievement of efficiencies through automation are likely to have aided the upside.

Higher fee income from business growth, favorable equity markets and net investment spread experience are likely to aid fourth-quarter results. Higher investment capital returns owing to overall market performance and higher fee revenues are likely to have aided the upside.

The Zacks Consensus Estimate for Voya Financial's fourth-quarter earnings per share of 71 cents indicates a decrease of 63.9% from the year-ago reported figure. Voya Financial has an Earnings ESP of +10.30% and a Zacks Rank #4 at present.

The bottom line surpassed estimates in each of the last four quarters, the average surprise being 6.77%. The same is depicted in the chart below:

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Prudential Financial, Inc. (PRU) : Free Stock Analysis Report

Unum Group (UNM) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report

Voya Financial, Inc. (VOYA) : Free Stock Analysis Report

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