The insurance industry is expected to have benefited on rate increases, strong retention rates, new business growth, an active merger and acquisition (M&A) strategy and ongoing technological advancements in the first quarter of 2025. However, interest rate cuts, an active catastrophe environment and continued inflationary pressures are likely to have dampened overall growth prospects for insurers. Some of the insurers, including The Allstate Corporation ALL, Aflac Incorporated AFL, Prudential Financial, Inc. PRU and MetLife, Inc. MET, are set to report their first-quarter earnings on April 30.
The insurance space is housed within the broader Finance sector (one of the 16 broad Zacks sectors within the Zacks Industry classification). Per the latest Earnings Preview, the total earnings of finance companies for the first quarter are anticipated to rise 8.2% from the prior-year quarter’s figure. These companies’ revenues are anticipated to improve 3.3%.
Factors Likely to Shape Insurers’ Performance in Q1
Revenues of insurance companies are likely to have been aided by strong premiums in the first quarter, which are expected to have stemmed from casualty insurance rate increases, exposure growth and solid customer retention rates. Growing premiums bode well for insurers as they account for a significant chunk of their top line. However, a decline in property insurance rates is expected to have hurt premium growth.
Per Marsh’s Global Insurance Market Index, U.S. commercial insurance rates witnessed an overall decline in the first quarter of 2025, mainly due to a fall in property insurance rates. Meanwhile, the U.S. casualty market experienced strong price increases on the back of higher severity of claims.
The Fed reduced interest rates three times in 2024 and the chances of multiple rate cuts remain in 2025. Life insurers, who benefit from higher rates by investing premiums to fulfill policyholder obligations, are expected to have faced pressure on investment returns due to lower interest rates in the to-be-reported quarter.
Meanwhile, lower interest rates are likely to have encouraged insurers to secure financing for M&A, enabling them to preserve cash while fueling expansion. A robust M&A strategy allows insurers to diversify their portfolios, reducing concentration risks and enhancing the sale of insurance policies during the first quarter. Increased policy sales have, in turn, are expected to have boosted premiums.
However, an active catastrophe environment is likely to have posed challenges to insurers’ underwriting performance. Despite the losses associated with catastrophe-related losses, such events typically lead to stronger policy renewal activity and prudent rate hikes. Insurers often offset these losses through reinsurance arrangements and favorable reserve developments, thereby reinforcing their risk management frameworks.
The aging U.S. population is expected to have maintained strong demand for life insurance and protection products, contributing to steady premium inflows. Additionally, the resurgence of commercial and industrial activity is likely to have fueled demand for workers' compensation insurance in the to-be-reported quarter.
A higher number of cars plying on roads is likely to have boosted auto premiums of insurers. However, continued inflationary headwinds and uninterrupted claim expenses are expected to have exerted strain on the profits of auto insurers.
The insurance industry frequently resorts to significant technology investments in light of a booming digital era, which are expected to have automated processes and brought operational efficiencies. These investments are likely to have curbed costs and aided the margins of insurers.
Let’s find out how the following insurers are placed before their first-quarter 2025 results on April 30.
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Allstate: Its results are likely to be driven by higher net premiums earned across most of its business lines, supported by rate increases. Net investment income is expected to have benefited from stronger market-based returns in the first quarter. The Auto insurance business’ underwriting results are expected be aided by favorable underlying loss experience and prior-year reserve reestimates. Despite these positive trends, the company's overall performance is likely to have been partially offset by an elevated expense level.
The Zacks Consensus Estimate for Allstate’s first-quarter 2025 earnings is pegged at $2.27 per share, which indicates a 55.8% decline from the prior-year quarter’s figure. The consensus mark for revenues is pegged at $17.1 billion, implying 11% growth from the year-ago quarter’s figure.
ALL has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold).
Allstate’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 127.06%. The same is depicted in the chart below:
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Aflac: Aflac's revenue growth is expected to have been driven by its U.S. operations, supported by rising net earned premiums, partly offset by higher benefit costs. However, a decline in sales of group voluntary benefit products is likely to have inflicted adversities on the unit’s performance in the to-be-reported quarter. Aflac’s Japan segment is anticipated to have faced headwinds due to declining net earned premiums, primarily due to a reduction in paid-up policies.
The Zacks Consensus Estimate for AFL’s first-quarter 2025 earnings is pegged at $1.68 per share, which indicates a 1.2% rise from the prior-year quarter’s figure. The consensus mark for revenues is $4.4 billion, implying a 19.5% fall from the year-ago quarter’s figure.
Aflac has an Earnings ESP of -0.65% and a Zacks Rank of 3.
AFL’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 10.88%. The same is depicted in the chart below:
Prudential Financial: Prudential Financial’s U.S. business is likely to have gained from higher fees, improved net investment spread, underwriting income and a strong mix of longevity and mortality businesses, while expanded financial solutions and distribution supported growth. Internationally, a diversified product portfolio in Japan and expanded channels in Brazil are likely to have driven gains. However, the upside is expected to have been partly offset by an elevated expense level. (Read more: Prudential Financial Q1 Earnings Coming Up: What to Expect)
The Zacks Consensus Estimate for PRU’s first-quarter 2025 earnings is pegged at $3.21 per share, indicating a 2.9% rise from the prior-year quarter’s figure. The consensus mark for revenues is $14.5 billion, implying a 33% drop from the year-ago quarter’s figure.
Prudential Financial has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
PRU’s earnings outpaced estimates in one of the trailing four quarters and missed the same thrice, the average negative surprise being 2.98%. The same is depicted in the chart below:
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. price-eps-surprise | Prudential Financial, Inc. Quote
MetLife: MetLife’s first-quarter results are expected to have benefited from rising premiums across most business segments. Strengthening operations in international markets, particularly Latin America, serve as a key growth driver. Strength in core and voluntary products is likely to have contributed to MetLife’s growth. Despite these tailwinds, rising costs and expenses are expected to have strained margins during the first quarter. (Read more: MET to Report Q1 Earnings: What Do the Key Estimates Say?)
The Zacks Consensus Estimate for MET’s first-quarter 2025 earnings is pegged at $1.99 per share, indicating a 8.7% rise from the prior-year quarter’s figure. The consensus mark for revenues is $18.2 billion, implying 7% growth from the year-ago quarter’s figure.
MetLife has an Earnings ESP of +0.24% and a Zacks Rank of 3.
MET’s earnings outpaced estimates in one of the trailing four quarters, matched the mark once and missed the same on the remaining two occasions, the average negative surprise being 1.49%. The same is depicted in the chart below:
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
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