The insurance industry is anticipated to have gained from improved pricing, strong retention rates, an active merger and acquisition (M&A) environment, product redesign, and reinsurance agreements. Insurers like Principal Financial Group, Inc. PFG, Reinsurance Group of America, Incorporated RGA, Lincoln National Corporation LNC and CNO Financial Group, Inc. CNO are set to report their fourth-quarter earnings on Feb. 6, 2025. However, rising expenses and interest rate cuts are likely to have weighed on their performance.
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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 fourth-quarter 2024 are anticipated to rise 22.6% from the prior-year quarter’s figure. These companies’ revenues are anticipated to improve 6.2%.
Important Points for Investors
Rising premiums are expected to have benefited insurance companies' top-line growth in the fourth quarter. Enhanced value propositions and better products tailored to customer needs are likely to have benefited customer retention rates. Higher policies sold and rate hikes are likely to have buoyed the results. Growing premiums bode well for insurers as they account for a significant chunk of their top line.
Insurers invest premiums majorly in fixed assets and benefit from higher interest rates, leading to improved net investment income. However, in the current situation where we are witnessing interest rate cuts, insurers are bound to look for alternative ways to grow their investment income. The Fed has lowered interest rates three times in 2024, prompting insurers to resort to alternative investments like private equity, hedge funds, and real estate. M&A activity is expected to have received a boost from lower interest rates, encouraging insurers to seek loans for expansion initiatives.
The growing middle class in emerging markets, coupled with declines in pension provisions from governments and businesses, is expected to drive continued growth in savings products over the coming years. Strong demand from advanced and emerging markets is expected to have boosted policy sales growth in the fourth quarter.
The bundling of products along with the original product has been gaining popularity. Redesigning products to better suit the needs of consumers wanting living benefits more than death benefits is changing the landscape of the insurance industry. Leveraging the new trends and adapting to them should enhance product demand and retention.
The insurance industry frequently resorts to significant technology investments in light of a booming digital era. These investments are expected to automate processes and bring operational efficiencies. These investments are likely to have curbed costs and aided insurers' margins.
Let’s find out how the following insurers are placed before their fourth-quarter 2024 results on Feb. 6.
The Zacks model suggests that a company needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Reinsurance Group of America: RGA’s fourth-quarter results are expected to benefit from a solid performance in the Europe, Middle East and Africa (EMEA) and Canada segments. Rising premiums and net investment income are expected to have further buoyed the company’s results in the to-be-reported quarter. The strong U.S. and Latin American segments also bode well. Despite these tailwinds, rising costs and expenses are expected to constrain profit expansion during the quarter partially.
The Zacks Consensus Estimate for RGA’s fourth-quarter 2024 earnings is pegged at $5.22 per share, indicating a 10.4% rise from the prior-year quarter’s figure. The consensus mark for revenues is $5.8 billion, implying 11.5% growth from the year-ago quarter’s figure.
RGA has an Earnings ESP of -0.86% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.
RGA’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 17.7%. The same is depicted in the chart below:
Reinsurance Group of America, Incorporated Price and EPS Surprise
Reinsurance Group of America, Incorporated Price and EPS Surprise
Reinsurance Group of America, Incorporated price-eps-surprise | Reinsurance Group of America, Incorporated Quote
CNO Financial: CNO Financial’s revenue growth is expected to have been driven by increased premiums in annuity, life and health products, as well as a notable rise in net investment income. Medicare Supplement health margin is expected to have improved in the fourth quarter, while the same in Supplemental Health and Long-Term Care is expected to have deteriorated.
The Zacks Consensus Estimate for CNO’s fourth-quarter 2024 earnings is pegged at $1.07 per share, which indicates a 9.3% decline from the prior-year quarter’s figure. The consensus mark for revenues is $949.7 million, implying 18.9% growth from the year-ago quarter’s figure.
CNO Financial has an Earnings ESP of 0.00% and a Zacks Rank of 2.
CNO’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 24.5%. The same is depicted in the chart below:
CNO Financial Group, Inc. Price and EPS Surprise
CNO Financial Group, Inc. Price and EPS Surprise
CNO Financial Group, Inc. price-eps-surprise | CNO Financial Group, Inc. Quote
Lincoln National: The company’s revenues are likely to have benefited from strong contributions of the Group Protection segment in the fourth quarter. The unit is expected to have been aided by expanding premiums resulting from increased sales and disciplined pricing. The Annuities segment of LNC is likely to have received an impetus from strong growth in annuity sales and diversification of products suite to include more spread-based products.
The quarterly results of Lincoln National are likely to be affected by feeble contributions from the Retirement Plan Services segment. The Life Insurance segment is likely to have suffered a blow due to continued mortality claims in the to-be-reported quarter. Numerous cost-cutting initiatives are likely to have provided some respite to the margins of Lincoln National in the to-be-reported quarter.
The Zacks Consensus Estimate for Lincoln National’s fourth-quarter 2024 earnings is pegged at $1.75 per share, which indicates a 20.7% improvement from the prior-year quarter’s figure. The consensus mark for revenues is pegged at $4.7 billion, implying a more than two-fold growth from the year-ago quarter’s figure.
LNC has an Earnings ESP of -0.82% and a Zacks Rank #3.
Lincoln National’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.9%. The same is depicted in the chart below:
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
Principal Financial: Principal Financial’s fourth-quarter results are expected to have benefited from solid performance across the Retirement and Income Solution and Principal International segments and improved assets under management. However, declining earnings in the Benefits and Protection and Specialty Benefits segment and higher expenses are expected to have acted as an offset.
The Zacks Consensus Estimate for PFG’s fourth-quarter 2024 earnings is pegged at $1.95 per share, which indicates 6.6% growth from the prior-year quarter’s figure. The consensus mark for revenues is $4 billion, implying a 5% decline from the year-ago quarter’s figure.
Principal Financial has an Earnings ESP of +0.03% and a Zacks Rank of 3.
PFG’s earnings outpaced estimates in one of the trailing four quarters and missed the mark thrice, the average negative surprise being 5.7%. The same is depicted in the chart below:
Principal Financial Group, Inc. Price and EPS Surprise
Principal Financial Group, Inc. Price and EPS Surprise
Principal Financial Group, Inc. price-eps-surprise | Principal Financial Group, Inc. Quote
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