Most publicly traded US life insurers are set to announce stronger second-quarter earnings as the macroenvironment continues to produce favorable conditions.
Of the 15 US life insurers for which analyst estimates are available, 11 are expected to book year-over-year increases in second-quarter earnings, according to analyst estimates compiled by S&P Global Market Intelligence. The group is also expected to bring in better results sequentially, with 10 companies projected to have higher earnings than they posted in the first quarter.
As was the case a quarter earlier, Brighthouse Financial Inc.'s second-quarter normalized earnings-per-share estimate of $4.37 was the highest among the group.
Positive trends
The second quarter has been marked by "generally constructive trends" for life companies, Keefe Bruyette & Woods analyst Ryan Krueger said in a note.
The group has seen "solid business growth," a "healthy capital return," and "good expense control," Krueger said, adding that life insurance stocks are up about 11% since the start of the year.
UBS analyst Brian Meredith forecast growth in individual and group annuity sales and said in a note that group benefits writers should see "sustained" premium growth as well as improved mortality and morbidity experience.
The second quarter's positive equity market performance will be a tailwind, Meredith said in a July 9 note, though there could be some headwinds for the sector's variable investment income.
Analysts and investors will also watch Globe Life Inc., which, days before its scheduled second-quarter earnings call, filed a Form 8-K disclosing the completion of an independent investigation into two short seller reports alleging company misconduct.
According to the filing, the company's audit committee found "no merit" in allegations that Globe Life engaged in "'wide-ranging insurance fraud'" that led to inaccurate or misleading financial reports.
Globe Life has received subpoenas from the US Justice Department regarding a separate issue related to sales practices by certain agents. In an email, a spokesperson for the insurer said there would be "additional comments" on that matter during the earnings call.
Anticipated revenue growth
Most life insurers are also expected to report better revenue results in the second quarter. Of the 15 life insurers in Market Intelligence's analysis, only four companies are projected to record weaker revenue numbers year over year. On a sequential basis, five are expected to post lower revenues.
Principal Financial Group Inc. is anticipated to record higher revenue in the second quarter compared to the year-ago period, but is the only insurer in the group expected to see no change in revenue from the prior quarter. The mean revenue estimate for the company for the second quarter is $3.80 billion.
MetLife Inc. is likely to book the highest second-quarter revenue among the 15 life insurers in the analysis, with the mean revenue estimate for the company at $18.57 billion.
CNO Financial Group Inc., meanwhile, is expected to post the lowest revenue among the group. The mean second-quarter revenue estimate for CNO is $930 million, which is lower than the insurer's reported revenue for the previous quarter and the prior-year period.
