Continued improved pricing, exposure growth, portfolio streamlining, solid retention, renewals, reinsurance agreements and accelerated digitalization are expected to have enhanced insurance stocks’ October-quarter performance. However, catastrophe losses are likely to have weighed on the upside. Insurers yet to report their third-quarter results on Oct. 28 are The Hanover Insurance Group, Inc. THG, Axis Capital Holdings Limited AXS, Everest Group, Ltd. EG and Aon plc AON.
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 third quarter are anticipated to rise 20.6% from the prior-year quarter’s figure. These companies’ revenues are anticipated to improve 7.8%.
Factors Likely to Shape Insurers’ Performance in Q3
Better pricing, solid retention and exposure growth across business lines are likely to have driven premiums. Per the latest Marsh Global Insurance Market Index, in the third quarter of 2026, Global insurance rates continued to decline, down 5%, marking the ninth consecutive quarter of reductions amid ample capacity across nearly all regions and lines of coverage. Property rates eased for the ninth consecutive quarter, declining 10%, while casualty rates increased 1%.
Per Gallagher Re Natural Catastrophe and Climate Report, the third quarter marked the sixth consecutive quarter without an individual natural catastrophe generating more than $10 billion in insured losses.
Intact Financial Corporation estimates that total catastrophe losses for the third quarter of 2026 were approximately $660 million on a pre-tax basis and net of reinsurance. Definity Financial Corporation estimates that catastrophe losses in the third quarter of 2026 would reduce underwriting income by approximately $190 million, net of reinsurance recoveries, representing $1.15 per common share, net of taxes and reinsurance.
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.
The U.S. Federal Reserve raised the federal funds target range by 25 basis points to 3.75-4%, its first rate hike since July 2023, citing still-elevated inflation. The Federal Reserve is expected to leave interest rates unchanged at the conclusion of its meeting on Oct. 28, but may hike rates again before the end of the year.
A larger investment asset base, strong cash flow from operating activities, higher bond yields and 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 expedites 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 the margins of insurers in the third quarter.
A solid capital position is likely to have 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 instills confidence in the insurers.
Let’s find out how the following insurers are placed before their third-quarter 2026 results on Oct. 28.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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.
The Hanover Insurance: The company's disciplined approach to profitable growth is likely to have benefited the net premiums written. Robust underwriting performance across Property, Management Liability, Surety, Marine and E&S is expected to have aided earnings. Net investment income is likely to have been driven by higher earned yields, cash flow investment and improved partnership income. Personal Lines is expected to have benefited from earned pricing and margin initiatives.
The Zacks Consensus Estimate for THG’s third-quarter 2026 earnings is pegged at $4.47 per share, indicating a decline of 12.2% from the prior-year quarter’s reported figure. The Hanover Insurance has an Earnings ESP of +6.83% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
THG’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 27.33%. The same is depicted in the chart below:
The Hanover Insurance Group, Inc. Price and EPS Surprise
The Hanover Insurance Group, Inc. price-eps-surprise | The Hanover Insurance Group, Inc. Quote
Axis Capital Holdings: In the third quarter, the Insurance segment of Axis Capital might have gained from increased new business opportunities, rate increases on renewal and continued strong retentions. New business growth and increased rates across North America and Global Markets are likely to have driven the Reinsurance unit. Technology investments that pave the way for efficient operations are likely to have provided an impetus to its margins.
The Zacks Consensus Estimate for AXS’ third-quarter 2026 earnings is pegged at $2.97 per share, indicating a decline of 8.6% from the prior-year quarter’s reported figure. Axis Capital has an Earnings ESP of -4.15% and a Zacks Rank of 3.
AXS’ earnings surpassed estimates in three of the last four reported quarters while missing in one, the average surprise being 5.68%. The same is depicted in the chart below:
Axis Capital Holdings Limited Price and EPS Surprise
Axis Capital Holdings Limited price-eps-surprise | Axis Capital Holdings Limited Quote
Everest Group: Premium growth in the third quarter is likely to have been pressured by the completed exit from the Commercial Retail Insurance business and the ongoing runoff of legacy casualty exposures. The Reinsurance Treaty segment is likely to have been affected by lower premiums in casualty pro-rata and casualty excess-of-loss businesses. Softer property catastrophe reinsurance pricing during the July 2026 renewals could have further pressured premium growth, while firm casualty pricing and disciplined underwriting are expected to have partly offset the weakness. The Global Wholesale & Specialty segment is likely to have benefited from product and geographic diversification and growth in niche specialty lines. Net investment income is likely to have benefited from an increase in fixed maturities, a rise in income from limited partnerships, and an increase in income from other alternative investments. (Read more: Will Everest Group Pull Off an Earnings Beat in the Third Quarter?)
The Zacks Consensus Estimate for EG’s third-quarter 2026 earnings is pegged at $9.38 per share, indicating an increase of 24.4% from the prior-year quarter’s reported figure. The company has an Earnings ESP of +3.43% and a Zacks Rank #3.
EG’s earnings surpassed estimates in two of the last four reported quarters while missing in the other two. This is depicted in the chart below:
Everest Group, Ltd. Price and EPS Surprise
Everest Group, Ltd. price-eps-surprise | Everest Group, Ltd. Quote
Aon: In the third quarter, the Health Solutions segment is likely to have been supported by new business growth, strong retention rates, and positive market impact. Favorable retention rates, new business generation and facultative placement growth are expected to have benefited Reinsurance Solutions. The aforementioned factors might have contributed to the company's year-over-year growth, positioning it for an earnings beat. However, the positives are likely to have been partially offset by high expenses due to significant investments in priority areas for long-term growth. The Wealth Solutions segment is likely to have been affected by weaker advisory demand in the United States. (Read more: Can AON Beat on Q3 Earnings Despite Weakness in Wealth Solutions?)
The Zacks Consensus Estimate for AON’s third-quarter 2026 earnings is pegged at $3.34 per share, indicating an increase of 9.5% from the prior-year quarter’s reported figure. The company has an Earnings ESP of -0.80% and a Zacks Rank #5 (Strong Sell) at present.
AON’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 2.72%. This is depicted in the chart below:
Aon plc Price and EPS Surprise
Aon plc price-eps-surprise | Aon plc Quote
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Axis Capital Holdings Limited (AXS): Free Stock Analysis Report
Aon plc (AON): Free Stock Analysis Report
The Hanover Insurance Group, Inc. (THG): Free Stock Analysis Report
Everest Group, Ltd. (EG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).