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After lagging in the last few quarters, financials has made an impressive comeback this earnings season, and has been one of the major contributors to overall Q1 earnings growth. Total earnings for 99.2% of the sector’s total market capitalization are up 16.2% on 2% revenue growth with beat ratios of 64.6% and 50%, respectively. Most of the sector’s growth comes from easy comparisons at Bank of America (NYSE: BAC ) and stronger earnings from J.P. Morgan (NYSE: JPM ), Goldman Sachs (NYSE: GS ), Citigroup (NYSE: C ) and many other banks. Further, earnings from the insurance industry also have been encouraging with most of the insurers beating the respective Zacks Consensus Estimate (read: Decent Banking Earnings Fail to Energize Financial ETFs ). While Prudential Financial (NYSE: PRU ), American International (NYSE: AIG ) and Allstate (NYSE: ALL ) surpassed our estimates on both the top and bottom lines, MetLife (NYSE: MET ) and Chubb Corp (NYSE: CB ) lagged on revenues. Nevertheless, Travelers (NYSE: TRV ) and Aflac Inc. (NYSE: AFL ) reported lackluster earnings. Insurance Earnings in Focus MetLife , the U.S. life insurer behemoth, beat the Zacks Consensus Estimate by 3 cents with earnings of $1.44, which improved 5% from the year-ago quarter. However, revenues slipped 0.5% year over year to $17 billion and fell shy of the Zacks Consensus Estimate of $17.5 billion. On the other hand, PRU , the second-largest U.S. life insurer, topped our earnings estimate by 15.8% and increased 16.3% year over year to $2.79. Revenues also rose 8% to $11.8 billion, much above our estimate of $10.9 billion. The largest commercial insurer in the U.S. and Canada, AIG posted impressive earnings of $1.22 per share, which surpassed the Zacks Consensus Estimate of $1.18 and increased 3.4% from the year-ago quarter. Earnings at one of the leading property and casualty insurer – Chubb – also beat our estimate by 1.95% and improved 4.7% from the year-ago quarter. However, revenues of $3.43 billion slightly missed the Zacks Consensus Estimate of $3.48 billion. On the other hand, earnings of personal property and casualty insurer, Allstate outpaced the Zacks Consensus Estimate by seven cents and were ahead of the year-ago earnings of $1.30. With this, the company kept its earnings streak alive with a trailing four-quarter average beat of 9.1%. Revenues rose 3.1% year over year to $8.95 billion and were well ahead of our estimate of $7.77 billion. Another property and casualty insurer and an industry bellwether, Travelers , posted disappointing earnings of $2.53 per share, lagging the Zacks Consensus Estimate by 3 cents and deteriorating 14% from the year-ago quarter. Revenues came in at $6.62 billion, down 1% from the year-ago quarter and marginally below the Zacks Consensus Estimate of $6.64 billion (see: all the Financial ETFs here ). Aflac, the seller of supplement health insurance, also missed our earnings estimate by a penny and fell 8.9% year over year. Revenues slid 7.3% year over year to $5.2 billion and marginally missed our estimate of $5.4 billion. ETFs in Focus Despite the decent results, the insurance industry witnessed mixed share price performances and ETFs have been on a roller coaster ride over the past one month gaining less than 0.7%. Investors looking to gain exposure to this corner of the market segment in a diversified way may consider the following ETFs. Any of these could be an excellent choice given that these have a top Zacks Rank of 2 or ‘Buy’ rating, suggesting their outperformance in the coming months. Further, the Fed is on track to raise interest rates sometime later in the year given the strengthening U.S. economy. As the sector is a clear beneficiary of a rising interest rate environment, an increase in interest rates would propel insurance stocks and ETFs higher (read: Financial ETFs in Focus on Rising Rates Buzz ). SPDR S&P Insurance ETF (NYSEARCA: KIE ) This fund follows the S&P Insurance Select Industry Index and offers an equal weight exposure to 50 stocks, suggesting no concentration risk. None of the securities holds more than 2.31% of total assets. More than one-third of the portfolio is allocated to the property and casualty insurance sector while life & health insurance accounts for another one-fourth share. The ETF has managed $294 million in its asset base and trades in a moderate average daily volume of over 58,000 shares. The product has an expense ratio of 0.35%. iShares U.S. Insurance ETF (NYSEARCA: IAK ) With AUM of $117.2 million, this product tracks the Dow Jones U.S. Select Insurance Index and charges 43 bps in annual fees. Volume is light, trading in less than 19,000 shares per day. In total, the fund holds 63 securities in its basket with the largest allocation going to American International at 12.7%, closely followed by Metlife at 9.3%. Other firms hold less than 6.5% of assets. PowerShares KBW Insurance Fund (NYSEARCA: KBWI ) This fund tracks the KBW Insurance Index and holds 24 securities in its basket. Out of these, TRV takes the top spot at 9.1% while PRU and MET account for the third and fourth spots with a combined 14.4% share. Other in-focus firms like AFL, CB and ALL make up for at least 4% of KBWI. The product has amassed about $7 million in AUM while volume is paltry at under 1,000 shares. The ETF charges an annual fee of 35 bps. Original Post Scalper1 News
Scalper1 News