Arch Capital Group Ltd. ACGL is slated to report fourth-quarter 2024 earnings on Feb. 10, after market close. The insurer delivered an earnings surprise in each of the trailing four quarters, the average beat being 17.07%.

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Factors to Consider

Increases in most lines of business due in part to new business opportunities and rate changes and growth in existing accounts in the Insurance and Reinsurance segments are likely to have favored net premiums earned.

The Zacks Consensus Estimate for net premiums earned is pegged at $3.8 billion, indicating an increase of 15.7% from the year-ago reported figure. We expect net premiums earned to increase 10.8% to $3.7 billion.

Net investment income is likely to have benefited from higher yields available in the financial market and growth in invested assets due in part to strong operating cash flows. We expect net investment income to increase 33.1% to $416.5 million. The Zacks Consensus Estimate for investment income is pegged at $416 million, indicating a 32.9% increase from the year-ago reported figure.

The top line is likely to have gained from improved earned premiums and higher net investment income. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $4.23 billion, indicating an increase of 15.2% from the year-ago reported figure.

Expenses are expected to have increased in the to-be-reported quarter, driven by higher losses and loss adjustment expenses, acquisition costs, other operating expenses, amortization of intangible assets, corporate expenses and interest expenses. We expect total expenses to increase 21.3% to $3.4 billion.

Underwriting profitability is expected to have benefited from better pricing and increased exposure, coupled with prudent underwriting, which is expected to have led to an improvement in the combined ratio. The Zacks Consensus Estimate for the combined ratio is pegged at 87. Our estimate is pegged at 84.9.

The Zacks Consensus Estimate for fourth-quarter 2023 earnings of $1.85 per share indicates a decrease of 25.7% from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Arch Capital this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case, as you can see below.

Earnings ESP: Arch Capital has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.85. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: ACGL currently carries a Zacks Rank #3.

Stocks to Consider

Some insurance stocks with the right combination of elements to deliver an earnings beat this time around are:

First American Financial Corporation FAF has an Earnings ESP of +4.97% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at $1.07, indicating an increase of 55% from the year-ago reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

FAF’s earnings beat estimates in two of the last four quarters while missing in the other two.

Kinsale Capital Group, Inc. KNSL has an Earnings ESP of +1.00% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at $4.34, indicating an increase of 12.1% from the year-ago reported figure.

KNSL’s earnings beat estimates in each of the last four quarters.

Palomar Holdings, Inc. PLMR has an Earnings ESP of +0.27% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at $1.24, indicating an increase of 11.7% from the year-ago reported figure.

PLMR’s earnings beat estimates in each of the last four quarters.

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First American Financial Corporation (FAF) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report

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