Arch Capital Group Ltd. ACGL is slated to report third-quarter 2024 earnings on Oct. 30, after market close. The insurer delivered an earnings surprise in each of the last four quarters, the average beat being 28.93%.

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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 $3.6 billion, indicating an increase of 12.2% from the year-ago reported figure. We expect net premiums earned to increase 5.8% to $3.4 billion.

Net investment income is likely to have benefited from sustained higher interest rates and growth in invested assets due in part to strong operating cash flows. We expect net investment income to increase 32% to $354.9 million. The Zacks Consensus Estimate for investment income is pegged at $372.5 million, indicating a 38.5% 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 third-quarter revenues is pegged at $4.04 billion, indicating an increase of 14.8% 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 19.2% to $3 billion.

Arch Capital is expected to have benefited from better pricing, rate increases and a balanced business mix, which are likely to have aided underwriting profitability. The Zacks Consensus Estimate for the combined ratio is pegged at 87. Our estimate is pegged at 90.

The Zacks Consensus Estimate for third-quarter 2023 earnings of $1.98 per share indicates a decrease of 14.2% from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model predicts an earnings beat for Arch Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Arch Capital has an Earnings ESP of +7.91%. This is because the Most Accurate Estimate of $2.14 is pegged higher than the Zacks Consensus Estimate of $1.98. 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.

Other Stocks to Consider

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

Fidelity National Financial, Inc. FNF has an Earnings ESP of +0.30% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $1.41, indicating a year-over-year increase of 14.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

FNF’s earnings beat estimates in one of the last four reported quarters and missed in the other three.

American Financial Group, Inc. AFG has an Earnings ESP of +1.91% and carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $2.51, implying an increase of 2.4% from the year-ago reported figure.

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

Axis Capital Holdings Limited AXS has an Earnings ESP of +2.87% and carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $2.50, implying an increase of 6.8% from the year-ago reported figure.

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

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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

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