The first quarter of 2024 is projected to bring growth in earnings for the majority of US life insurers, both on a year-over-year and sequential basis. Analyst estimates compiled by S&P Global Market Intelligence indicate that out of 15 publicly traded US life insurers, 12 are expected to record year-over-year increases in first-quarter earnings. The same group is also anticipated to perform better sequentially, with eight projected to have higher earnings in Q1 2024 than in the preceding quarter.
Brighthouse Financial Inc. leads the pack with the highest projected first-quarter normalized earnings-per-share estimate at $3.87, followed closely by Jackson Financial Inc. at $3.76. Both figures denote an increase from the companies' EPS in the previous quarter and year.
UBS analyst Brian Meredith attributes this promising outlook to a favorable macro environment, which he believes will be beneficial for the life insurance industry in Q1. "The strong equity market performance in the quarter should benefit fee income and provide a tailwind for upward EPS estimate revisions," Meredith stated. He further anticipates sustained demand for individual annuities, group annuities, and group benefits products.
Individual annuities reached a record high in 2023 with $347.68 billion in considerations, reflecting a significant surge from $286.15 billion in 2022.
However, Meredith warns of potential headwinds related to variable investment income, which he expects will be "weak for most companies." Piper Sandler analyst John Barnidge also notes potential exposure to "seasonally higher mortality claims from infectious disease" for some life insurers.
Reinsurance Group of America Inc., according to Meredith, is well-positioned going into Q1 earnings due to its potential benefit from better-than-expected benefits ratios and possible revenue growth beyond expectations.
Life insurers are also likely to see increased bond trading activity in 2024 due partly to a temporary accounting change implemented by the National Association of Insurance Commissioners in 2023. Corebridge Financial Inc. was the best-performing stock among US public life insurers in Q1, with its shares gaining 32.6%.
Revenue estimates for the life sector also lean towards growth, with only four life insurers expected to report weaker revenue figures on a year-over-year basis. Eight are estimated to book higher revenue compared to Q4 2023, while five are projected to record lower revenue than the previous quarter.
MetLife Inc. is expected to lead in terms of revenue for Q1, with a mean revenue estimate of $17.73 billion.