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Insurance Biggest Drag on S&P 500 Earnings over past Month

Companies and Earnings

By John Butters  |  October 6, 2017

Since September 5, the estimated earnings growth rate for the S&P 500 for Q3 2017 has fallen by more than two percentage points (to 2.8% from 5.0%). What has driven the decline in the earnings growth rate?

In the last month, estimated dollar-level earnings for the S&P 500 for the third quarter have decreased by about $6.3 billion (to $287.0 billion from $293.3 billion). At the industry level, the Insurance industry has by far recorded the largest decline in dollar-level earnings during this time at $4.8 billion (to $5.1 billion from $9.9 billion). Thus, the Insurance industry alone accounts for 77% of the decline in the estimated earnings for the S&P 500 for Q3 2017 over the past month. If the Insurance industry were excluded, the estimated earnings growth rate for the S&P 500 for Q3 2017 would improve to 4.9% from 2.8%.

At the industry level, the Insurance industry has by far recorded the largest decline in dollar-level earnings during this time at $4.8 billion (to $5.1 billion from $9.9 billion).

Analyst have lowered EPS estimates for companies in the insurance industry to account for catastrophic losses due to the recent hurricanes and the earthquake in Mexico. Chubb Limited, AIG, Everest Re Group, XL Group, and Allstate have been the five largest contributors to the decline in earnings for this industry over this period. Combined, these five companies account for $4.0 billion (or 83%) of the $4.8 billion decline in earnings for this industry since September 5. All five companies have seen their mean EPS estimate for Q3 drop by more than 50% during this period.

TICKER

COMPANY

EPS: TODAY

EPS: 9/5/2017

CHANGE (%)

RE

Everest Re Group, Ltd.

-18.78

3.62

-618%

XL

XL Group Ltd

-1.48

0.67

-322%

CB

Chubb Limited

-0.26

2.60

-110%

AIG

American International Group

0.22

1.22

-82%

ALL

Allstate Corporation

0.65

1.53

-57%

 

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John Butters

Senior Earnings Analyst

John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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