4 of the best value choices in the life insurance industry

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The Zack Life insurance the industry is housed in the richest 21% of Zacks’ 255 industries. Industry players are poised to benefit from product redesign and re-pricing as well as increased automation. It currently carries a Zack Industry Rank # 54. Industry profit estimates for the current year have been revised up 16.2% in one year.

The industry that suffered last year from the pandemic has gained momentum. The industry has gained 8.8% since the start of the year compared to the Finance the sector’s increase of 43.2% and the rally of 35.1% of the Zacks S&P 500 composite.

Image source: Zacks Investment Research

Rising vaccinations, improving employment and encouraging economic growth prospects are inspiring confidence in the industry. Economic growth reflected by GDP grew at an annualized rate of 6.5% for the second quarter.

Life insurers are sensitive to interest rates. They invest the earned premium to meet the contractually guaranteed obligations of policyholders. A low rate weighs on investment income. Thus, insurers direct their funds towards alternative investments such as private equity, hedge funds and real estate to meet the challenges. The rate is expected to remain low until 2023, as reported at the last FOMC meeting.

Industry players also refrain from selling long term term life insurance. The players are opportunistically moving away from guaranteed savings products towards protection products for unit-linked savings products.

Increased adoption of technologies such as blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, and robotic process automation facilitate underwriting and complaint handling, improving efficiency operational.

According to an IBISWorld report, the US $ 886.7 billion life insurance and annuities market represents 4.2% growth in 2021. Players are well positioned to capitalize on the opportunity, by building on their main strengths. Sales are expected to benefit from growing demand for protective products.

The industry is currently undervalued compared to the Zacks S&P 500 composite as well as the Zacks Finance sector. The price-to-book (P / B) ratio, the best multiple to evaluate insurers due to their unpredictable financial results, is 1.2, lower than the 6.9 of the Zacks S&P 500 composite and the 3.3 of the industry. . Such a positioning on the market suggests greater room for improvement in the coming quarters.

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Image source: Zacks Investment Research

Zacks investment research
Image source: Zacks Investment Research

Value choice

Given the outlook for the industry, let’s take a look at a few stocks that are currently undervalued and likely to generate better returns. Our property Value Note makes the arduous task easier.

The value score helps to find attractive value stocks. These value stocks have a long history of delivering superior returns. Back-tested results have shown that stocks with a strong value score and favorable Zacks rankings generate better returns.

With the help of Zacks stock filter, we have selected five life insurance stocks with a favorable Value Score of A or B. Each of these stocks has a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

These stocks have also seen positive estimate revisions over the past 60 days, reflecting analyst confidence in companies’ operational efficiency. The stocks of each of these life insurers have outperformed the industry in a year and are cheaper than the industry average.

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Image source: Zacks Investment Research

Based in Philadelphia, Pennsylvania, Lincoln National Society LNC is a diversified life insurance and investment management company. This diversified life insurance and investment management company is set to grow thanks to the good performance of the life insurance segment. The company has made changes to its sales mix to focus on sales, with no long-term guarantees to improve profitability. The improving economic environment and a growing set of retirement solutions products should stimulate the Retirement business. The company prudently manages its costs to preserve its margins.

The company’s shares have gained 120.3% year-on-year. The stock is currently trading at a price of 0.6 per pound multiple.

Bermuda based Athens Holding ATH is a provider of pension insurance and reinsurance products in the United States and Bermuda, and is poised for long-term growth through a continued focus on organic channels as well as a strong relationship with Apollo. The portfolio of capital-efficient products and the addition of reinsurance partners are expected to provide enhanced retirement solutions. The company expects healthy organic growth to continue in 2021. It also estimates that total organic inflows will likely reach or exceed $ 30 billion in 2021.

Strategic buyouts and bulk reinsurance deals with multiple companies are expected to fuel inorganic growth.

The company’s shares have gained 105.7% year on year. The stock is currently trading at a price of 0.61 for a multiple of a pound.

Chesterfield, MO Reinsurance Group of America RGA is a global provider of traditional life and health reinsurance as well as financial solutions.

It is believed that the significant value embedded in the existing business will generate predictable long-term profits. Reinsurance Group expects longevity insurance to experience long-term growth in the Canadian market as demand is expected to be strong.

The company’s shares gained 19.2% year-on-year. The stock is currently trading at a price of 0.56 for an accounting multiple.

Charlotte, North Carolina Brighthouse Financial BHF owns one of the largest providers of annuity and life insurance products in the United States and is poised to grow with an attractive line of annuity and annuity, individual insurance and life insurance products. focus on the transition of all activities to less capital intensive products.

The company remains focused on ramping up new sales of life insurance products and expanding the distribution network, with the goal of becoming a leading player in the industry. It targets total annual annuity sales of over $ 8.5 billion and $ 250 million in total life insurance sales in 2021. Although the company’s fixed-rate annuity sales are expected to be lower, it predicts growth in Shield and variable annuities in 2021.

Given the strong execution of strategies to increase profitability, increased financial strength and flexibility, the company aims to return $ 1.5 billion of capital to shareholders by the end of 2021.

The company’s shares gained 67.8% year on year. The stock is currently trading at a price of 0.23 for an accounting multiple.

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Lincoln National Corporation (LNC): Free Stock Analysis Report

Reinsurance Group of America, Incorporated (RGA): Free Inventory Analysis Report

Athene Holding Ltd. (ATH): Free Stock Analysis Report

Brighthouse Financial, Inc. (BHF): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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