Wednesday, 23 January 2019
BREAKING NEWS

5 Best Performing Life Insurance Stocks to Buy for 2019 – Zacks.com

The insurance industry saw the wheels of fortune turning in its favor during 2018 with the economy improving significantly owing to the rising interest rates, a growing gross domestic product and the tax cut. A fairly strong 2018 has set the stage for the insurance industry to usher in 2019 with high hopes. Even though the industry might fight challenges in the form of weather-related events and ongoing disputes over tariffs and trade rules, we still expect insurers to maintain a positive trend in the year ahead.

Here we will talk about the life insurance industry and the factors anticipated to aid its overall results in 2019.

The current interest rate environment has given life insurers enough reasons to rejoice as the regulatory body has kept its promise of raising interest rates thrice and with another FOMC meeting around the corner, the air of optimism is at peak among investors surrounding a fourth rate hike. For 2019, the Fed has given an indication of increasing the interest rates thrice with two more lined up for 2020.

Life insurers reinvest premiums, which they receive from policy holders so that enough funds are available at the time of paying future claims or upon maturity. In this case, a favorable interest rate environment enables life insurers to reinvest funds at higher rates, thereby garnering better returns. Thus, rising rates have proved to be a boon to life insurers.

In 2017, life insurers witnessed a decline in premiums due to weak performing annuity business (political and regulatory uncertainties were responsible for this downside). However, progressing interest rates have lent a plausible support to insurers and the annuity business has gradually recovered. We expect this positive trend to remain in the year ahead as well. Per Munich Re’s insurance market outlook, the future of annuities looks bright on the back of a bettering interest rate environment and growth in disposable income with the total U.S. annuity sales projected to climb 5% in 2019 (2018 estimate was in the 5-10% band). Hence, we expect premiums to augment considerably in 2019.

It is important to note here that the United States is currently the most important life insurance market with a global market share of around 20%. The Life Insurance industry is ranked at #18 (representing the top 7% of the Zacks Industry Rank for more than 250 industries).

If we shift our attention from the interest rate hikes to a strong labor market, denoted by lower unemployment rate and rising wages, we can safely conclude that it will be able to boost policy sales even at higher premiums. According to an article by the balance, the unemployment rate is expected to drop to 3.5% and the GDP is estimated to rise at 2.5% in 2019. So, a fall in the unemployment rate should perk up demand for life insurance and annuity products. Further, a spurt in aging population will push up demand for retirement benefits’ products.

Adoption and implementation of advanced technology in day-to-day operations have proven to be beneficial for the life insurers. More and more industry players are now opting to sell policies online that appeal to a greater number of tech savvy consumers. Also, usage of real time data is simplifying premium calculation and reducing risk. Moreover, embracing technologies like artificial intelligence (AI), robotic process automation (RPA), cognitive intelligence (CI) or blockchain should assist life insurers to curtail operational costs.

Potential Outperformers in 2019

Riding on the strength of rising interest rates, brisk annuity business, solid labor market and adherence to advanced technology, the life insurers are capable of reaping profits through underlying potency and business modification.

We have zeroed in on five stocks that are touted as the top gems in terms of delivering a consistent performance, courtesy of a Zacks Rank #2 (Buy) and an impressive VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a top Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

West Des Moines, IA-based American Equity Investment Life Holding Company (AEL Free Report) develops and sells fixed index and fixed rate annuity products in the United States.

Shares of American Equity have lost 4.9%, noticeably narrower than the industry’s decline of nearly 27.7% so far this year. Also, the stock has seen its 2019 estimates being revised 1.3% upward in the last 60 days.

Toronto, Canada-based Manulife Financial Corporation (MFC Free Report) offers financial advice, insurance plus wealth and asset management solutions to individuals, groups and institutions in Asia, Canada and the United States.

Shares of Manulife have lost 29.4%, slightly wider than the industry’s decrease of roughly 27.7% year to date. Nonetheless, the company has witnessed its 2019 estimates move 0.9% north in the last 60 days.

New York-based Voya Financial, Inc. (VOYA Free Report) operates as a retirement, investment and insurance company in the United States.

Shares of Voya Financial have dropped 16.6%, narrower than the industry’s decline of approximately 27.7% on a year-to-date basis. Also, the company has witnessed its 2019 estimates being inched 1.1% up in the last 60 days.

Radnor, PA-based Lincoln National Corporation (LNC Free Report) engages in multiple insurance and retirement businesses in the United States.

Shares of Lincoln National have plunged 30.4%, slightly wider than the industry’s decline of about 27.7% on a year-to-date basis.

Duluth, GA-based Primerica, Inc. (PRI Free Report) distributes financial products to middle income households in the United States and Canada.

Shares of Primerica have slid 0.6%, substantially narrower than the industry’s fall of around 27.7% on a year-to-date basis.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>

Source: https://www.zacks.com/stock/news/343270/5-best-performing-life-insurance-stocks-to-buy-for-2019

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