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Fight Higher Interest Rates With These 3 Top Insurance Stocks
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We’ve landed in a highly challenging macroeconomic environment after coming out of a once-in-a-lifetime pandemic. Inflation remains historically elevated, even after the Fed’s hawkish pivot.
In addition, Fed Chairman Jerome Powell has been very clear in his message that the rate hikes will continue until inflation returns to the 2% target rate.
Financial service stocks, such as insurance firms and banks, can see their profit margins expand in higher interest rate environments.
Three highly-ranked stocks in the Zacks Finance Sector include Unum Group (UNM - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Brighthouse Financial (BHF - Free Report) . Below is a year-to-date chart of all three companies with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
Unum Group
Unum Group (UNM - Free Report) provides disability insurance, long-term care insurance, life insurance, and employee-paid group benefits and related services.
The company sports the highly-coveted Zacks Rank #1 (Strong Buy), telling us it’s enjoyed favorable analyst estimate revisions over the last several months.
Image Source: Zacks Investment Research
UNM’s projected growth is undoubtedly worth highlighting – earnings are forecasted to soar nearly 40% in FY22 and a further 2% in FY23.
Image Source: Zacks Investment Research
In addition to a favorable growth profile, Unum Group shares could be seen as undervalued, as displayed by its Style Score of an A for Value.
UNM’s forward earnings multiple resides at a cheap 6.5X, representing a staggering 55% discount relative to its Zacks Finance Sector.
Image Source: Zacks Investment Research
For investors seeking an income stream, UNM’s got that covered; the company’s annual dividend yields a rock-solid 3.3%, and the company has increased its dividend payout four times over the last five years.
Further, the yield is much higher than its Zacks Finance Sector average.
Image Source: Zacks Investment Research
Reinsurance Group of America
Reinsurance Group of America (RGA - Free Report) is a leading global provider of traditional life and health reinsurance and financial solutions with operations in the United States, Canada, Europe, and many others.
Over the last several months, analysts have raised their earnings outlook significantly – a bullish signal.
Image Source: Zacks Investment Research
Like UNM, Reinsurance Group of America’s growth prospects are stellar; earnings are forecasted to skyrocket a quad-digit 1050% in FY22 and an additional double-digit 20% in FY23.
Image Source: Zacks Investment Research
Further, RGA shares look cheap when paired with the forecasted growth trajectory. RGA’s forward earnings multiple sits at 9.9X, well beneath its 12.2X five-year median and representing an enticing 32% discount relative to its Zacks Sector.
Reinsurance Group of America carries a Style Score of a B for Value.
Image Source: Zacks Investment Research
Who doesn’t love getting paid? RGA’s annual dividend yields a notable 2.5%, just above its Zacks Sector average.
In addition, the company has upped its dividend payout four times over the last five years, paired with a five-year annualized dividend growth rate of a substantial 9.2%.
Image Source: Zacks Investment Research
Brighthouse Financial
Brighthouse Financial (BHF - Free Report) is one of the largest providers of annuity and life insurance products in the United States, utilizing multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.
BHF’s earnings outlook has turned very bright over the last several months.
Image Source: Zacks Investment Research
The company’s bottom-line is forecasted to take a hit in FY22, with the Zacks Consensus EPS Estimate of $11.58 penciling in a 46% Y/Y drop.
However, Brighthouse Financial’s earnings picture turns back to green in FY23, with earnings forecasted to climb 23%.
Image Source: Zacks Investment Research
In addition, BHF has a strong earnings track record – the company has exceeded the Zacks Consensus EPS Estimate in nine of its previous ten quarters.
Top line results have also been robust, with Brighthouse Financial penciling in eight revenue beats across its last ten prints. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
A challenging macroeconomic environment has sent stocks tumbling in 2022. With inflation at historically high levels, the Fed had to pivot to a Hawkish stance, cranking borrowing rates.
During times of high-interest rate environments, insurance providers can see their profit margins expand, such as Unum Group (UNM - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Brighthouse Financial (BHF - Free Report) .
These insurers carry many longer-duration assets, such as safe long-term bonds, to back their policies.
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Fight Higher Interest Rates With These 3 Top Insurance Stocks
We’ve landed in a highly challenging macroeconomic environment after coming out of a once-in-a-lifetime pandemic. Inflation remains historically elevated, even after the Fed’s hawkish pivot.
In addition, Fed Chairman Jerome Powell has been very clear in his message that the rate hikes will continue until inflation returns to the 2% target rate.
Financial service stocks, such as insurance firms and banks, can see their profit margins expand in higher interest rate environments.
Three highly-ranked stocks in the Zacks Finance Sector include Unum Group (UNM - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Brighthouse Financial (BHF - Free Report) . Below is a year-to-date chart of all three companies with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
Unum Group
Unum Group (UNM - Free Report) provides disability insurance, long-term care insurance, life insurance, and employee-paid group benefits and related services.
The company sports the highly-coveted Zacks Rank #1 (Strong Buy), telling us it’s enjoyed favorable analyst estimate revisions over the last several months.
Image Source: Zacks Investment Research
UNM’s projected growth is undoubtedly worth highlighting – earnings are forecasted to soar nearly 40% in FY22 and a further 2% in FY23.
Image Source: Zacks Investment Research
In addition to a favorable growth profile, Unum Group shares could be seen as undervalued, as displayed by its Style Score of an A for Value.
UNM’s forward earnings multiple resides at a cheap 6.5X, representing a staggering 55% discount relative to its Zacks Finance Sector.
Image Source: Zacks Investment Research
For investors seeking an income stream, UNM’s got that covered; the company’s annual dividend yields a rock-solid 3.3%, and the company has increased its dividend payout four times over the last five years.
Further, the yield is much higher than its Zacks Finance Sector average.
Image Source: Zacks Investment Research
Reinsurance Group of America
Reinsurance Group of America (RGA - Free Report) is a leading global provider of traditional life and health reinsurance and financial solutions with operations in the United States, Canada, Europe, and many others.
Over the last several months, analysts have raised their earnings outlook significantly – a bullish signal.
Image Source: Zacks Investment Research
Like UNM, Reinsurance Group of America’s growth prospects are stellar; earnings are forecasted to skyrocket a quad-digit 1050% in FY22 and an additional double-digit 20% in FY23.
Image Source: Zacks Investment Research
Further, RGA shares look cheap when paired with the forecasted growth trajectory. RGA’s forward earnings multiple sits at 9.9X, well beneath its 12.2X five-year median and representing an enticing 32% discount relative to its Zacks Sector.
Reinsurance Group of America carries a Style Score of a B for Value.
Image Source: Zacks Investment Research
Who doesn’t love getting paid? RGA’s annual dividend yields a notable 2.5%, just above its Zacks Sector average.
In addition, the company has upped its dividend payout four times over the last five years, paired with a five-year annualized dividend growth rate of a substantial 9.2%.
Image Source: Zacks Investment Research
Brighthouse Financial
Brighthouse Financial (BHF - Free Report) is one of the largest providers of annuity and life insurance products in the United States, utilizing multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.
BHF’s earnings outlook has turned very bright over the last several months.
Image Source: Zacks Investment Research
The company’s bottom-line is forecasted to take a hit in FY22, with the Zacks Consensus EPS Estimate of $11.58 penciling in a 46% Y/Y drop.
However, Brighthouse Financial’s earnings picture turns back to green in FY23, with earnings forecasted to climb 23%.
Image Source: Zacks Investment Research
In addition, BHF has a strong earnings track record – the company has exceeded the Zacks Consensus EPS Estimate in nine of its previous ten quarters.
Top line results have also been robust, with Brighthouse Financial penciling in eight revenue beats across its last ten prints. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
A challenging macroeconomic environment has sent stocks tumbling in 2022. With inflation at historically high levels, the Fed had to pivot to a Hawkish stance, cranking borrowing rates.
During times of high-interest rate environments, insurance providers can see their profit margins expand, such as Unum Group (UNM - Free Report) , Reinsurance Group of America (RGA - Free Report) , and Brighthouse Financial (BHF - Free Report) .
These insurers carry many longer-duration assets, such as safe long-term bonds, to back their policies.