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Here's Why Hold Strategy is Apt for Athene (ATH) Stock

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Athene Holding, Ltd. (ATH - Free Report) has been gaining momentum on the back of higher premiums, higher product charges, favorable alternative investment performance and sufficient financial stability.

This Zacks Rank #3 (Hold) life insurer has been witnessing strong performance on the back of investment-related gains and losses, increase in net investment income, higher premiums and higher product charges, which in turn lead to solid top-line growth.

Higher pension risk transfer (PRT) premiums and increase in premiums from flow reinsurance, strong performance of the indices, higher level of sales, growth in investment portfolio and growth in the block of business are expected to fuel revenues in the near term.

The Zacks Consensus Estimate for the company’s 2021 revenues is pegged at $6.1 billion, indicating a year-over-year increase of 17.9%.

Given favorable alternative investment performance, investment earnings attributed to the Jackson reinsurance transactions, non-recurring adjustment on derivative collateral, higher bond call income, mortgage repayment, investment income is expected to improve despite the current low interest rate environment. The metric witnessed CAGR of 14.2% in the past five years (2014-2019).

Banking on its strong organic and inorganic growth tailwinds, continued Jackson portfolio re-positioning and drawdown of excess cash will lift fixed income investment earnings. Athene is well-positioned for continued growth in 2021.

Athene remains extremely well-capitalized with $14.5 billion of regulatory capital, and $7.6 billion of total deployable capital, which comprises $3.2 billion of excess equity capital, $2.6 billion of untapped debt capacity, and $1.8 billion of available undrawn third-party capital remaining for Athene Co-Invest Reinsurance Affiliate 1A Ltd. (ACRA).

The capital is projected to be used for generating strong organic growth, closing additional inorganic opportunities, supporting rating upgrades, and opportunistically executing creative share repurchases. At present, it has $224 million remaining in existing share repurchase authorization.

Athene’s in-force business is expected to generate about $2 billion of capital from earnings and runoff and the same amount of capital is projected to be used for new organic business in asset redeployment.

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $8.08, indicating year-over-year increase of nearly 51%.

Moreover, shares of this life insurer have gained 35.2% in the past six months, outperforming the industry’s increase of 8.7%.

Stocks to Consider

Some better-ranked players from the insurance industry are The Allstate Corporation (ALL - Free Report) , Manulife Financial Corp (MFC - Free Report) and Primerica, Inc. (PRI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Allstate surpassed bottom-line estimates in three of the last four quarters. It has a trailing four-quarter earnings surprise of 38.59%, on average.

Manulife Financial surpassed bottom-line estimates in two of the last four quarters. It has a trailing four-quarter earnings surprise of 6.87%, on average.

Primerica surpassed bottom-line estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 10.04%, on average.

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