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Athene (ATH) Stock Up 60.2% in a Year: More Room to Run?

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Shares of Athene Holding, Ltd. have gained 60.2% in a year, outperforming the industry's increase of 26.2%. The Zacks S&P 500 composite increased 41.8% in the said time frame. With a market capitalization of $9.6 billion, average volume of shares traded in the last three months was 1.2 million.



Over the past 30 days, the company’s 2021 and 2022 earnings estimates have moved 3.6% and 1.9% north, respectively, reflecting investors’ optimism surrounding the stock.

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $8.37 and $9.23, indicating year-over-year increase of nearly 30.3% and 10.3%, respectively.

Will the Bull Run Continue?

The insurer boasts a unique ability to directly originate senior-secured assets that capture illiquidity, complexity, and size premia well matched with long-term, persistent funding sources through its relationship with Apollo since its establishment in 2009. Athene recently agreed to merge with Apollo Global Management in an $11 billion all-stock deal, expected to be completed in January 2022. The merger is likely to accelerate asset and liability origination, widen distribution channels and create a leading global solutions provider with a solid capital base.

Riding on 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, revenues of Athene are likely to improve in the long term. The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $6.3 billion and $6.9 billion, indicating a year-over-year increase of 18.9% and 9.7%, respectively.

Despite market dislocation, net organic growth of the insurer was $21 billion in 2020 and has averaged 26% over the past three years (2018 – 2020).

Deployment of excess cash and continued redeployment of the Jackson portfolio continue to benefit its fixed income lower net investment earned rate (NIER). The fixed NIER is likely to drift approximately 3.6% in the near term.
Moreover, its large excess equity capital position of $3.5 billion and $15.9 billion of regulatory capital makes it the best positioned company to continue to take advantage of the accelerating restructuring in the life insurance industry.

In 2020, it deployed nearly $3 billion of capital to support record organic growth with very strong returns. Further, its debt to capital of 8.9% was better than the industry average of 11.8%. A lesser debt burden relative to the industry is encouraging.

Banking on its sound capital and liquidity position, this Zacks Rank #2 (Buy) life insurer is engaged in prudent capital deployment via share repurchases. At present, it has $221 million remaining in existing share repurchase authorization.

Other Stocks to Consider

Some other top-ranked stocks in the insurance industry include Sun Life Financial Inc. (SLF - Free Report) , Alleghany and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sun Life Financial surpassed earnings estimates in each of the last four quarters, with the average surprise being 18.19%.

Alleghany’s bottom line surpassed estimates in two of the last four quarters, while missed the same on the other two occasions, with the average surprise being 34.1%.

Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.1%.

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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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