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MetLife (MET) Set to Gain From High Demand for Holistic Benefits

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MetLife, Inc. (MET - Free Report) stands well poised to gain from robust Group Benefits business, through which the company has been offering life insurance, dental, individual disability, accident and health, as well as vision offerings. Through these products, the company has been able to build a strong foothold in the U.S. group insurance market.

The importance of a comprehensive benefits package was highlighted during the COVID-19 pandemic. The pandemic not only wreaked a worldwide health crisis but also inflicted financial insecurities ranging from job cuts to reduction in income across the world. As a result, it became the need of the hour for employers to alter their benefit offerings that existed in the pre-pandemic period as employee needs evolved with the coronavirus outbreak. A sense of financial insecurity cropped up in most employees, which can be possibly addressed through tailored benefits offerings that best matches their personal needs. In addition to providing sound financial health, these offerings are likely to help employees in taking care of unavoidable healthcare expenses, which have been grappling the United States for quite some time.

Time and again, MetLife has remained committed to roll out enhanced benefits solutions, given that a comprehensive benefits program forms an integral part of employees’ well being and satisfaction. A satisfied workforce, in turn, is likely to boost the company’s productivity. The same fact has been further substantiated by the 19th annual U.S. Employee Benefit Trends Study of MetLife, per which employees are 42% more likely to adapt and perform well under adverse circumstances on getting a benefits package matching their needs.

For broadening the Group Benefits business, MetLife has acquired or joined forces with well-established companies. Some notable examples of such initiatives in 2020 include the acquisition of one of the leaders in vision care Versant Health for enhancing MetLife’s vision benefit offerings. Last year, MetLife extended alliance with PlanSource, which is renowned for offering cloud-based solutions aimed at enhancing the process of benefits administration for HR personnel and employees.

While MetLife made efforts to delve into the pet insurance space with the buyout of PetFirst in 2019, the company has also been keen on foraying into the digital estate planning space, as is evident from the Willing acquisition in the same year itself. These initiatives helped MetLife to emerge as a preferred choice for offering enhanced and newer group benefits offerings by employers across the United States. Also, the high-performing Group Benefits business backed by expense margins, underwriting and volume growth contributed 41.4% to adjusted earnings of MetLife's U.S. segment last year.

Shares of this Zacks Rank #3 (Hold) multiline insurer have surged 116.7% over a year compared with the industry’s 77.4% rally.

Moreover, the importance of tailored benefits has been further reiterated by the abovementioned study of MetLife. While Boomers are keeping a close eye on the benefits intended to boost physical health in 2021, younger employees are intensifying focus on improving their mental and financial well-being. Also, 71% of the Boomers have laid emphasis on vision care to be a must-have benefit. The figure improved from 53% last year. With two in five employees still facing a dearth of suitable benefits offerings or programs per the same study, MetLife seems to be capitalizing on the prevailing scenario via launching newer benefits offerings. 

Stocks to Consider

Some better-ranked stocks in the insurance space include Old Republic International Corporation (ORI - Free Report) , James River Group Holdings, Ltd. (JRVR - Free Report) and Sun Life Financial Inc. (SLF - Free Report) . While Old Republic sports a Zacks Rank #1 (Strong Buy), James River Group and Sun Life Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Old Republic, James River Group and Sun Life Financial have a trailing four-quarter earnings surprise of 65.8%, 11.6% and 18.2%, respectively, on average.

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