We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
7 Insurance Stocks to Bet on Even As Fed Keeps Rates Unchanged
Read MoreHide Full Article
The Federal Reserve kept interest rate unchanged at 0-0.25% in its two-day FOMC meeting that concluded on Jun 16. However, officials are optimistic about a rate rise by 2023. Reopening of the economy, decline in coronavirus cases, increased vaccination, and a lower unemployment rate are some of the likely indicators of an improved rate environment in the horizon.
In fact, 13 of the18 officials are in favor of increasing the rate at least once by 2023, while 11 officials expect at least two by 2023. On a brighter note, seven officials expect a rate rise in 2022. However, per Fed chairman Powell “that’s far from a certainty.”
Also, to continue with its impetus to support the economy, the central bank will carry on its $120 billion monthly asset purchase program to ensure credit flow to households and businesses.
The Fed also remains upbeat about growth. It now expects GDP growth of 7% in 2021, up from 6.5% expected in the March meeting. Unemployment rate is expected to fall to 4.5% while inflation is expected to reach 3.4%.
Impact on Insurers
Insurers are major beneficiaries of rising rates. A low rate adversely impacts long-tail Property and Casualty Insurance providers and Life insurers (whose earnings are typically derived from the spread between their investment returns and what they credit as interest on insurance policies and products).
Insurers invest a portion of premiums collected to meet their commitments to policyholders. Thus, a low rate reduces income from investments, an important component in insurers’ top line.
To maintain profitability amid low rate, life insurers are refraining from selling long duration term life insurance or making changes to product portfolio by moving away from guaranteed savings products toward protection products of unit-linked savings products. Higher invested asset base is also helping to limit the downside.
Nonetheless, better pricing, exposure growth, business streamlining, sturdy policyholders’ surplus, and increased use of technology should help insurers deliver solid numbers. The insurance industry’s earnings estimate for the current year has increased 4.6% in a year’s time.
7 Insurance Picks in the Current Scenario
Amid such a macro backdrop, investors may like to add insurance stocks with strong fundamentals and potential to generate better yields.
VGM Score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Back-tested results show that stocks with a favorable Style Score coupled with a solid Zacks Rank are the best investment options.
Northbrook, IL-based The Allstate Corporation (ALL - Free Report) provides property and casualty, and other insurance products in the United States and Canada. The stock has a VGM Score of A. This Zacks Rank #2 insurer is poised to grow on the back of its solid property and liability segment.
New York, NY -based MetLife, Inc. (MET - Free Report) , a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. The stock has a VGM Score of A and carries a Zacks Rank #2. The insurer is set to grow on the strength of its strong international operations and business streamlining.
Louisville, KY -based Humana Inc. (HUM - Free Report) operates as a health and well-being company in the United States. The stock has a VGM Score of A and sports a Zacks Rank #2. Strong Medicare as well as Medicaid business positions it for long-term gains.
Toronto, Canada based Manulife Financial Corporation (MFC - Free Report) is one of the three dominant life insurers within its domestic market and has rapidly growing operations in the United States and several Asian countries. The stock has a VGM Score of B. Its strong Asia business and expanding wealth and asset management business poise this Zacks Rank #2 insurer well for growth.
Chicago, IL based Old Republic International Corporation (ORI - Free Report) engages in the insurance underwriting and related services business primarily in the United States and Canada. The stock has a VGM Score of A and carries a Zacks Rank # 2. Niche focus, low property catastrophe exposure and expanding presence in commercial real estate market poise it well for growth.
Tampa, FL based HCI Group, Inc. (HCI - Free Report) engages in the property and casualty insurance, reinsurance, real estate, and information technology businesses. The stock has a VGM Score of B and carries a Zacks Rank #2. Its well performing Homeowners Choice and TypTap coupled with conservative reserving practice should drive growth.
Houston, TX-based Stewart Information Services Corporation (STC - Free Report) provides title insurance and real estate transaction services. The stock has a VGM Score of A and carries a Zacks Rank #2. Its solid Title insurance business should aid long-term growth.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Image: Bigstock
7 Insurance Stocks to Bet on Even As Fed Keeps Rates Unchanged
The Federal Reserve kept interest rate unchanged at 0-0.25% in its two-day FOMC meeting that concluded on Jun 16. However, officials are optimistic about a rate rise by 2023. Reopening of the economy, decline in coronavirus cases, increased vaccination, and a lower unemployment rate are some of the likely indicators of an improved rate environment in the horizon.
In fact, 13 of the18 officials are in favor of increasing the rate at least once by 2023, while 11 officials expect at least two by 2023. On a brighter note, seven officials expect a rate rise in 2022. However, per Fed chairman Powell “that’s far from a certainty.”
Also, to continue with its impetus to support the economy, the central bank will carry on its $120 billion monthly asset purchase program to ensure credit flow to households and businesses.
The Fed also remains upbeat about growth. It now expects GDP growth of 7% in 2021, up from 6.5% expected in the March meeting. Unemployment rate is expected to fall to 4.5% while inflation is expected to reach 3.4%.
Impact on Insurers
Insurers are major beneficiaries of rising rates. A low rate adversely impacts long-tail Property and Casualty Insurance providers and Life insurers (whose earnings are typically derived from the spread between their investment returns and what they credit as interest on insurance policies and products).
Insurers invest a portion of premiums collected to meet their commitments to policyholders. Thus, a low rate reduces income from investments, an important component in insurers’ top line.
To maintain profitability amid low rate, life insurers are refraining from selling long duration term life insurance or making changes to product portfolio by moving away from guaranteed savings products toward protection products of unit-linked savings products. Higher invested asset base is also helping to limit the downside.
Nonetheless, better pricing, exposure growth, business streamlining, sturdy policyholders’ surplus, and increased use of technology should help insurers deliver solid numbers. The insurance industry’s earnings estimate for the current year has increased 4.6% in a year’s time.
7 Insurance Picks in the Current Scenario
Amid such a macro backdrop, investors may like to add insurance stocks with strong fundamentals and potential to generate better yields.
It’s an intimidating task to zero in on underpriced stocks with high growth potential. The Zacks Stock Screener makes this work relatively simpler. The selected stocks have a favorable VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VGM Score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Back-tested results show that stocks with a favorable Style Score coupled with a solid Zacks Rank are the best investment options.
Northbrook, IL-based The Allstate Corporation (ALL - Free Report) provides property and casualty, and other insurance products in the United States and Canada. The stock has a VGM Score of A. This Zacks Rank #2 insurer is poised to grow on the back of its solid property and liability segment.
New York, NY -based MetLife, Inc. (MET - Free Report) , a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. The stock has a VGM Score of A and carries a Zacks Rank #2. The insurer is set to grow on the strength of its strong international operations and business streamlining.
Louisville, KY -based Humana Inc. (HUM - Free Report) operates as a health and well-being company in the United States. The stock has a VGM Score of A and sports a Zacks Rank #2. Strong Medicare as well as Medicaid business positions it for long-term gains.
Toronto, Canada based Manulife Financial Corporation (MFC - Free Report) is one of the three dominant life insurers within its domestic market and has rapidly growing operations in the United States and several Asian countries. The stock has a VGM Score of B. Its strong Asia business and expanding wealth and asset management business poise this Zacks Rank #2 insurer well for growth.
Chicago, IL based Old Republic International Corporation (ORI - Free Report) engages in the insurance underwriting and related services business primarily in the United States and Canada. The stock has a VGM Score of A and carries a Zacks Rank # 2. Niche focus, low property catastrophe exposure and expanding presence in commercial real estate market poise it well for growth.
Tampa, FL based HCI Group, Inc. (HCI - Free Report) engages in the property and casualty insurance, reinsurance, real estate, and information technology businesses. The stock has a VGM Score of B and carries a Zacks Rank #2. Its well performing Homeowners Choice and TypTap coupled with conservative reserving practice should drive growth.
Houston, TX-based Stewart Information Services Corporation (STC - Free Report) provides title insurance and real estate transaction services. The stock has a VGM Score of A and carries a Zacks Rank #2. Its solid Title insurance business should aid long-term growth.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Today, Download Marijuana Moneymakers FREE >>