3 Stocks to Watch From the Prospering Accident & Health Insurance Industry – June 24, 2022


The Zacks Accident and Health Insurance industry is predicted to ride on the rise in underwriting exposure. Aflac Incorporated (AFL Quick QuoteAFL Free Report) , Unum Group (UNM Quick QuoteUNM Free Report) and Amerisafe Inc. (AMSF Quick QuoteAMSF Free Report) should proceed benefiting from prudent underwriting standards. Nonetheless, an increase in claims frequency could weigh on the positives.

The industry has been witnessing soft pricing over the past several quarters and the identical is predicted to proceed for the rest of the yr. Nonetheless, an increase in claims on account of business activities returning to normal levels is prone to increase pricing for this industry in the approaching days. Also, the increasing adoption of technology in operations will assist in the graceful functioning of the industry amid coronavirus-induced challenges.

In regards to the Industry

The Zacks Accident and Health Insurance industry comprises corporations that provide employees’ compensation insurance, mainly to employers operating in hazardous industries, corresponding to construction, trucking, logging and lumber plus manufacturing and agriculture. These insurer also offer group, individual or voluntary supplemental insurance products. Employees’ compensation is a type of accident insurance paid by employers without affecting employees’ pay. Claims are generally met by insurance firms or state-run employees’ compensation fund. Thus, these coverages profit each employers and employees. While it boosts employees’ morale thus productivity, employers stand to profit from lower claims costs. As awareness concerning the advantages of getting such an accident and medical insurance coverage rises, the longer term of accident and health insurers seems vivid.

3 Trends Shaping the Way forward for Accident & Health Insurance Industry

Pricing Pressure to Proceed: The employee compensation industry has been witnessing pricing pressure over the past several quarters. Given this soft pricing, the efforts to retain market share will again induce pricing pressure, which could curb top-line growth. Per Willis Towers Watson’s Industrial Lines Insurance Pricing Survey, employees’ compensation likely witnessed a slight price reduction in 2021. Per the survey, pricing at employees’ compensation could possibly be down 2% to up 4% in 2022.  With business and industrial activities back on target, demand for insurance coverage is prone to be on the rise.

Claims Frequency Might Rise: The accident and medical insurance space has witnessed growth through the years, primarily driven by a rise in advantages offered by employers. The appropriate type of employees’ compensation policy translates into personal take care of injured employees, increased productivity, higher worker morale, lower turnover, reduced claims costs and fewer financial worry amid rising medical costs. Increasing underwriting exposure, sustained decrease in claims frequency rates attributable to a greater working environment and conservative reserve levels have been boosting the industry’s performance. With workplace injury and illnesses decreasing, insurers could meet claims without putting margins under strain during this pandemic. Nonetheless, with business activities getting normal and folks returning to their workplaces, claims could possibly be on the rise.

Increasing Adoption of Technology: The industry is witnessing accelerated adoption of technology in operations. Telemedicine has gained pace amid the pandemic. Carriers began selling policies online that appeal to the tech-savvy population. Given the present pandemic, several organizations are working remotely to comply with social distancing norms. Electronic applications, e-signatures, electronic policy delivery, cloud computing and blockchain should help insurers gain a competitive edge. Nonetheless, higher spending on technological advancements will lead to escalated expense ratios.

Zacks Industry Rank Indicates Vivid Prospects

The group’s Zacks Industry Rank, which is essentially the common of the Zacks Rank of all-member stocks, indicates encouraging near-term prospects. The Zacks Accident and Health Insurance industry, housed inside the broader Zacks Finance sector, currently carries a Zacks Industry Rank #107, which places it in the highest 43% of the 250 plus Zacks industries. Our research shows that the highest 50% of the Zacks-ranked industries outperforms the underside 50% by an element of greater than 2 to 1.

The industry’s position in the highest 50% of the Zacks-ranked industries is a results of a positive earnings outlook for the constituent corporations in aggregate. Taking a look at the mixture earnings estimate revisions, it seems that analysts are steadily gaining confidence on this group’s earnings growth potential. The industry’s earnings estimate for the present yr has moved up 0.2% in a yr’s time.

We present a number of stocks one should buy or retain, given their business advancement endeavors. But before that it’s value taking a take a look at the industry’s performance and current valuation.

Industry Outperforms Sector and S&P 500

The Accident and Health Insurance industry has outperformed each the Zacks S&P 500 composite and its own sector over the past yr. The stocks on this industry have collectively lost 4.2% prior to now yr compared with the Finance sector’s decline of 15.5% and the Zacks S&P 500 composite’s decrease of 12.7% over the identical period.

One-12 months Price Performance

Current Valuation

On the premise of a trailing 12-month price-to-book (P/B) ratio, commonly used for valuing insurance stocks, the industry is currently trading at 1.04X compared with the Zacks S&P 500 composite’s 5.65X and the sector’s 2.91X.

Over the past five years, the industry has traded as high as 1.6X, as little as 0.58X and on the median of 1.15X.

Price-to-Book (P/B) Ratio (TTM)

Price-to-Book (P/B) Ratio (TTM)


3 Accident & Health Insurance Stocks to Keep an Eye on

We’re presenting two Zacks Rank #2 (Buy) stocks from the Zacks Accident and Health Insurance industry and one Zacks Rank #3 (Hold) stock. You may see the entire list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Unum Group: Chattanooga, TN-based Unum Group provides long-term care insurance, life insurance, employer- and employee-paid group advantages and related services. The continued rollout of dental products and geographic expansion has been paying off because the acquired dental insurance businesses are growing in the USA and the UK. The Zacks Rank #2 insurer has a powerful VGM Rating of A.

The expected long-term earnings growth rate for Unum Group is 11.9%, higher than the industry average of 8.4%. The Zacks Consensus Estimate for 2022 and 2023 earnings indicates a year-over-year increase of 17% and 14%, respectively. UNM delivered a trailing four-quarter earnings surprise of twenty-two.06% on average. The consensus estimate for 2022 and 2023 has moved 1.6% and 0.2% north prior to now 30 days, reflecting analysts’ optimism. The stock has risen 10.5% in a yr.

Price and Consensus: UNM

Amerisafe:  DeRidder, LA-based Amerisafe is a specialty provider of employees’ compensation insurance. AMSF should proceed to realize from its high hazard area of interest focus, small to mid-size employer focus, high hazard underwriting expertise and intensive claims management.

A balance sheet with no debt provides Amerisafe plenty of monetary flexibility to fund operations, meet financial obligations and weather shocks or unexpected expenses. The Zacks Consensus Estimate for 2022 has moved 3.9% north prior to now 60 days. AMSF delivered a trailing four-quarter earnings surprise of 4.16 on average. The stock has lost 17.4% in a yr. Amerisafe carries a Zacks Rank of two.

Price and Consensus: AMSF

Aflac Incorporated: This Columbus, GA-based company offers voluntary supplemental health and life insurance products and operates through Aflac Japan and Aflac U.S. Aflac’s Argus buyout will provide it with a platform to construct the corporate’s network of dental and vision products and further strengthen its U.S. segment.

AFL delivered a trailing four-quarter earnings surprise of 12.05% on average and has a powerful VGM Rating of A. The expected long-term earnings growth rate is pegged at 5%. The Zacks Consensus Estimate for 2022 has moved north by a cent prior to now 30 days. The stock has lost 1.1% in a yr. Aflac carries a Zacks Rank #3.

Price and Consensus: AFL



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