Accident and Health Insurance
Concerning the Industry
The Zacks Accident and Health Insurance industry comprises firms that provide employees’ compensation insurance, mainly to employers operating in hazardous industries, equivalent to construction, trucking, logging and lumber plus manufacturing and agriculture. These insurer also offer group, individual or voluntary supplemental insurance products. Staff’ 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 learn from lower claims costs. As awareness in regards to the advantages of getting such an accident and medical health insurance coverage rises, the long run 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 Business 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 industrial and industrial activities back on course, demand for insurance coverage is more likely to be on the rise.
Claims Frequency Might Rise: The accident and medical health insurance space has witnessed growth over time, primarily driven by a rise in advantages offered by employers. The fitting type of employees’ compensation policy translates into personal look after 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. Nevertheless, with business activities getting normal and other people 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 Brilliant 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 firms in aggregate. the combination earnings estimate revisions, it seems that analysts are progressively 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 just a few 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% up 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-Yr Price Performance
On the idea 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.
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 up 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 achieve 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 economic flexibility to fund operations, meet financial obligations and weather shocks or unexpected expenses. The Zacks Consensus Estimate for 2022 has moved 3.9% north up 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 up 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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