Health Insurance Stock CEO and Research Analyst Reveal Hidden Values

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June 30, 2022

Meyer Shields, Managing Director, Keefe, Bruyette & Woods

Medical health insurance stocks are an missed investment sector.  CEO and equity research analyst interviews reveal some interesting potential investment upside on this segment of the market.

Meyer Shields is Managing Director at Keefe, Bruyette & Woods, Inc., a subsidiary of Stifel Financial Corp. He covers insurance brokers and small- and mid-cap property and casualty insurers. Earlier, he worked at Legg Mason, J.P. Morgan Securities, Inc., and Zurich North America. He ranked fifth amongst stock pickers within the insurance/nonlife industry in The Wall Street Journal “Best on the Street” analysts survey for 2009.

He has a B.S. degree in actuarial science from the University of Toronto and is a Fellow of the Casualty Actuarial Society.  In his interview within the Wall Street Transcript, Mr. Shields states:

“2021 was an enchanting 12 months that began off with really strong earnings because in the primary quarter of the 12 months, there was still less driving than normal, and due to this fact automobile insurance firms were making an awful lot of cash.

After which in a short time, within the aftermath of COVID-related supply chain disruptions, the speed of claim cost inflation, what we call loss trend, for private auto really accelerated and most firms were actually doing worse or significantly worse than they expected earlier on.

So, over the course of the tip of 2021, let’s say the second half of the 12 months, that segment of the insurance industry did fairly poorly because there have been consistent indications of rising claim costs, and never much in the best way of rate increases.

And the insurance brokers also did pretty much. The economic rebound that we saw last 12 months combined with the tendency of insurance firms to boost rates — and that is predominantly a business subsegment-focused industry, that’s what many of the brokers sell — that translated into very solid top-line growth. In order that was the 2021 story.

2022 has been form of tough. I mean, many of the market is down. That appears to be broadly true for insurance firms. There are some exceptions. However the space has been under some pressure and the weak performance that we’ve seen, particularly in growth stocks, has also manifested itself in insurance names which are considered to be growthy.

So it’s been a much tougher begin to this 12 months than the tip of last 12 months.”

Mario Schlosser is the CEO and co-founder of Oscar Health (NYSE:OSCR), a health insurance stock

Mario Schlosser, CEO and co-founder, Oscar Health (NYSE:OSCR)

Mario Schlosser is the CEO and co-founder of Oscar Health Inc. a newly public medical health insurance stock.

Oscar Health develops seamless technology and provides personalized support to assist greater than 1M members navigate their health care. It has been recognized as one in all Fast Company’s most revolutionary firms in health, one in all CNBC’s top 50 disruptors, and one in all TIME’s most influential in health care.

Previously, Mr. Schlosser co-founded the most important social gaming company in Latin America, where he led the corporate’s analytics and game design practices.

Prior to that, he was a Senior Investment Associate at Bridgewater Associates and worked as a consultant for McKinsey & Company in Europe, the U.S. and Brazil. Mr. Schlosser also hung out as a visiting scholar at Stanford University, where he wrote and co-authored 10 computer science publications, including one of the crucial cited computer science papers published up to now decade, through which he developed the EigenTrust Algorithm to securely compute trust in randomized networks.

In May 2019, Mr. Schlosser and his co-authors, Sepandar D. Kamvar (Mosaic Constructing Group Inc.) and Héctor Garcia-Molina (Celo), received the celebrated Seoul Test of Time Award from the International World Wide Web Conference Committee (IW3C2) for this work.

Mr. Schlosser holds a level in computer science with highest distinction from the University of Hannover in Germany and an MBA from Harvard Business School.

Mario Schlosser is currently applying his intellect to the issues of health care insurance coverage in the USA.

“We’re the primary consumer-driven, tech-driven insurance company startup within the U.S. We began the corporate in 2012 with a watch towards developing a unique sort of insurance company.

From that point period, we now are at 1.1 million members and north of $6 billion in revenues this 12 months. Not only have we developed a health insurer that has amongst the best member engagements and member satisfaction anywhere in medical health insurance, but we’ve also built our technology stack in such a way that we’re enabling other risk-bearing entities within the U.S. health care system to construct on top of our technology.

So we lease out our technology and our services to others in these two business lines — on the one hand, offering insurance to individuals, and then again, offering technology to other players in U.S. health care.”

This fairly recent IPO stock has a path to profitability:

“We spent a few hours at an investor day about two months ago or so taking people through what must occur and what we want to do to ensure that that to be the case.

First, insurance company profitability in 2023 after which, following up in 2025 by overall company profitability. I actually have really every confidence that with the levers we control there, we’re pulling exactly the proper sequence and with the proper power.

And that the general market conditions may also be such that every little thing we want to see around us is falling in place.

So yes, I trust.

We’ve now been doing this for 10 years and I feel we’ve also had a somewhat unique history of challenges to navigate. We’re one in all the few firms within the ACA and the person markets from the very starting — and there have been many situations where the ACA almost got defunded, where it modified very, very radically when it comes to the market and so forth for a recent insurance market.

That’s not unusual in any respect.

The Medicare Advantage market also went sideways for a lot of, a few years within the early 2000s, late Nineties, before it then recovered and have become this sort of unstoppable juggernaut for health insurers.

We predict we’re very early in a market that can appear like that.”

Ann Hynes is a senior health care services analyst and managing director at Mizuho Securities specializing in health insurance stocks

Ann Hynes, Senior Health Care Services Analyst and Managing Director, Mizuho Securities

Ann Hynes is a senior health care services analyst and managing director at Mizuho Securities Co, Ltd. and has alot of recommendation regarding medical health insurance stocks.

Previously, she was a senior member of Leerink’s health care research team, and worked at Caris & Company, FTN Equity Capital Markets, and Cowen and Company. She received an MBA from Boston College and a bachelor’s degree from Fairfield University.

Ms. Hynes doesn’t see inflationary pressures impacting medical health insurance stocks profitability:

“I feel of all my subsectors, the medical health insurance industry is the least impacted.

There are some labor pressures that the businesses see. Nevertheless it is more on the shopper service side. They don’t employ a number of physicians, where we’re seeing a number of the pressure point.

From an inflationary perspective, I feel what would impact them over the subsequent couple of years could be from providers, like hospitals or outpatient centers or surgery centers, who’re really battling increased labor costs.

To place it in perspective, historically, for a hospital, labor costs per full-time worker might increase 2% to 2.5%, and currently, it’s increasing about 5% to six% on the bottom business.

That may be a big headwind for hospitals.

They may must go to business insurance firms to attempt to receives a commission for that. And typically, that doesn’t occur mid-contract cycle. These contracts are typically anywhere from one to 3 years and roughly one-third of their book renews annually.

Because the contract renews, managed care might want to reimburse health care providers for higher base wage rates. They may must negotiate and sure must pay hospitals for the labor increases.

But that can just find yourself in higher premiums to the patron.

It will not be a net negative from a margin perspective for a managed care company. It is basically just going to hit the U.S. consumer.

Because our health care premiums will eventually increase due to the labor market increases on the health care side of the equation.”

Medical health insurance stock sector CEO and equity research analyst interviews reveal some interesting potential investment upside on this segment of the market.  Read the whole interviews to get the whole advice from these highly skilled executives, only within the Wall Street Transcript.

 

 

 

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