Market Overview

Credit Suisse Neutral On Several Insurance Names: Reinsurance Group, Unum, Torchmark

Share:
Credit Suisse Neutral On Several Insurance Names: Reinsurance Group, Unum, Torchmark

Credit Suisse initiated coverage of insurance stocks, with Reinsurance Group of America Inc (NYSE: RGA), Torchmark Corporation (NYSE: TMK) and Unum Group (NYSE: UNM) all started at Neutral.

Near-Term Fear Confronts Unum

Analyst John Nadel said he likes Unum's positive leverage to economic improvement. The analyst views the risk/reward as fairly balanced, but the absence of sufficient near-term catalysts prevented him from being constructive.

Nadel believes Unum has adequate capital strength to support downside risk under the scenario of another LTC reserve charge and/or a modest recession.

Estimates, Valuation For Unum

Credit Suisse estimates earnings per share of $3.87, $4.10 and $4.40 for 2016, 2017 and 2018, respectively. The $42 price target for Unum represented 10.4 times its 2017 estimated earnings per share.

Torchmark's Steady Fundamentals

Although Credit Suisse is a fan of the company's predictable earnings stream, consistent free cash flow deployment and solid return on equity, it believes these positives are already discounted in current valuation. The firm believes the current valuation reflected the company's relative safety versus the peer group and also incorporated some takeout premium following M&A activity by Japanese buyers of smaller U.S. life insurers over the past two years.

Related Link: Credit Suisse Sees Voya Financial As A Top Pick

Valuation For Torchmark

Credit Suisse noted that its $68 price target for Torchmark is based on 14.5 times its 2017 earnings per share estimate. The firm believes the company's shares should trade at a premium to historical valuation, given its strong and predictable fundamentals and relatively low sensitivity to low long-term interest rates.

Reinsurance: Unique Business A Positive

The firm noted that the company offers investors exposure into mortality improvement in the United States and internationally, with commendable long-term revenue, earnings and book value growth. Despite the company being a pure play life insurer, the firm said the short-term results are highly volatile, given the difficulty involved in estimating mortality.

Nevertheless, the firm noted that this volatility has created opportunities to add to or build positions. The firm also highlighted the company's significant excess capital and healthy operating margin long term.

Valuation

The $115 price target is based on 11.7 times its 2017 earnings per share estimate.

>Ratings And Price Targets

  • Reinsurance: Neutral/$115 Price Target.
  • Torchmark: Neutral/$68 Price Target.
  • Unum Group: Neutral/$42 Price Target.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for RGA

DateFirmActionFromTo
Aug 2020Morgan StanleyMaintainsUnderweight
Jul 2020Evercore ISI GroupUpgradesUnderperformIn-Line
Jul 2020Morgan StanleyMaintainsUnderweight

View More Analyst Ratings for RGA
View the Latest Analyst Ratings

 

Related Articles (RGA + TMK)

View Comments and Join the Discussion!

Posted-In: Credit Suisse insurance John NadeAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
ZTSGabelli & Co.Downgrades
AUPHHC Wainwright & Co.Maintains34.0
RCLCredit SuisseMaintains75.0
PINCCredit SuisseMaintains35.0
SUNCredit SuisseMaintains29.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com