Shares of StanCorp Financial Group Inc. SFG hit a new 52-week high of $114.87 on Sep 10, 2015. The upside came on solid second-quarter results as well as anticipation of benefits from the merger deal with Meiji Yasuda Life Insurance Company. With about 0.3 million shares exchanging hands yesterday, the stock finally closed at $114.46 per share.
StanCorp’s year-to-date return of 63.84% stands substantially higher than the S&P 500’s return of -5.17%. The return is also much higher than that of other industry players like Aflac Incorporated AFL, Assurant Inc. AIZ and Principal Financial Group Inc. PFG, which recorded returns of -5.54%, 10.28% and -8.72%, respectively.
StanCorp recently inked a deal to be acquired by Meiji Yasuda Life Insurance Company, the oldest and third-largest life insurance company in Japan. Hence, this transaction will not only enable StanCorp to benefit from the acquirer’s expansive product portfolio and geographical footprint, it will also bring substantial and immediate value for its shareholders. The combined entity will hold total assets worth $327 billion.
With respect to the second-quarter results, the bottom line surpassed the Zacks Consensus Estimate and improved year over year, driven by a higher favorable claims experience in Employee Benefits and Individual Disability. The quarter also witnessed higher sales and premium growth, along with solid results at Asset Management. This Zacks Rank #2 (Buy) life insurer delivered positive surprises in all of last four quarters, with an average beat of 21.53%.
After seeing a higher benefit ratio in several quarters, StanCorp is finally experiencing improvement. In 2015, the company continues to target a benefit ratio of 77–79%. Also, StanCorp’s investment portfolio has been performing well with no considerable exposure to high-risk asset classes.
These positives pushed the Zacks Consensus Estimate for 2015 north by 1.8% to $5.70 in the last 60 days.
Additionally, we believe that StanCorp’s conservative underwriting practices and a strong capital position bode well for the long term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ASSURANT INC (AIZ): Free Stock Analysis Report
STANCORP FNL CP (SFG): Free Stock Analysis Report
AFLAC INC (AFL): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis Report
To read this article on Zacks.com click here.