Zacks Industry Outlook Highlights Manulife Financial, Sun Life Financial, Reinsurance Group of America, Primerica and Brighthouse Financial

For Immediate ReleaseChicago, IL – October 17, 2024 – Today, Zacks Equity Research discusses Manulife Financial Corp. MFC, Sun Life Financial Inc. SLF, Reinsurance Group of America, Inc. RGA, Primerica PRI and Brighthouse Financial BHF.Industry: Life InsuranceLink: https://www.zacks.com/commentary/2351621/5-life-insurance-stocks-to-buy-despite-feds-interest-rate-cutRedesigning and repricing of products and services to maintain sales and profitability have been driving Zacks Life Insurance industry players. Increased automation is expected to drive premium growth and boost the efficiency of Manulife Financial Corp., Sun Life Financial Inc., Reinsurance Group of America, Inc., Primerica and Brighthouse Financial.However, with the recent 50 basis points interest rate cut, life insurers will likely face challenges as they invest a large portion of their premiums to meet contractually guaranteed obligations of policyholders. Also, with accelerated digitalization, expenses are likely to increase. Prudently pricing the products and balancing customers' preferences and claim costs are a challenge.About the IndustryThe Zacks Life Insurance industry comprises companies that offer life insurance coverages and retirement benefits to individuals and groups. The products include annuities, whole and term life insurance, accidental death insurance, health insurance, Medicare supplements and long-term healthcare policies. Sales benefit from the increasing demand for protection products.The industry also includes companies providing wealth and asset management solutions. With a rise in the number of baby boomers, the demand for retirement benefits is increasing. Economic growth instills confidence. Per a Statista report, the life insurance market is expected to grow, with a gross written premium expected to be $3.67 trillion in 2024. The industry has also been witnessing the accelerated adoption of technology. However, rising mortality or loss cost trends may impact the profitability of insurers.3 Trends Shaping the Future of the Life Insurance IndustryInterest Rate Lowered: In its September FOMC meeting, the Fed cut the interest rate by 50 basis points after four years. Life insurers are direct beneficiaries of improved rates as they invest the premiums to meet the contractually guaranteed obligations of policyholders. Thus, rate cut will likely weigh on the investment return. Nonetheless, in times of persistently low interest rates, life insurers direct their funds into alternative investments like private equity, hedge funds and real estate. They, thus, know how to navigate the low-rate environment. These insurers also stay focused on navigating the challenges faced by their commercial real estate portfolio.Product Redesigning: Industry players are finding new solutions and ways to improve their sales and profitability. Insurers are refraining from selling long-duration term life insurance. Also, life insurers continue to roll out investment products that provide bundled covers of guaranteed retirement income, life and healthcare to cater to customers preferring policies with "living" benefits more than those with death benefits. Increased awareness about having coverages continues to support the life insurance business. A compelling product portfolio will thus aid sales of life insurers.Prudently pricing products and balancing customers' preferences and claim costs will be the key to driving growth. Per a report published in ReporterLinker, global life insurance gross written premium is expected to be $2.5 trillion by 2026. Per Statista's report, gross written premium is expected to reflect an annual growth rate (CAGR 2024-2028) of 1.7%. Per Deloitte, life premiums are projected to rise 1.5% in 2025 in advanced markets. Solid sales in emerging markets like China, India, and Latin America are expected to boost premiums by 7.2% in 2024 and 5.7% in 2025 per the report.Increased Adoption of Technology: Companies are now using electronic applications, e-signatures and electronic policy delivery. Carriers have started selling policies online that appeal to the tech-savvy population. At the same time, the use of real-time data makes premium calculation easier and reduces risk. Increased automation is expected to drive premium growth and boost efficiency.Moreover, accelerated digitization, as evident from the increased adoption of generative AI, cognitive intelligence and blockchain, should help life insurers curb operational costs and aid margin expansion. Insurers are investing heavily in technological advancements to ensure efficiency and smooth functioning. At the same time, players must shield themselves from falling prey to cyber threats.Zacks Industry Rank Indicates Bright ProspectsThe group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects for the near term.The Zacks Life Insurance industry, within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #21, which places it in the top 8% of the 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry's positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate.Before we present a few life insurance stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and valuation picture.Industry Vs. Sector & S&P 500The Life Insurance industry has outperformed the Finance sector and the Zacks S&P 500 composite in the past year. The stocks in this industry have collectively gained 40.3% compared with the Finance sector's increase of 31.8% and the Zacks S&P 500 composite's increase of 33.5% in the said time frame.Life Insurance Industry's Current ValuationOn the basis of trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 2X compared with the S&P 500's 8.85X and the sector's 3.7X.Over the past five years, the industry has traded as high as 2X, as low as 0.65X, and at the median of 1.34X.5 Life Insurance Stocks to Add to Your PortfolioHere, we present one stock with a Zacks Rank #1 (Strong Buy) and four stocks with a Zacks Rank #2 (Buy) from the industry. You can see the complete list of today's Zacks #1 Rank stocks here.Manulife Financial: Headquartered in Toronto, Canada, this Zacks Rank #1 insurer is one of the three dominant life insurers within its domestic market and possesses rapidly growing operations in the United States and several Asian countries. A strong Asia business, expanding wealth and asset management business, investments to ramp up digital capabilities and solid capital position poise this life insurer well for growth. MFC estimates core EPS growth between 10% and 12% over the medium term.The Zacks Consensus Estimate for Manulife's 2024 and 2025 earnings indicates a year-over-year increase of 6.6% and 4.9%, respectively. The expected long-term earnings growth rate is pegged at 10%. It delivered a four-quarter average earnings surprise of 8.03%. It has a VGM Score of B.Sun Life Financial: Based in Toronto, SLF is the third largest insurer in Canada. This Zacks Rank #2 company is well diversified by geography and product, providing protection and wealth management products and services to individual and group customers worldwide. Its focus on Asia operations, asset management businesses' growth, scale-up and integration of U.S. operations and strategic buyouts bode well for growth. The underlying return on equity continues to trend toward a medium-term financial objective of 18% plus, thus reflecting a sustained emphasis on capital-light businesses.The Zacks Consensus Estimate for Sun Life's 2024 and 2025 earnings indicates a year-over-year increase of 3.6% and 10.1%, respectively. The expected long-term earnings growth rate is pegged at 8%. The company delivered a four-quarter average earnings surprise of 1.76%. It has a VGM Score of B.Reinsurance Group of America: This Zacks Rank #2 insurer is a leading global provider of traditional life and health reinsurance and financial solutions with operations in the United States, Latin America, Canada, Europe, the Middle East, Africa, Asia and Australia. This insurer is set to benefit from the changing life reinsurance pricing environment, expanding business in the pension risk transfer market and disciplined capital management.The Zacks Consensus Estimate for Reinsurance Group's 2024 and 2025 earnings indicates a year-over-year increase of 9.7% and 3.2%, respectively. The consensus estimate for 2024 and 2025 has moved up 0.4% and 0.2%, respectively, in the past seven days. RGA delivered a four-quarter average earnings surprise of 19.48%. It has a VGM Score of A.Primerica: This Duluth, GA-based, second-largest issuer of term-life insurance coverage in North America aims to be a successful senior health business while continuing to enhance its shareholders' value. Strong demand for protection products drives sales growth and policy persistency benefit of this Zacks Rank #2 insurer. A strong business model makes Primerica well-poised to cater to the middle market's increased demand for financial security.The Zacks Consensus Estimate for PRI's 2024 and 2025 earnings indicates a year-over-year increase of 12.8% and 11.8%, respectively. The consensus estimate for 2024 and 2025 has moved up 0.4% and 0.9% north, respectively, in the past seven days. PRI delivered a four-quarter average earnings surprise of 1.74%.Brighthouse Financial: Charlotte, NC-based Brighthouse Financial, with an expansive and compelling suite of life and annuity products and a strong market presence, aims to become a premier player in the individual insurance market. Brighthouse is also revamping its life insurance business to boost annuity sales. Sales of Shield Level annuities and variable annuities with FlexChoice Access should drive Annuity sales. The insurer remains focused on transitioning the business mix to less capital-intensive products. BHF carries a Zacks Rank #2.The Zacks Consensus Estimate for BHF's 2024 and 2025 earnings indicates a year-over-year increase of 33.2% and 7.2%, respectively. The consensus estimate for 2024 and 2025 has moved up 2.5% and 0.2% north, respectively, in the past seven days. The company delivered a four-quarter average earnings surprise of 3.76%.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>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 Manulife Financial Corp (MFC): Free Stock Analysis Report Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report Primerica, Inc. (PRI): Free Stock Analysis Report Sun Life Financial Inc. (SLF): Free Stock Analysis Report Brighthouse Financial, Inc. (BHF): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks