On Jul 2, we issued an updated research report on U.S. life
Protective Life Corp.
Last month, the company announced its takeover by the Japanese life
insurer Dai-ichi Life Co. for $5.7 billion. The transaction -
expected to close by year-end 2014 or early 2015 - will provide
immense diversification benefits, helping it to transform from a
national to an international player courtesy of being a wholly
owned subsidiary of the one of the largest insurers in Japan.
This transaction will also enable Protective Life to deliver
substantial, immediate cash value to its shareholders while
sustaining growth. Moreover, Protective will be part of the
thirteenth largest global insurer which Dai-ichi Life will
transform to, post acquisition. Consequently, courtesy of its
takeover, Protective will rise in rank from a medium to a large
size U.S. insurer.
Protective Life has a long operating history in the U.S. and has
grown via organic and inorganic routes. Its inorganic growth story
seems impressive with 47 small and big acquisitions to its credit
over the past four decades.
We appreciate the insurer's diverse revenue and earnings sources,
significant presence in the life insurance market, multiple
distribution channels, manageable cash outflows at the holding
company, and a solid track record that reflects it competence to
acquire other companies and blocks of businesses.
This life insurer boasts solid asset quality and sound capital
position, liquidity and financial flexibility alongside robust
enterprise risk management which drives credit rating agencies to
assign it a strong credit score.
During the last reported quarter, bottom line outpaced the Zacks
Consensus estimate by 27% and year ago earnings by 34%. Solid
performance by its Annuity and Stable Value lines of business drove
the upside. Top line also improved year over year on higher net
premium and net investment income, while falling in line with the
Zacks Consensus Estimate.
Protective Life carries a Zacks Rank # 3 (Hold). Better-ranked
players from the same industry include
Lincoln National Corporation
China Life Insurance Co. Ltd.
Sun Life Financial Corp.
). All these stocks carry a Zacks Rank #2 (Buy).
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PROTECTIVE LIFE (PL): Free Stock Analysis
LINCOLN NATL-IN (LNC): Free Stock Analysis
CHINA LIFE INS (LFC): Free Stock Analysis
SUN LIFE FINL (SLF): Free Stock Analysis Report
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