We are upgrading our recommendation on
StanCorp Financial Group Inc.
) to Neutral from Underperform, as we expect the company to
continue to deliver solid underwriting results and lower
The company is schedule to release its third quarter results on
October 22 and we expect it to deliver earnings of 69 cents per
share, improving sequentially, though falling short of the
Performance of StanCorp continues to be robust. Its second
quarter marks the third consecutive time of reporting lower
delinquency. It also marked the lowest 60 day delinquency rate
since the first quarter of 2009. The company also reported strong
growth in Group insurance premiums. However, intense price
competition weighed heavily on the company's group insurance
sale. It is also expanding its product portfolio by launching new
products and re-launching some of them to diversify its areas of
StanCorp enjoys a strong capital position. By virtue of its solid
capital position, the company remains focused on enhancing
shareholders' value. StanCorp spent $10 million in share
repurchases in the second quarter. The company stated that if
group insurance benefit ratio continues to trend upward, then
there are remote chances of share buyback activity in the second
half of 2012.
However, as StanCorp expected, the second quarter of 2012
experienced higher benefit ratio in the Insurance Services
segment, largely due to less favorable claims experience in the
group long-term disability business. Benefit ratio exceeded the
guided range of 80% to 82% for 2012. Also, the company now
expects full-year benefit ratio to exceed its guided range, given
the performance in the first half of the year and the
persistently low interest rate environment.
Moreover, StanCorp's Asset Management segment, after posting
solid earnings over the past couple of quarters, witnessed a
decline for the fourth consecutive quarter.
Stancorp currently carries a Zacks #3 Rank translating into a
short-term Hold rating.
Principal Financial Group Inc.
), which compete with Stancorp, share the same rank.
METLIFE INC (MET): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
UNUM GROUP (UNM): Free Stock Analysis Report
To read this article on Zacks.com click here.