On Mar 15, we downgraded our recommendation on
StanCorp Financial Group Inc
) to Neutral based on higher group insurance benefit ratio and
lower premiums. This life insurer currently carries a Zacks Rank
AEGON N V (AEG): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
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Why the Downgrade?
After reporting strong growth in group insurance premiums,
StanCorp witnessed a decline in premiums for the last two
quarters. The decline largely stemmed from a low single-digit
price increase in its group insurance business and stiff
competition, which also weighed on new sales and renewals.
Persistency also declined compared with 2011.
In 2012, delinquency improved to 0.40% from 0.34% in 2011.
Benefit ratio was 83.7% in the fourth quarter (up from 82.8% in
the year-ago quarter) and was 83.9% for full year 2012, both
exceeding the guided range of 80%-82%.
Causes for Concern
StanCorp also expects headwinds from the lack of employment and
wage growth in the group insurance business to persist in the
upcoming quarters and pressurize premium growth. StanCorp expects
group insurance premium to decrease in low-single digit in 2013,
exerting downward pressure on group insurance sales and
Group insurance benefit ratio is expected between 81% and 84% in
Insurance Stocks That Warrant a Look
Other insurance stocks worth a look are
Reinsurance Group of America Inc
Principal Financial Group Inc
Aegon N. V.
). All these stocks carry a Zacks Rank #2 (Buy).