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The Zacks Analyst Blog Highlights: Cigna, Progressive, James River and American Equity


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For Immediate Release

Chicago, IL -November 15, 2018 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Cigna CorporationCI , The Progressive CorporationPGR , James River Group Holdings, Ltd.JRVR and American Equity Investment Life Holding CompanyAEL .

Here are highlights from Wednesday's Analyst Blog:

Mergers, Casualty Losses Drive U.S. Insurers: 4 Picks

Insurance buyers have been facing extreme price pressure of late. Natural disasters, which ravaged parts of the United States in 2017 and 2018 so far, have not only resulted in increased number of insurance renewals but also higher premium pricing. What is rather a burden for buyers has proved to be a boon for insurance companies.

Also adding to the Insurance space's fortunes is an increasing number of mergers in the pipeline. In such circumstances where the industry is poised for growth, adding insurance stocks to one's portfolio seems prudent.

Insurance Renewals and Higher Prices a Boon

Per the latest report published by Willis Towers Watson in its 2019 Insurance Marketplace Realities, players in the insurance industry are poised for tremendous growth in the days to come.

The report attributes the growth to increasing pricing pressure on insurance buyers due to a spate of casualty losses. Not only have prices increased in the recent past, cataclysmic events in 2017 and 2018 so far have resulted in a higher number of insurance renewals. Such events have led to firming up of the industry.

Experts from Willis Towers Watson also expect auto liability premiums to increase in 2019, the third year on the trot. Auto rates are believed to surge to anything between 6% and 12% in 2019 as the automobile sector experiences deteriorating cost of loss. Such costs result from ever increasing number of vehicles on the roads, which has bumped up auto claims.

Looking into the property market, the recent spate of natural disasters has resulted in increased prices of claims. For non-catastrophe exposed programs, pricing is expected to increase 2.5%. Pricing for catastrophe-exposed programs are likely to surge between 2.5% and 7.5% in 2019. Also, catastrophe-exposed programs for heavy losses could witness an increase in prices by as much as 10%.

Finally, an increasing aging population within the United States has resulted in higher number of claims from long-term care and senior living facilities. The health insurance renewals are expected to increase between 5% and 30%.

Increased Number of Insurance Mergers in the Pipeline

Major insurance players have shown an increased desire to pursue inorganic growth. Further, benefits such as newer technologies and talent of the incumbent workforce has resulted in an increase in number of mergers and acquisitions (M&A) in the insurance industry.

According to a report published by PwC on Oct 24, 2018, the total value of merger and acquisition activity in America's insurance sector increased to $8.1 billion in the third quarter of 2018. This was a steep increase from $1.9 billion in the same period in 2017.

Of the various high-profile mergers, the one that stands out is Apollo Global Management LLC's acquisition of Aspen Insurance Holdings Ltd. for $2.6 billion. The deal was announced in August 2018 and is yet to be completed. In the same month, the $2.2 billion takeover of Navigators Group Inc. by Hartford Financial Services Group Inc. was also announced. It is yet to be completed.

4 Hot Choices

A series of natural disasters, an aging American population and increased number of vehicles on the roads have led to an increase in prices of insurance premiums. Further, a number of mergers in the pipeline have resulted in firming up of the insurance industry.

In this context, we have selected four insurance stocks that are expected to gain from these factors. These four stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

CignaCorporation is a provider of insurance and related products and services in the United States as well as across the globe. The company also provides healthcare policies to employers, unions and other groups and individuals.

The Zacks Rank #1 company is based out of Bloomfield, CT. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 2.6% over the past 60 days.

The Progressive Corporation provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States.

The Zacks Rank #2 company is based out of Mayfield Village, OH. It has expected earnings growth rate for the current year of more than 100%. The Zacks Consensus Estimate for the current year has improved 6% over the past 60 days.

James River Group Holdings, Ltd.  offers specialty insurance and reinsurance services in the United States.

The company is based out of Pembroke, Bermuda and carries a Zacks Rank #2. The company has expected earnings growth rate for the current year of 73.38%. The Zacks Consensus Estimate for the current year has improved 2.6% over the past 60 days.

American Equity Investment Life Holding Company  provides life insurance products and services in the United States.

The company is based out of West Des Moines, IA and carries a Zacks Rank #2. The company has expected earnings growth rate for the current year of more than 100%. The Zacks Consensus Estimate for the current year has improved 1.7% over the past 60 days.

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Past 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 http://www.zacks.com/performance  for information about the performance numbers displayed in this press release.


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

American Equity Investment Life Holding Company (AEL): Free Stock Analysis Report

Cigna Corporation (CI): Free Stock Analysis Report

James River Group Holdings, Ltd. (JRVR): Free Stock Analysis Report

The Progressive Corporation (PGR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: AEL , CI , JRVR , PGR



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