On Sep 28, we issued an updated research report on StanCorp Financial Group Inc.SFG .
In Jul 2015, StanCorp Financial entered into an agreement to be acquired by Meiji Yasuda, the oldest as well as the third-largest life insurance company in Japan. Following the all-cash transaction, the combined entity will have total assets worth $327 billion. StanCorp will benefit from the acquirer's huge product portfolio and geographical footprint besides being substantially and immediately value accretive for the insurer's shareholders.
StanCorp Financial's Asset Management segment has been witnessing substantial improvement over the past few quarters. This reflects higher equity values and favorable cash flows for retirement plan assets under administration. Despite the low interest rate environment, the company's new money investment rate has been improving over the last few quarters.
StanCorp Financial enjoys a strong capital position, which enables it to engage in shareholder friendly moves.
StanCorp Financial's investment portfolio continues to perform well with lower exposure to high-risk asset classes. StanCorp Financial envisions an investment portfolio comprising 60% fixed maturity securities and 40% commercial mortgage loans with a maximum allocation of 45% for commercial mortgage loans over the long term.
However, the company witnessed a decline in premiums in the recent quarters due to lower Employee Benefits sale and slower organic growth. To mitigate elevated claims incidence and the low interest rate environment, StanCorp Financial will continue to implement pricing actions for both new and renewed long-term disability business. These, in turn, may create pressure on the top line.
Zacks Rank and Stocks to Consider
StanCorp Financial presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance space are Employers Holdings, Inc. EIG , Sun Life Financial Inc. SLF and Primerica, Inc. PRI . While Employers Holdings sports a Zacks Rank #1 (Strong Buy), both Sun Life Financial and Primerica hold a Zacks Rank #2 (Buy).
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