Here's Why Investors Should Retain Hartford Financial (HIG)
The Hartford Financial Services Group, Inc. HIG has gained on growing premiums attributable to rate hikes and new business growth. Acquisitions and product launches, as well as adequate cash-generating abilities, are additional tailwinds for the stock.
Zacks Rank & Price Performance
Hartford Financial currently carries a Zacks Rank #3 (Hold).
The stock has gained 11.4% in a year compared with the industry’s 0.2% growth. The Zacks Finance sector and the S&P 500 composite increased 8.1% and 15.6%, respectively, in the same time frame.
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Robust Growth Prospects
The Zacks Consensus Estimate for Hartford Financial’s 2023 earnings is pegged at $7.80 per share, indicating an improvement of 3.2% from the prior-year reading, while the same for revenues stands at $16.5 billion, implying an 8.4% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $9.46 per share, suggesting 21.3% growth from the 2023 estimate. The same for revenues stands at $17.9 billion, which indicates a rise of 8.7% from the 2023 estimate.
Decent Earnings Surprise History
HIG’s bottom line surpassed earnings estimates in three of the trailing four quarters and matched the mark once, the average surprise being 9.36%.
Solid Return on Equity
The return on equity for Hartford Financial is currently 17.5%, which is higher than the industry’s average of 10.8%. The figure substantiates the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Hartford Financial gains from strong contributions by its Commercial Lines and Group Benefits businesses. The Commercial Lines unit is aided by continued rate increases, new business growth and strong customer retention rates, which in turn, drive premiums.
Improved fully insured ongoing premiums driven by robust sales and solid persistency contribute to the impressive performance of HIG’s Group Benefits business. The insurer makes efforts to bolster its suite of group benefits offerings and its move of introducing a critical illness insurance product covering more than 160 health conditions this year bear testament to the same.
Improved premiums flowing from Commercial Lines and Group Benefits businesses bode well for the top line of Hartford Financial, since premiums account for a significant chunk of any insurer’s revenues.
Though catastrophe losses come with its own share of worries, frequent losses ramp up the policy renewal rate and sustain the steady flow of premiums to HIG. Hartford Financial also has reinsurance agreements in place, which limit the losses suffered.
HIG has been resorting to product launches or acquisitions to upgrade capabilities and strengthen its nationwide presence. It has undertaken divestitures to intensify focus on its U.S. operations and release capital, which in turn, offer increased financial flexibility to pursue business investments. Cost-cutting measures are an indication of Hartford Financial’s efforts to provide respite to margins in the days ahead.
A strong financial position equips Hartford Financial to engage in the tactical deployment of capital through share buybacks or dividend payments. The insurer had a leftover capacity of $2 billion under its share repurchase program as of Jun 30, 2023.
Stocks to Consider
Some better-ranked stocks in the insurance space include Arch Capital Group Ltd. ACGL, Aflac Incorporated AFL and Chubb Limited CB. While Arch Capital currently sports a Zacks Rank #1 (Strong Buy), Aflac and Chubb carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 26.83%. The Zacks Consensus Estimate for ACGL’s 2023 earnings indicates a rise of 38.2%, while the same for revenues suggests an improvement of 30.6% from the respective year-ago actuals. The consensus mark for ACGL’s 2023 earnings has moved 2.3% north in the past 30 days.
The bottom line of Aflac beat estimates in each of the trailing four quarters, the average beat being 7.76%. The Zacks Consensus Estimate for AFL’s 2023 earnings indicates a rise of 12.2% from the prior-year tally. The consensus mark for AFL’s 2023 earnings has moved 1.4% north in the past 30 days.
Chubb’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.36%. The Zacks Consensus Estimate for CB’s 2023 earnings indicates a rise of 19.3%, while the same for revenues suggests an improvement of 8.8% from the respective year-ago actuals. The consensus mark for CB’s 2023 earnings has moved 0.8%north in the past 30 days.
Shares of Arch Capital, Aflac and Chubb have gained 71%, 25.6% and 6.7%, respectively, in a year.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
Aflac Incorporated (AFL) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
