FBR Capital Maintains an 'Outperform' on StanCorp Financial (SFG), Pre-Announced 1Q11 Misses on Higher Claims Costs
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Rating Summary:
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
0 Buy, 8 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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FBR Capital maintains an 'Outperform' on StanCorp Financial (NYSE: SFG).
FBR analyst says, "SFG pre-announced 1Q11 operating EPS of $0.75 - $0.77, compared to both the FBR and Street estimate of $1.19. The company reported that it is unlikely to reach the lower end of 2011 guidance of $4.80 - $5.10. The miss was driven by higher long-term disability insurance (DI) claim incidence. While we do not have a full financial statement (and thus cannot fully update our model), we believe the result could move our 2011E EPS to $4.50 - $4.60 from our current $5.00 estimate. While this earnings miss is clearly a disappointment, SFG is still solidly profitable with substantial excess capital, and therefore at this point, we do not see a reason for the current share repurchase program to be curtailed..."
"Lateral call for group benefits. SFG's industry and geographic mix is different than DI focused companies such as Unum (NYSE: UNM0 and Delphi Financial (NYSE: DFG), as well as the conglomerate DI providers such as Hartford (NYSE: HIG), MetLife (NYSE: MET), Prudential (NYSE: PRU) and Lincoln (NYSE: LNC). As such, making a lateral call to these other carriers is not clear. However, we have seen a fairly consistent trend of rising benefit ratios across the group benefit space. We estimate the average benefit ratio rose by ~70bps in 2010 for the specialty group benefit names (UNM, SFG, DFG) and ~270bps for the conglomerate writers. While specific lateral calls are tough to make, this result from SFG supports the notion of a worsening benefit ratio trend across the industry, especially for more DI focused group benefit providers."
For more ratings news on StanCorp Financial click here and for the rating history of StanCorp Financial click here.
Shares of StanCorp Financial closed at $45.37 yesterday.
FBR analyst says, "SFG pre-announced 1Q11 operating EPS of $0.75 - $0.77, compared to both the FBR and Street estimate of $1.19. The company reported that it is unlikely to reach the lower end of 2011 guidance of $4.80 - $5.10. The miss was driven by higher long-term disability insurance (DI) claim incidence. While we do not have a full financial statement (and thus cannot fully update our model), we believe the result could move our 2011E EPS to $4.50 - $4.60 from our current $5.00 estimate. While this earnings miss is clearly a disappointment, SFG is still solidly profitable with substantial excess capital, and therefore at this point, we do not see a reason for the current share repurchase program to be curtailed..."
"Lateral call for group benefits. SFG's industry and geographic mix is different than DI focused companies such as Unum (NYSE: UNM0 and Delphi Financial (NYSE: DFG), as well as the conglomerate DI providers such as Hartford (NYSE: HIG), MetLife (NYSE: MET), Prudential (NYSE: PRU) and Lincoln (NYSE: LNC). As such, making a lateral call to these other carriers is not clear. However, we have seen a fairly consistent trend of rising benefit ratios across the group benefit space. We estimate the average benefit ratio rose by ~70bps in 2010 for the specialty group benefit names (UNM, SFG, DFG) and ~270bps for the conglomerate writers. While specific lateral calls are tough to make, this result from SFG supports the notion of a worsening benefit ratio trend across the industry, especially for more DI focused group benefit providers."
For more ratings news on StanCorp Financial click here and for the rating history of StanCorp Financial click here.
Shares of StanCorp Financial closed at $45.37 yesterday.
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