On Aug 25, 2014, Symetra Financial Corporation (SYA) scaled a 52-week high of $23.82 after posting strong second-quarter financial results, which included an 11.6% positive earnings surprise. With respect to earnings trend, this life insurer has delivered positive earnings surprises in the trailing four quarters with an average beat of 15.9%.
In fact, shares of Symetra Financial rose nearly 6.3% over the last few trading sessions to close at $23.72, since the company reported second-quarter earnings results on Jul 24, 2014. Furthermore, the one-year return on the stock is 29.6%, above the S&P 500’s return of 20.1% as well as that of other players in the insurance industry like Lincoln National Corp. (LNC), Voya Financial, Inc. (VOYA) and White Mountains Insurance Group, Ltd. (WTM) that generated returns of 22.9%, 28.6% and 11.2% respectively over the same period.
During the second quarter, Symetra Financial’s bottom line not only surpassed the Zacks Consensus Estimate but also improved year over year on the successful tax credit investment strategy and improved sales across the three divisions, namely Deferred Annuities, Income Annuities and Individual Life. In fact, management remained optimistic and stated that the Benefits, Retirement and Individual Life segments are slated to generate an increase in sales that will drive growth going ahead. Additionally, the second quarter witnessed strong underwriting results in the Benefits segment.
The investment portfolio of Symetra Financial was strong, with gains realized during the said quarter as against losses in the comparable period last year. The company’s gains from bond sales increased significantly that contributed to the investment gain. In terms of financial position, Symetra Finanacial was strong with an increase in assets and shareholders’ equity, and a stable debt burden. A robust financial position enabled the company to undertake share repurchases during the quarter that not only boosted investors’ return but also contributed to the upside in earnings per share (EPS).
Further, management provided encouraging outlook for the second half of the year. Symetra Financial is expected to come up with benefit loss ratio of 64%–66% for the second half. Moreover, sales of fixed to fixed indexed annuities flow and individual life are expected to increase.
Additionally, management expects premium growth in group life and disability income to improve. Profitable growth, along with prudent capital management, is expected to drive Return on Equity (ROE). Based on these expectations, management of Symetra Financial reiterated the operating earnings guidance for full-year 2014 at $1.80–$2.00 per share.
As a result, the Zacks Consensus Estimate for 2014 increased 3.2% over the last 30 days to $1.93 per share. This estimate lies within the company’s guided range. For 2015 too, most of the estimates moved north over the same period to pull up the Zacks Consensus Estimate by 1.6% to $1.91 per share.
Currently, Symetra Financial carries a Zacks Rank #2 (Buy). Other stocks to consider in the life insurance space include Lincoln National and Voya Financial. Both have the same Zacks Rank as Symetra Financial.
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