Roughly six out of 10 Americans have some form of life insurance. About half of young people aged 18 to 29 (44%) and almost two-thirds in the 65-and-over bracket (65%) are currently covered.
That said, the life insurance market in the United States is both enormous and competitive. Investopedia reports that at least 900 life insurers had direct written premiums worth nearly $150 billion in the U.S.
U.S. life-annuity insurers entered the year in decent financial shape, but the impact from external factors — rising customer expectations, advances in technology, cyber risks, growing competition — will force those competing in the industry to sink or swim.
These market shifts will surely push insurers to adapt by introducing new strategies, services and processes, while at the same time dealing with regulatory and economic uncertainty.
We used Profit Scanner to examine the top insurers, determining what trends have emerged and whether short- to intermediate-term profit opportunities exist.
Life Insurance Stocks to Buy: Lincoln National Corporation (LNC)
The adjacent chart shows shares of LNC have been sliding for quite some time. Comparatively, the broader equity market has managed to claw its way close to all-time highs. So there’s certainly a longer-term disconnect happening between the industry and equities.
With the price of the stock at $40.36, Profit Scanner’s Technical Event Lookup search alerted us that a bullish moving average convergence divergence occurred on March 25, when the stock was trading for $39.27 per share. The signal came when the indicator’s nine-period exponential moving average crossed above the MACD (12, 26) EMA line.
Given the rise from mid-February’s recent price lows, does the bullish move have enough momentum to justify a position? Using Profit Scanner, we found relevant support at $39.28 and resistance at $58.54. Given that the LNC stock price is marginally above support, the risk-to-return ratio is indeed attractive.
The reason for this is simple: Placing a stop loss at the Profit Scanner’s suggested $36.46 price puts the downside risk at 10.69%. If the price climbs up to resistance at $58.54, however, the profit runs as high as 45.04%.
Life Insurance Stocks to Buy: Metlife Inc (MET)
Click to Enlarge With written premiums totaling more than $11 billion and a market share near 8%, MetLife (MET) is the biggest life insurance company domestically. MET’s foreign life insurance premiums added an additional $1 billion, giving MET significant international exposure.
In the adjacent chart, we identify a similar pattern of long-term, lower price lows and key technical levels that investors have come to respect.
Profit Scanner’s two technical event alerts in late March (outside bar and continuation wedge) were both bearish, indicating that the recent rally from February lows was showing signs of exhaustion. The only question is whether price will successfully test the 50-day moving average and surge higher from there.
Looking to Profit Scanner’s short-term outlook, we find price consolidating below its 21-day moving average. According to the system, support is found at $41.70 below with resistance at $51.11 above.
With MET currently trading around $44.85 per share, the downside risk comes out to be 7.02%. If the price climbs up to resistance, however, then we’d see profits of 13.95%. Not the best risk-to-reward ratio out there, but still favorable.
Life Insurance Stocks to Buy: Prudential Financial Inc (PRU)
Click to Enlarge Prudential (PRU) ranks fourth for America’s largest life insurance and financial services conglomerate. In the chart to the right, we can once again see that bears have a long-term choke hold on the stock.
Any time the bulls have attempted to stage a rally, it just hasn’t been potent enough to climb up above key resistance points that would have allowed for a change in trend.
A simple search in Profit Scanner identifies intermediate-term support at $70.31, with resistance at $85.63. With shares currently trading around $72.64, we have another attractive risk-to-reward trading setup.
The system tells us that a stop should be set at $67.08. If we maintain that level of risk, we’d see a 7.65% loss in the event price collapses to that particular stop point.
If the bulls can stage another rally, however, investors could pocket gains of up to 17.88%.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.