Seeking Alpha: MetLife Muddling Through For Now

For all of the positives I can name about MetLife (NYSE:MET), only the pathetically low rate of return on money market funds keeps me from arguing that investors would have done better putting their cash there than in the shares of this leading life insurance company. I mentioned the risk of regulatory uncertainties weighing on the stock a year ago, but I underestimated the extent to which that would impact sentiment. Likewise, I had expected more action in interest rates by now, and MetLife sits with Prudential (NYSE:PRU), Lincoln National (NYSE:LNC), and AXA (OTCQX:AXAHY) in the part of the room that really needs to see higher rates to start performing better.

At the risk of making an "I wasn't wrong … just early!" call, I still do believe that MetLife shares are meaningfully undervalued today. I believe the company has done well in shifting its mix towards higher return products with lower capital requirements and I believe the shift toward more protection-oriented products has been a smart one. Additionally, I believe the company can do well both in emerging markets and with new annuity products that reduce the risk to the issuer. I've stretched out the timeline to MetLife achieving 12% ROE and have maintained a high discount rate to account for the regulatory uncertainty, but still believe fair value is in the mid-$60's today.

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MetLife Muddling Through For Now

Seeking Alpha: A Few Flickers From Torchmark

Until September began, my March call that Torchmark (NYSE:TMK) still offered some upside was looking okay, as the stock was doing a little better than other insurance names like Prudential (NYSE:PRU), MetLife (NYSE:MET), and Lincoln National (NYSE:LNC). After the S&P revised its outlook lower, though, the shares have shed a few percentage points on worries that management may have to pull back a bit on buybacks.

I suspect that the S&P action was less relevant from a fundamental perspective and more likely a good excuse for managers to take some gains on an insurance stock that had risen close to 60% over the past two years. What's more, there are a few suggestions in recent earnings reports that growth may be a little harder to come by in the short-to-medium term. While I still like the fundamentals here, and the shares haven't exactly shot through my prior target, this may be a case where investors want to shop around a bit.

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A Few Flickers From Torchmark

Seeking Alpha: Hartford Financial Services Offers Self-Improvement And Takeover Potential

Although The Hartford Financial Services Group (NYSE:HIG) (or "The Hartford") has taken several significant steps to reposition itself as a quality P&C operator, the Street hasn't fully bought into the story. While the shares have appreciated about 50% over the last three years, ACE Limited (NYSE:ACE) and Travelers (NYSE:TRV) have done even better (up more than 60% each) and there's little differentiation among them over the past year despite ongoing self-improvement efforts at The Hartford.

To be sure, there are some reasons for The Hartford to lag. The company's expense ratio is a little higher than its peer group (or at least the better-run members) and investors worry that the variable annuity run-off process will tie-up capital with poor returns and that the group benefits business won't improve as much as management hopes. Although the shares are near a 52-week high, that skepticism still creates a window of opportunity for investors; The Hartford is perhaps not the cheapest stock in the space today, but it is cheap enough to merit interest and it could be an acquisition target.

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Hartford Financial Services Offers Self-Improvement And Takeover Potential

Seeking Alpha: Isn't Torchmark Supposed To Be Defensive?

Life and supplemental health insurance company Torchmark (TMK) is unusual in a lot of ways. Not only does the company have a pretty exceptional history of returns on equity, those returns have been remarkably consistent. The company's underwriting risk is low and not many companies can compete in its core life insurance markets. What's perhaps even stranger is that this supposedly defensive insurance stock is doing quite well in a market where conditions are seen as improving for the sector.

Even though Torchmark would normally have less to gain from the improving economy and rising rates, these shares may yet be undervalued. Torchmark's different model makes P/TBV valuation almost useless, but the shares look surprisingly cheap on the basis of an excess return model. I don't normally think to look at the 52-week high list for bargains, but Torchmark could still offer some meaningful upside from today's level.

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Isn't Torchmark Supposed To Be Defensive?

Investopedia: Steady Progress And Underapperciated Value At MetLife

With low rates and an uncertain regulatory environment still troubling investors, MetLife (NYSE:MET) shares have been on a slow boat to nowhere over the past year. Operating performance continues to improve faster than analysts expect, though, and MetLife's strong international operations should help build value in the coming years. While the risk of a MetLife position is asymmetrical (there's a higher likelihood of something going much worse than much better), I do believe these shares are undervalued and priced to deliver good returns over the long term.

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http://www.investopedia.com/stock-analysis/2013/Steady-Progress-And-Unappreciated-Value-At-MetLife-MET-PFG-PRU-GE0215.aspx

Investopedia: MetLife's Guidance Reflects A Wider Problem

For readers who think that the United States government bends over backwards to accommodate the financial industry, MetLife's (NYSE:MET) discussion of guidance for the remainder of 2012 and 2013 is a must-read. While the troubled asset relief program and a variety of other government programs clearly allowed financial companies to shore up their capital, the reality is that the zero interest rate policy and "QE infinity" are taking a toll on companies that earn their living on interest rate spreads.

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http://www.investopedia.com/stock-analysis/2012/MetLifes-Guidance-Reflects-A-Wider-Problem-MET-USB-PRU-ZION1214.aspx

Investopedia: MetLife Keeps On Keeping On

It's too much of a stretch to say that the financial sector is healthy again, but banks and P&C insurers have largely recovered a lot of lost value. Conditions are not so strong in the life insurance industry, though, where low rates and volatile markets have done a number on many aspects of the business. Tough times tend to highlight the best operators, though, and I believe MetLife (NYSE:MET) continues to demonstrate why it is a top-notch company that is meaningfully undervalued.

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http://stocks.investopedia.com/stock-analysis/2012/MetLife-Keeps-On-Keeping-On-MET-PRU-PUK-LNC0803.aspx

Investopedia: Hartford's Transformation Is A Multi-Year Proposition

At a time when many insurance companies are looking to diversify and enter new markets to stimulate growth, Hartford Financial Services (NYSE:HIG) is looking to go in the other direction. Although exiting life insurance, retirement and annuities should both improve and stabilize returns over the long term, but it's likely going to take many years for the benefits to show up. While Hartford's current valuation seems to understate the core value in the business, investors could be looking at dead (or at least very sleepy) money for a while.

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http://stocks.investopedia.com/stock-analysis/2012/Hartfords-Transformation-Is-A-Multi-Year-Proposition-HIG-MET-LNC-PRU0618.aspx

Investopedia: Can Torchmark Be What It Used To Be?

Investors have definitely warmed up to insurance companies in recent months, as a quick look at the charts of property and casualty insurers like Allstate (NYSE:ALL) and Progressive (NYSE:PGR) will show. The same is true for the life insurers, as stocks like Lincoln National (NYSE:LNC) and MetLife (NYSE:MET) (even with the disappointment tied to the Fed's stress test) have done reasonably well.

Where does that leave Torchmark (NYSE:TMK)? Torchmark is an odd insurance company, as it offers fairly simple products and focuses in part on a competitive cost structure. While the stock is up nearly 50% over early October lows, current analyst targets seem to suggest that the future will not be nearly as strong as the past. If Torchmark can reclaim past returns on equity (ROE), though, the returns could be still be significant.

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