JPMorgan outlook for life insurers; upgrades Principal Financial Group

Investing.com -- JPMorgan maintains a cautious long-term view on the life insurance sector but expects stocks to outperform in the near term. A strong equity market, higher interest rates, and healthy balance sheets are seen as key tailwinds, while corporate credit risks remain a concern.

For 2025, JPMorgan forecasts strong AUM growth and robust margins in group insurance but expects mixed results for individual life products. Variable investment income is likely to weigh on Q4 2024 earnings, with the firm cutting near-term estimates but raising 2025 projections for several insurers.

Principal Financial Group Inc (NASDAQ:PFG ) has been upgraded to overweight due to its low-risk profile and improved business outlook. Global Life remains JPMorgan’s top pick, while MetLife (NYSE:MET ) is also favored.

However, Unum Group (NYSE:UNM ) was downgraded to neutral after recent outperformance, and Brighthouse Financial (NASDAQ:BHF ) and Lincoln National (NYSE:LNC ) remain Underweight.

Valuations for life insurers have improved but still offer relative value, trading at 1.3x book value ex-AOCI and 9x forward EPS, JPMorgan noted.

“Life insurers are vulnerable to macro deterioration, but we believe that the sector is better positioned in a downturn than feared by most investors,” analyst wrote.

Source: Investing.com