The implementation of the Patient Protection and Affordable Care Act, or PPACA, in the U.S. is scheduled in 2013. This act will help the Federal Government to increase the rate of people covered under health insurance by making it mandatory and providing tax credits to the individuals. The company observed $997 million in sales in fiscal year 2012. But now AFLAC Incorporated (NYSE:AFL) is expecting a 5% increase in sales in the second half of 2013 based on an increase in the number of people getting insured. In addition to this, it is planning to build an independent health insurance exchange in 2014, where it will offer government-regulated health care plans, which will make individuals eligible for federal subsidies. With 94% brand awareness, the company is forecasting an increase in demand for its medical insurance products.
New product and estimation bringing revenue
American Security Insurance, a subsidiary of Assurant, Inc. (NYSE:AIZ), filed for a 0% rate change in Florida in March 2013, which will be effective from August 2013. Assurant, Inc. (NYSE:AIZ) has plans to launch a new ‘’lender-placed’’ insurance, an insurance policy placed by a bank on a homeowner whose property insurance is lapsed, which will be affected by this rate change. This new insurance product is more flexible and less costly. Currently, American Security has 140,000 policies in Florida alone, which have premiums worth more than $500 million. Florida contributes one third of the total premium received by American Security. With this, the company expects Florida to contribute, in total premium, more than the current one third. Furthermore, the company is planning to launch this new product in 28 states by the end of the second quarter of 2013 and all over the U.S. by the end of 2013.
Assurant, Inc. (NYSE:AIZ), on its investor day in 2011, announced the five-year estimate for the placement rates on loans to steady down to 1.8%, as it was expecting the sales to decrease. The placement rate in the first quarter of 2013 was 2.85% due to sales of new loans in 2012. In the first quarter of 2013, it sold 32.9 million loans, a 1.7 million quarter-over-quarter rise. Going forward, Assurant, Inc. (NYSE:AIZ) is expecting to sell 900,000 loans more in the second quarter of 2013. With this, the company is expecting high growth from the sale of new loans.
Insured for growth
With the plan of a country-wide launch of new products and anticipation of the placement rates, Assurant, Inc. (NYSE:AIZ) is very optimistic about growth in revenue. AFLAC Incorporated (NYSE:AFL) is expected to show an uptrend in sales in Japan based on its excellent performance in the Japanese market. Additionally, after the implementation of the health care act, the company is anticipating a rise in sales, which will result in higher top-line growth.
A new product launch and repurchase plan are expected to boost Unum Group (NYSE:UNM)’s revenue in upcoming years. The company’s strong presence in the market and its free cash flow depict future growth in terms of higher profit.
I recommend a buy on all these stocks.
Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends Aflac. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Insurance Companies Focusing on Future Growth originally appeared on Fool.com is written by Shweta Dubey.
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