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Lincoln National Corporation (LNC): An Underrated Insurance Play

Indeed, the Bankers Life segment is the company’s workhorse, accounting for almost 60% of revenues. This segment helps serve the retirement market through various products that include health and life insurance products and annuities. Premiums for the unit fell 9.6% in 2009 and 14% in 2010, but remained flat in 2011 before declining 5.5% in 2012.


Going into 1Q there were a total of 27 hedge funds long Lincoln National Corporation (NYSE:LNC). This includes the hedge fund with the top position, Steven Richman’s East Side Capital, having over 11% of its 13F portfolio invested in the stock (check out East Side’s top stocks).

At the end of 1Q, there were only 12 hedge funds long Manulife. However, this was a 33% increase from the previous quarter. Daniel Bubis’ Tetrem Capital had the largest position among major hedge funds in the stock, worth some $62 million (see Terem’s newest stocks).

As for CNO Financial Group Inc (NYSE:CNO), there were a total of 20 hedge funds long the stock. Billionaire John Paulson of Paulson & Co. had the largest position, worth over $150 million (see Paulson’s newest stock picks).

The bottom line

I like Lincoln for its robust presence in the insurance business and the company’s return potential. Lincoln has managed to expand its return on equity, now well above that of Manulife or CNO.

I also like Lincoln National Corporation (NYSE:LNC) for its valuation; it’s trading at 60% of book value. The insurer even pays a modest 1.36% dividend. I think it could be a great time to get into the stock on the back of rising demand from the Baby Boomer population. Worth noting is that while the industry might see a nice influx of capital over the interim due to new premiums and policies, the longer-term fallout should be considered. The Baby Boomers will look to put their insurance premiums to work in the next 10-20 years.

The article An Underrated Insurance Play originally appeared on and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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