So firms like Primerica, Inc. (NYSE:PRI) and The Allstate Corporation (NYSE:ALL) that offer traditional and hybrid life insurance products could face new regulatory oversight.
Ameriprise Financial provides an array of financial products and services (including financial planning) to its customers. The company’s share price recently hit a new 52 week high and is hovering around the $73 mark. Average volume has reportedly been about 1.4 million shares over the past 30 days. The firm has market cap of $14.64 billion and shares are up about 15 percent this year. The price increase can be attributed in part to the firms’ revenue growth, expanding profit margins, rising increase in net income.
Primerica, Inc. (NYSE:PRI) Financial Services also offers a variety of financial products like life insurance, mutual funds and debt consolidation. The company has a smaller market cap than Ameriprise (about $1.8 billion), but recently joined the Standard & Poor’s Mid Cap 400 index. The company’s price earnings ratio is about 11 percent (lower than the S&P average of 17.7). The company is set apart largely because of its huge sales force. Primerica, Inc. (NYSE:PRI) has almost 100,000 life insurance licensed representatives. Also, more than 50% of its mutual fund reps have been licensed as the company makes a push into the investment side of financial services.
The Allstate Corporation (NYSE:ALL) provides personal property and casualty insurance, life insurance and retirement and investment products. The firm has also hit new 52 week highs and it is trading at about $48.60 (above its previous 52-week high of $48.30). Average volume has been 3.1 million shares over the past 30 days. The Allstate Corporation (NYSE:ALL) has a market cap of $22.88 billion and shares are up 19% this year. The stock price performance is largely a reflection of solid revenue growth, a sound financial position and good cash flow from operations.
The bottom line: broker-dealers and exempt financial service providers could be required to adhere to a more stringent fiduciary duty. This has many legal and regulatory implications that will really mean higher operating costs as companies meet new licensing and educational requirements for their sales force. And these costs will ultimately be passed onto consumers.
Ultimately, however, these outfits will continue to prosper regardless of the regulatory umbrella they fall under. Given the fact that the larger financial services sector still faces many hurdles, these outfits may offer better buying opportunities.
The article New SEC Fiduciary Duty Standards Loom Large for Financial Service Providers originally appeared on Fool.com and is written by Kyle Colona.
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