Insurance Weekly Notes: UnitedHealth, Prudential, Hartford
In this weekly note we take a look at the latest developments relating to UnitedHealth’s (NYSE:UNH) acquisition of Catamaran, Hartford’s (NYSE:HIG) latest digital initiatives, and a few recent appointments at Prudential (NYSE:PRU) that align with its strategy to expand in new markets and strengthen marketing capabilities. All of the three stocks were relatively flat in trading over the week.
Lawsuit Over UnitedHealth’s Catamaran Deal
On Monday, March 30, UnitedHealth announced the acquisition of Catamaran Corporation in a bid to expand its presence in the pharmacy benefits management (PBM) market in the U.S. The deal, valued at $12.8 billion, is about 27% higher than Catamaran’s closing price on March 27. [1] In our article, UnitedHealth Expands PBM Footprint With Catamaran Acquisition, we discussed the nuances of the deal and its impact on UnitedHealth. Catamaran will combine with UnitedHealth’s OptumRx business, making the joint entity the third largest player in the PBM market. However, in a more recent development, an investor in Catamaran, Barry Hintze, has filed a class-action lawsuit against Catamaran for failing to get a higher price for the sale as opposed to the current offer of $61.50 per share. [2] Mr. Hinze’s argument is that Catamaran is a fast growing company and has strong growth potential, supported by solid financials over the past few years.
UnitedHealth’s stock ended Thursday’s trading at $118, gaining about 1% during the week. We have a price estimate of $105 for UNH’s stock, valuing the company at over $100 billion. Our forecast for the company’s EPS for the year 2015 is $6.35, compared to consensus EPS of $6.20. The company is scheduled to report its first quarter earnings on Thursday, April 16.
See Full Analysis For UnitedHealth Group Here
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Hartford’s Digital Push
During the week, Hartford launched a mobile application called ‘My Benefits’ for its customers in the group disability insurance segment to better manage claims. [3] The application enables consumers to update personal data, start a claim and monitor its progress. Part of the company’s efforts to incorporate digital services, this recent application follows in the footsteps of Your VoiceSM service that the company launched last year. Hartford’s group life insurance division accounts for nearly 20% of the company’s total revenues.
Hartford’s stock made gains of less that 1% during the week, ending Thursday’s trading at $42. We have a price estimate of $40 for Hartford’s stock, valuing the company at just under $17 billion.
See Full Analysis for Hartford here
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New Appointments At Prudential
Prudential made some key appointments to increase its focus on emerging and new markets. The company appointed Chuck Anderson to the role of senior vice president, Business Development; wherein he will be responsible to identify and implement opportunities in new markets to enhance life insurance products as well as expand distribution channels. [4] In another appointment, Randy Zipse has been appointed as vice president of the Advanced Markets team to lead the company’s strategy for creating innovative solutions, and delivering training and thought leadership on life insurance products to sales professionals and clients.
Prudential’s stock remained stable through the week, rising less than 1% during the week. We have a price estimate of $86 for the company’s stock, compared to Thursday’s closing price of $81.
See our full analysis of Prudential here
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Notes:- Catamaran and OptumRx to Combine, UnitedHealth Press Release [↩]
- Catamaran Faces Suit Over $12.8 Billion UnitedHealth Deal, Bloomberg [↩]
- The Hartford’s New Mobile App Allows Consumers To Manage Disability Claims Anytime, Anywhere , Hartford Press Release [↩]
- Prudential Individual Life Insurance appoints key executives to enhance distribution and advanced marketing capabilities, Prudential Press Release [↩]