Large health insurers fared better than most insurance stocks during the week ending April 6 as regulatory overhang persisted and the industry approached earnings season.
The SNL Insurance Index held mostly steady for the week with a 0.13% gain to 885.69, while the S&P 500 fell slightly with a 0.22% drop to 2,357.49.
Cigna Corp., Humana Inc., Molina Healthcare Inc. and Aetna Inc. posted modest gains for the week as reports emanated from Washington that the administration of President Donald Trump had revived its attempt to replace the Affordable Care Act, often referred to as Obamacare.
Analyst reports during the week highlighted divergent approaches that two of the larger managed care companies in the insurance index have taken amid the regulatory uncertainty.
Credit Suisse analyst Scott Fidel reported Centene Corp.'s relatively sunny outlook for business under the ACA, including within the troubled public exchanges, in which Centene expects to do business and remain profitable.
"[Centene] remains positive on its future business prospects and is taking a 'business as usual' approach to the public exchanges and to health policy uncertainty in Washington," Fidel wrote in an April 4 research note to clients following a meeting with executives.
The company's attitude persisted despite a higher relative policy risk facing its core Medicaid and exchange markets, Fidel said. He raised his target price for the company to $77 from $70 with what appears to be a delay in the collapse of the ACA marketplace and maintained his "neutral" call on the company's shares.
Centene's shares declined nearly 2% April 4 but recovered the next day, finishing the week up 0.31% at $71.48.
Jefferies analyst David Windley said after meeting with Anthem Inc. executives that the company was planning a large-scale exit of ACA marketplaces in the absence of significant changes to the law. In a March 31 note, Windley kept his "hold" rating on Anthem's stock while increasing his target price to $177. The company's shares climbed slightly following the report, then lost the gains in the following days. For the week, Anthem shares edged up 0.33% to $165.92.
Investors gave AmTrust Financial Services Inc.'s shares a temporary bounce after the company April 4 released its 2016 annual financial statement along with earnings revisions for that year and the two previous fiscal years. The company said the revisions mostly involved the timing of recognized service and fee revenues. Amtrust Financial's shares declined overall during the next two market days, though it managed to post a weekly gain of 4.28% to $19.25.
During the week's last day of trading, a powerful storm system moved from the Southeast into the Mid-Atlantic, causing extensive property damage, State Farm Mutual Auto Insurance Co. spokesman Justin Tomczak said.
"It's been mostly straight-line wind and some hail," Tomczak said in an interview, saying the company's claims have concentrated in Alabama, Georgia and Kentucky. Most of the hail was small, but the company has fielded claims from larger hail, he said.
State Farm was still tallying the calls and the damage claims, but the storm was part of a noisy start to the second quarter following a first quarter that began in a relatively subdued manner, Sandler O'Neill analyst Paul Newsome said in an April 4 note. With earnings reports nearing for the first quarter, Newsome was optimistic, with catastrophe losses expected to be close to average. Allstate Corp. in particular has made good progress in auto claim frequency and has an attractive valuation, Newsome wrote. He fixed his first-quarter EPS estimate for the company at $1.82 versus a consensus estimate of $1.67.
Allstate finished the week nearly flat with a 0.06% decline to $81.44.