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Health insurance stocks are performing well with some recovery in the economy worldwide. While the sector's performance relies largely upon macroeconomic and regulatory factors, companies are making diligent efforts to improve their businesses and expand margins.

With evident signs of economic recovery, it's time to revisit the sector and analyze some of the popular tickers.

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*As of 5/15/2013

Source: Yahoo! Finance

Assurant Inc (NYSE:AIZ) is a leading provider of specialty insurance. The company reported its first-quarter 2013 earnings of $1.35 per share, which declined 23% year-over-year. These results were primarily affected by the $14 million settlement with the New York Department of Financial Services. Earnings also felt a negative impact due to catastrophe losses at Assurant Specialty Property. However, the total revenue for the company came in at $2.15 billion, an increase of around 3.7% year-over-year.

According to the management, the outlook for 2013 is mixed. The company's Specialty line is expected to grow because of the increase in multi-housing loans. The Solutions business is also expected to benefit from top-line growth by enhancing domestic as well as international businesses. The health segment, however, is expected to post lower earnings due to healthcare reforms and lower investment income from real estate joint venture partnerships.

Assurant was included in Goldman Sachs list of 2013's "Best Income Stocks." According to Sachs, Assurant can provide some easy earnings to investors through the "social contract," which implies a mix of increase in earnings due to expected share buybacks and dividend yields.

The PEG ratio of the company is 0.89 and PB is at 0.74, which reflects that the stock is undervalued. The EPS of the company is expected to surge by 11.6% in 2013, from $5.00 to $5.58. The earning potentials are great as the company beat analyst estimates four times in 2012. It is estimated that company will provide a good investment opportunity for long-term investors.

Unum Group (NYSE:UNM) is a dominant player in providing financial protection benefits in both the United States and the United Kingdom. Unum's first-quarter earnings were a good sign for fiscal 2013. The company posted a net income of $212.6 million, compared with $213.9 million in 1Q2012. The net operating income came in at $215.6 million in 1Q2013 compared with $213.2 million in 1Q2012.

The company has extracted benefits from its disciplined approach toward its businesses. The risk results were impressive, ensuring strong levels of profitability. Both the balance sheet and the capital position of the company are solid, which will induce confidence among shareholders.

Unum is, however, projecting a cautious outlook for fiscal 2013, mainly fearing macro factors. The company is estimating that there can be a correction in the near-term due to employment growth, interest rates and general business confidence. The company is also facing intense competition in some segments.

Unum has asked for the approval to increase the LTCI rates by about 25% in around 60%of its markets. At present, there are no such hurdles in getting the approval and the effect of the increased rate will be reflected in the financial reports toward the end of fiscal 2013 or in the beginning of 2014, which is again a good sign for investors.

The stock is trading at 8.23x forward earnings estimates for the next four quarters. This number is less than its trailing P/E and S&P 500 index's forward P/E of 15.20, presenting a good opportunity for patient investors.

AFLAC Incorporated (NYSE:AFL) has reflected strong growth in sales in the past, but there has been a deviation from this trend in the most recent quarter. The company posted less revenue quarter-over-quarter. The operating earnings for first-quarter of 2013 came in at $1.69 per share, compared with earnings of $1.74 per share in the previous year's period. The operating earnings declined 2.9% year-over-year to $790 million. The total revenue for the company declined 0.5% year-over-year to $6.21 billion.

Aflac Inc. is putting its efforts into expanding into the global market, primarily in Japan. The Japanese insurance market contributes more than 80% of the company's total revenue. Aflac has a dominant position in the Japanese cancer and medical insurance market.

The stock declined more than 75% during the recession but maintained its dividend payment and dividend growth at 30%. The company is a dividend aristocrat by increasing the annual dividend consistently for past 30 years. The stock is trading at the PE of 8.1, which is below the industrial average of 12.60. The stock has rebounded but is still down compared with its high of the pre-recession period, which makes it a good investment.

Conclusion

Each of the three stocks above is good for investors from a long-term point of view. However, of those three, Unum looks the best, despite the company's cautious outlook. The macro factors considered by management will affect the entire industry. Moreover, earnings will be boosted by LTCI approval. Assurant and Aflac are also performing strongly and should stay on investors' watch lists.

Disclaimer: Black Coral Research, Inc. is not a registered investment advisor or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. Investing involves risk, including the loss of principal. Readers are solely responsible for their own investment decisions.

Source: Comparison Of 3 S&P 500 Dividend-Paying Accident And Health Insurance Providers