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Citizens vs. Humana: Which Life Insurance Stock is a Better Buy?

Even though the COVID-19 spurt led to increased life insurance payouts, high consumer demand continues to drive record life insurance sales. So, life insurance companies Humana (HUM) and Citizens (CIA) should benefit. But which of these two stocks is a better buy now? Read more to find out.

Humana Inc. (HUM) operates as a health and well-being company in the United States. It operates through Retail; Group and Specialty; and Healthcare Services segments. On the other hand, Citizens, Inc. (CIA) provides life insurance products in the United States and internationally. It operates in two segments, Life Insurance and Home Service Insurance.

The COVID-19 pandemic led to a rise in death benefits paid by U.S. life insurance companies last year, and they still have been processing claims at a record rate. According to OneAmerica’s CEO, Scott Davison, the death rate is up 40% from pre-pandemic levels among working-age people. However, the insurance industry dealt with this by passing higher costs onto their customers through premium increases. Moreover, the life insurance sector witnessed record sales growth due to the COVID-fueled buying and is expected to remain in the spotlight with the continued spread of omicron. According to LIMRA’s U.S. Retail Life Insurance Sales Survey, total life insurance annualized premium grew 18% in the third quarter, representing the third consecutive quarter of double-digit growth. Therefore, both HUM and CIA should benefit.

HUM has gained 4.8% over the past six months, while CIA has returned 0.4%. Also, HUM’s 10.5% gains over the past month compare to CIA’s negative returns. Moreover, HUM is the clear winner with 19.2% gains versus CIA’s negative returns in terms of the past three months’ performance.

But which of these two stocks is a better buy now? Let’s find out.

Management Comments

On November 3, 2021, Bruce D. Broussard, HUM’s President and CEO, said, “Looking ahead to 2022, we’re taking a steady and balanced approach to ensure we can maintain years-long stability of benefits for our customers, while also continuing to navigate pandemic uncertainties and the return to industry norms.".

On November 4, 2021, Gerald W. Shields, CIA’s Vice-Chairman of the Board and interim CEO, said, “Premium revenue was negatively affected by Hurricane Ida, and expenses were negatively affected by higher death claims due to the COVID-19 Delta variant. Our growth strategy remains focused on the introduction of new products and processes--all core to our value proposition."

Recent Financial Results

HUM’s adjusted revenue increased 10.9% year-over-year to $20.87 billion for the fiscal third quarter ended September 30, 2021. The company’s adjusted pre-tax income grew 45.8% year-over-year to $802 million. Also, its adjusted EPS came in at $4.83, up 56.8% year-over-year.

CIA’s revenues increased 3% year-over-year to $61.58 million for the fiscal third quarter ended September 30, 2021. The company’s net loss declined 64.6% year-over-year to $2.79 million. Also, its loss per share came in at $0.06, down 62.5% year-over-year.

Past Financial Performance

HUM’s EBITDA and total assets grew at CAGRs of 5.8% and 18.1%, respectively, over the past three years. On the other hand, CIA’s EBITDA and total assets grew at CAGRs of 52.1% and 4.6%, respectively, over the past three years.


HUM’s trailing-12-month revenue of $82.20 billion is significantly higher than CIA’s $245.59 million. HUM is also more profitable with an EBITDA margin and net income margin of 5.11% and 3.25% compared to CIA’s 3.82% and 0.08%, respectively.

Furthermore, HUM’s ROE, ROA, and ROTC of 16.68%, 5.77%, and 9.21% are higher than CIA’s 0.07%, 0.26%, and 1.69%, respectively.


In terms of trailing-12-month P/S, CIA is currently trading at 1.08x, 47.9% higher than HUM’s 0.73x. Moreover, CIA’s forward EV/S ratio of 0.95x is 14.5% higher than HUM’s 0.83x.

So, HUM is relatively affordable here.

POWR Ratings

HUM has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. On the other hand, CIA has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

HUM has a B grade for Value, consistent with its trailing-12-month EV/EBIT of 17.53x, 28% lower than the industry average of 24.34x. However, CIA has a C grade for Value, in sync with its forward EV/EBIT of 30.13x, 134.4% higher than the industry average of 12.86x.

Of the 30 stocks in the Insurance - Life industry, HUM is ranked #1. In comparison, CIA is ranked #18.

Beyond what I’ve stated above, we have also rated the stocks for Sentiment, Momentum, Growth, Stability, and Quality. Click here to view all the HUM ratings. Also, get all the CIA ratings here.

The Winner

As the demand for life insurance is expected to grow, both HUM and CIA are expected to benefit. However, it is better to bet on HUM now because of its lower valuation, higher profitability, and better financials.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Insurance - Life industry here.


HUM shares were trading at $459.99 per share on Tuesday afternoon, down $5.46 (-1.17%). Year-to-date, HUM has declined -0.83%, versus a 0.57% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.


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