Another little-mentioned benefit of Obamacare: It has reduced medical bankruptcies

Personal bankruptcy filings fell from more than 1.5 million in 2010 to 770,846 last year. The publication acknowledges that several factors have contributed to the decline, particularly 2005 changes in bankruptcy law that made personal bankruptcy harder and more costly to file and the general improvement in the economy since 2008. But its experts “almost all agreed that expanded health coverage played a major role in the marked, recent decline.”

LIVESTOCK HIGHLIGHTS: Top Stories of the Day

Wendys Forecasts Commodity Inflation This Year — Market Talk

10:36 ET – Wendys (WEN) expects commodity cost inflation of 1.5%-2% this year, ending what had been a deflationary environment in food costs last year. In 4Q, the company had predicted flat commodity cost for this year. The cost of raw ingredients is expected to pressure margins this year, the burger chain said. That doesnt mean the gap between restaurant and supermarket prices is going to narrow significantly. Grocery stores are still expected to remain competitive with one another on price, and labor costs are continuing to put pressure on restaurant prices. WEN said it expects labor inflation of 4% this year. But higher menu prices have driven diners away from restaurants. WEN told investors that consumers who are managing debt and higher healthcare expenses are still seeking restaurant deals and that restaurants are competing hard to attract guests. WEN gains 5.7% to $15.97. (julie.jargon@wsj.com)

Wendys Systemwide Sales Growth Slows — Market Talk

8:24 ET – Wendys (WEN) reports slower sales growth from restaurants in North America open for at least 15 months and systemwide during 1Q. Global systemwide sales, which includes sales from both company-operated stores and franchises, rise 3% in 1Q compared to 5.2% last year. However, CEO Todd Penegor says 1Q results are solid despite a tough prior-year comparison. WENs same-restaurant sales growth in North America is positive for 17th consecutive quarter. WENs 1Q profit and revenue top views and shares rise 3.7% premarket. (imani.moise@wsj.com; @moisenoise)

Whole Foods Tweaks Annual Outlook — Market Talk

Black Hawk School financial review finds former principal Kenya Walker, staff didn’t follow rules

A State Journal review of public documents shows Walker filed for a voluntary Chapter 13 personal bankruptcy on Feb. 27 in US Bankruptcy Court in the Northern District of Illinois in Chicago. Court records also show she was evicted from her Downtown Madison apartment in 2015, with the school district ordered by the court in May 2016 to garnish her wages for payment of $8,550 in rent and damages to Park Place Apartments, 212 N. Bassett St.

Updates on state and federal health care reform

The Division of Insurance announced(www.colorado.gov/pacific/dora/news/division-insurance-announces-deadline-health-insurance-companies) recently that the deadlines for filing, review, and approval is a little different from previous years. Because of the uncertainty at the federal level around the individual market, the 2018 filings are due June 19. They will be made public July 14, and finalization will come in late summer or early fall.

Nearly lost in all the attention focused on the vote in the US House, was encouraging news reported by Consumer Reports on the positive impact the Affordable Care Act has had on personal bankruptcies. The number of bankruptcies across the country has been cut in half after the law took effect, demonstrating the impact medical expenses have on personal budgets. The Colorado Health Access Survey supports those findings. That report noted that personal bankruptcy filings in Colorado numbered 104,000 in 2013 (before the Affordable Care Act took full effect) and dropped to 45,000 by 2015, when the law was fully adopted.

We continue to work with our representatives at the state and federal level to protect the health coverage of all Coloradans and find solutions to the challenge of increasing access, affordability and choice.

Linda Gann is the senior manager, Western Slope Region, for Connect for Health Colorado.

U.S. Insurance Stock Outlook – April 2017

Its well known to investors that insurers are among the major beneficiaries of a rising interest rate environment because of their dependence on bonds to invest the chunks of cash they typically hold to meet their commitments to policyholders. But the gradual improvement in the rate environment after almost a decade surprisingly failed to attract investors attention to insurance stocks.

While the Feds latest rate hike — along with the forecast of two more this year — should have ideally led to a strong rally in insurance stocks, the performance the SPDR Samp;P Insurance ETF (KIE) paints a different picture. This representative ETF of insurance stocks lost 3.3% since the Feds latest rate hike on Mar 15 versus the Samp;P 500s decline of 1.8%. Moreover, the Zacks classified Insurance Industry saw a 4.8% decline over this period.

Perhaps investors are waiting to see what sort of aggressive actions the central bank takes down the road. On the other hand, the market had priced in this modest increase in interest rates even before the Fed took the recent actions. And its quite predictable that there will be only a little impact of this monetary policy tightening on the Treasury yield curve that insurers depend on for their investment income.

Did Low Rates Hurt Insurance Stocks at All?

The low-rate era could not stop the industry from drawing investors attention, as evident from the SPDR Samp;P Insurance ETFs 104.3% gain and the Zacks classified Insurance Industrys surge of 77.4% in the past five years versus 70.2% growth of the Samp;P 500. What made this outperformance possible?

Many insurers have changed their asset allocation strategies in an effort to minimize the impact of low rates on their business. Moving beyond their traditional holdings, they have been investing in racier asset classes for increased returns.

In fact, this has now reduced their ability to reap the benefits of rising rates. Of course, pricing changes and the eventual improvement in yields on high-quality bonds based on rising rates will let them earn more, but their revenue model is now stable enough to counter a low rate environment.

Do Insurance Stocks Still Have Some Upside Left?

While the industry outperformed the broader market over the last five years, there is still a value-oriented path ahead. Looking at the industrys price-to-book ratio, which is the best multiple for valuing insurers because of their unpredictable financial results, investors might still want to pay more.

The Zacks classified Insurance Industry currently has a trailing 12 month P/B ratio of 2.49. This compares unfavorably with the average level of 2.13 seen by the industry in the last five years. In fact, the current number is near the high of 2.57 witnessed by the industry over this period.

However, it actually compares pretty favorably with the market at large, as the current P/B for the Samp;P 500 is at 3.52 and the median level is 3.08.

Overall, while the valuation from a P/B perspective looks stretched when compared with its own range in the time period, its lower-than-market positioning calls for some more upside in the quarters ahead.

But the groups Zacks Industry Rank indicates that any upside is hard to come. Per Zacks classification, the industry is sub-divided into five industries at the expanded (aka X) level: Pamp;C, Multiline, Accident amp; Health, Life and Brokers.

The Zacks Industry Rank is #49 (top 19% of the 250 plus Zacks classified industries) for Life, #61 (top 24%) for Multiline, #167 (bottom 35%) for Pamp;C, #185 (bottom 28%) for Accident amp; Health and #236 (bottom 8%) for Brokers. Our back-testing shows that the top 50% of the Zacks ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The Rate-Hike Benefit Varies Across Industry Segments

Being structurally tied to interest rates, the monetary policy tightening will bring some benefits for the industry sooner or later. But the extent of benefits will vary across industry segments. Moreover, the relationship of profit with the interest rate is not direct.

Property amp; Casualty (Pamp;C) insurance, which is not too sensitive to the interest rate environment, holds a significant amount of bonds, which would fall in value with interest rates rising steadily (which is very unlikely, though). This will lead to capital volatility in the industry.

However, a rising rate environment would keep alleviating the pressure on Pamp;C insurers investment income, and thus their earnings. Moreover, a higher rate environment would make the pricing environment more competitive, further supporting carriers to grow.

Life insurers depend heavily on investment income, so they will benefit more from a rising rate environment. There will be relief from operating pressures resulting from tight credit spreads that the low-rate environment has exerted for so long. However, the benefit is expected to be modest as life insurers have significantly reduced their interest-sensitive product lines in the low-rate era.

No matter how the changing interest rate environment impacts insurers, normal catastrophe losses and continued influx of capital are expected to keep most lines of Pamp;C insurance favorable for buyers. On the other hand, containment of underwriting expenses and a modest increase in premiums are shoring up the prospects of life insurers.

With glaring dissimilarity in business dynamics, it makes better sense to look at the prospects of these two key segments of the US insurance space separately (read our subsequent posts for a detailed insight) .

Factors to Influence the Industrys Performance

Domestic economic progress and a likely boost in infrastructure spending under Trumps administration make the backdrop stronger for the countrys insurers. After all, an improving job market and consumer sentiment, along with a resurgent housing market, will lead to more car and home purchase, which means more insurable exposure.

Moreover, a strengthening US dollar will not have much impact on the industry, as it drives the majority of revenues from the domestic economy.

Evolving insurable risks (such as cyber threats, endemic diseases, etc.) should increase demand for coverage. In fact, this increase in demand from economically recuperating American households should eventually place insurers in a favorable pricing cycle.

Recovery in underwriting and a lower combined ratio for Pamp;C insurers are expected to continue if the trend of modest catastrophe losses prevails.

A strong liquidity profile by virtue of continued capital inflow into the industry, ample capacity, conservative product design and evolving coverage will not only limit any downside but will also keep the industrys growth trend alive.

However, a rising rate environment may result is momentum loss primarily for the housing market, leading to lower insurable exposure in this segment.

Further, increasing dependence on automation will gradually reduce the number of insurable workers across industries.

Bottom Line

Looking at the broader trends, the industry is unlikely to see significant growth until the Fed takes aggressive steps in raising interest rates. Moreover, the emergence of new issues might dampen insurers business. However, learning from past experience, insurers are capable enough of remaining profitable through structural modification and expense savings.

It may not be easy for insurers to please investors. While there are enough drivers for margin expansion, the inability to increase premium rates will keep on curbing profitability.

How to Play Insurance Stocks

As you can see, the interest rate environment may not significantly benefit insurers any time soon and there are other challenges too. However, taking advantage of the recent gloom, one may pick a few insurance stocks that are well positioned to capitalize on the industrys positive trends.

Here are a few top-ranked insurance stocks you may want to consider:

Health Insurance Innovations, Inc. (HIIQ): This Zacks Rank #1 (Strong Buy) stock gained over 170% in the last six months compared with about 8.9% gain for the Samp;P 500. Its Zacks Consensus Estimate for the current year revised 31.8% upward over the last 60 days.

Erie Indemnity Company (ERIE): This Zacks Rank #1 stock gained roughly 21% over the last six months. It has seen the Zacks Consensus Estimate for the current year earnings revising 6.1% upward over the last 60 days.

Legal amp; General Group Plc (LGGNY): The average annual earnings growth rate for this Zacks Rank #1 stock was 15.6% over the last 3-5 years. The price of this stock surged over 25% in the last six months.

Argo Group International Holdings, Ltd. (AGII): This Zacks Rank #1 stock gained nearly 16% over the last six months. Its Zacks Consensus Estimate for the current year revised 5% upward over the last 60 days.

Zacks 2017 IPO Watch List

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One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free gt;gt;

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Legal amp; General Group PLC (LGGNY): Free Stock Analysis Report

SPDR-KBW INSUR (KIE): ETF Research Reports

Health Insurance Innovations, Inc. (HIIQ): Free Stock Analysis Report

Erie Indemnity Company (ERIE): Free Stock Analysis Report

Argo Group International Holdings, Ltd. (AGII): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Harvard President’s Innovation Challenge creates answers to future needs

A new test that helps people confirm that they’ve taken a life-saving HIV drug, a nonprofit that helps people navigate personal bankruptcy, and a venture working to accelerate artificial intelligence were the big winners in Tuesday’s President’s Innovation Challenge awards ceremony at the Harvard Innovation Labs.

President Drew Faust awarded each of the three student ventures, UrSure, Upsolve, and Lightmatter, with $75,000 in prize money to help transform their innovative ideas into real, world-changing ventures.

“Your aspirations are so exciting because they are bold, they are risk-taking, and they are devoted to imagining the world as a better place — fairer, healthier, safer,” said Faust in her introduction. “It is so inspiring to see what you are trying to accomplish, for young children, for people who have found themselves in financial distress, for women who need health care, for a whole range of different problems that we’ve seen addressed in these proposals.

“I look forward to seeing in the future how all of you, winners and those of who aren’t winners today, continue to pursue their goals,” Faust added. “And I look forward to seeing these proposals turn into things I’m reading about in the news or seeing in stores or hearing about around the world.”

The President’s Innovation Challenge is open to any Harvard student from any School. This year, 440 student teams submitted declarations of interest, a record 200 teams entered business plans in the competition, and 15 finalists were selected in March. All 15 finalists gave elevator pitches for their companies at the ceremony.

Harvard Innovation Labs Managing Director Jodi Goldstein said she was proud that all 12Harvard Schools were represented among the applicants, reflecting the spirit of President Faust’s One Harvard initiative. “In fact, half of our finalist teams contain a mix of teammates from different Schools,” she said.

The winners split $310,000 in prizes in three categories: Health or Life Sciences; Social Impact or Cultural Enterprise; and a new Open Track. Three runners-up, which received $25,000 prizes, were Jane Diagnostics, a venture developing molecular diagnostic devices for point-of-care screening of HPV; C16, which uses synthetic biology to create environmentally conscious palm oil; and Aircrew, a maker of advanced air-purification systems.

Based on voting by the audience, an inaugural Crowd Favorite prize of $10,000 was awarded to one other team: Two Rabbits, a venture bringing culturally adapted curricula and teachingto schools at the margins of society.

UrSure’s CEO and founder Giffin Daughtridge, whose venture received The Bertarelli Foundation $75,000 grand prize, said, “This is an absolute game-changer for us.”

“We had enough funding to get through the next couple of months, but this will help us accelerate our timeline,” said Daughtridge, who is about to receive dual degrees in medicine from the University of Pennsylvania and a master’s in public policy from the Harvard Kennedy School of Government.

Upsolve CEO Rohan Pavuluri, whose team won the Social Impact or Cultural Enterprise grand prize, said, “The beauty of startups is that they are an outlet to make a change in the world. You can choose any problem you want and start working on it.

“We are so happy to win,” he added. “But now we have more work to do.”

The President’s Innovation Challenge underwent some significant changes in its sixth year, merging what previously had been two separate challenges: one in which the prizes were selected by Harvard’s deans in categories such as health and life sciences, cultural entrepreneurship, and sports, and a separate President’s Challenge that invited students to create early stage ventures to solve specific global problems. Additionally, a new Open Track was created this year, allowing for greater diversity of student ventures entering ideas that defy easy categorization.

“This is validation that we have a good idea and that we should keep going forward with our business,” said Open category winner Lightmatter’s Nicholas Harris. “It’s really raised our energy, and we are going to try to raise money this summer to make Lightmatter a real thing. This money is going to help make that happen.”

“By empowering these students as they go through the experience of building a venture, we are unlocking the personal potential that other types of endeavors tend not to,” Goldstein said, “That’s why this competition exists. Because people who otherwise wouldn’t have participated in the entrepreneurial process can build, learn, fail, and grow.

“It’s an important distinction,” she added. “This isn’t just a business plan competition. We aren’t just evaluating the business potential of these teams. It’s about the students and the realization of their potential for impact.”

Bankrupt by cancer

The issue: Cancer patients canface crippling financial hardship, forcing some into bankruptcy. Solutions: All provinces should cover the cost of expensive out-of-hospital cancer drugs; government benefit programs should better respond to cancer patients’ needs.

Monica Pope probably didn’t need to be told the breast cancer that doctors diagnosed in 2014 was aggressive: one day she suddenly saw the tumour pressing up from under her skin.

What followed was the full traumatic panoply of cancer treatment, including three surgeries, chemotherapy and radiation.

But that was not all. Complications from surgery mean Pope, 51, has been unable to work at her technical sales job the past 34 months and now must find a new occupation. Even when her workplace disability finally kicked in after 19 weeks, it paid the single woman $23,000 less than her annual salary.

Add in expenses like drugs and hospital parking, and last year Pope felt forced to take drastic action. In a country that prides itself on looking after the sick, no matter their ability to pay, she declared personal bankruptcy because of cancer.

“People will deal with different stresses, they will have financial stress or problems with health,” says the southern Ontario resident. “When you throw everything together all at once, there comes a point where you say ‘I just can’t do it any more.’ You need to be able to breathe.”

Ending up in bankruptcy because of disease sounds like a quintessentially American problem, and it is undoubtedly more common in the US

Yet interviews with patients, and a growing body of research confirm that having cancer in Canada is not just a life-threatening burden, but often a financial disaster, too.

Prolonged loss of income and cancer-related costs –from drugs to travel expenses –can combine to have a devastatingeffect on patients already in the health struggle of their lives.

About one in six bankruptcies that trustee Hoyes Michalos handles involve health problems, many cancer-related, said co-owner Doug Hoyes.

“It’s a huge issue,” says Gabriel Miller of the Canadian Cancer Society. “For middle-class Canadians and working-class Canadians, a cancer diagnosis is like standing on thin ice, and you only hope you can get back to work and cover your bills before you go under.”

To keep from sinking, some patients drain retirement savings, re-mortgage homes or end up on welfare.

Making the ordeal more challenging is a historic shift to people undergoing cancer drug treatment at home rather than in hospital. For more than half the country, that means patients themselves have to pay the often sky-high price of medications.

Patients and their advocates also complain that federal and provincial income replacement programs are woefully inadequate for people faced with months or years off work because of disease.

The system was designed in a different era, when being diagnosed with cancer inevitably meant a drastically curtailed life expectancy; now many patients can live long lives after treatment, often returning to work, notes Miller.

“Those (government) benefits just expire too soon for a lot of people,” he said.

The situation can be even more precarious for self-employed Canadians — people like Lawrence.

He was already feeling the pinch after being off work as a Toronto real estate agent because of a perforated ulcer. Then the 56-year-old was rocked by a stomach-cancer diagnosis in December 2015, leading to surgery that removed 60 per cent of his stomach and his gall bladder. “I was gutted,” he says.

So were his finances. Lawrence thought the disability insurance he had been paying into for decades would fill the gap, but the insurance company refused to honour his policy, pointing to an alleged pre-existing condition.

Earlier this year, he, too, filed for personal bankruptcy.

“It’s something I’m not proud of, something I never thought I’d do. I’ve always been a proud, stand-up individual,” says Lawrence, who asked that his last name not be published. “But I had no alternative … You’re not bringing in income, bills are mounting, (creditors) are not compassionate and understanding. They want their money.”

He and other Canadians do, of course, receive actual oncology treatment, mostly without charge. Beyond that, cancer patients are largely on their own.

Two of every five end up off work for at least six months, according to a 2012 survey by the Canadian Partnership Against Cancer.Even 60 per cent of their caregivers either have to cut work hours or quit outright, estimated a Lung Cancer Canada survey.

Overall, a 2010 McMaster University study estimated that Canadian patients’ families see incomes plummet 26 per cent – $3 billion in wages lost every year because someone got cancer.

Perhaps the most unfortunate among them are parents of sick children, who must be at the patient’s side throughout treatment, and lose an average of $26,000, according to another McMaster study.

They include Vancouver’s Patrick Sullivan. When his son, Finn, a twin, was diagnosed with a rare muscle cancer in early 2007, the 21-month-old was prescribed a special type of radiation treatment available only in the United States.

The BC government covered the cost of the therapy, but the family had to travel to Boston and stay there for two months on theirown dime. Tragically, the treatment failed to halt Finn’s malignancy, and he died several months later.

Patrick and his wife are both lawyers, and his partners paid him an advance during those months off work. Relatives also raised money to help with expenses.

Yet, at the end of the day, as they mourned the loss of a son, the couple still had to take out a second mortgage on their home to cover the bills.

“The reality is that everything catches up to you,” says Sullivan.