财险与经纪人：管理团队的主要问题

1、P&C Insurance/Brokers: Questions for & Key Commentary fromManagement TeamsFebruary 24, 2020 Equity Research United StatesResearch AnalystMike ZaremskiSenior Analyst, Equity Research Property & Casualty Insurance Credit Suisse Securities11 Madison Avenue, New York, NY 10010+1 212 325 5061 HYPERLINK m

2、ailto:michael.zaremski michael.zaremskiResearch AnalystCharlie LedererEquity Research Associate Property & Casualty Insurance Credit Suisse Securities11 Madison Avenue, New York, NY 10010+1 212 538 1822 HYPERLINK mailto:charles.lederer charles.ledererDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CO

3、NTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITYDISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of inter

4、est that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Slide 2Recent P&C Research ReportsWLTW: Wholesale Broking Arm In FocusPGR: January Preview Make Sure You Are Aware Of Calendar DynamicsTRV: 10-K Ti

5、dbits Reserves Inching Right Way in GL & CML AutoInsurance Brokers: Follow the FCFs WLTW Not So CheapP&C Insurance: Coronavirus - Direct Impact to US P&C Industry Limited P&C Insurance: No End In Sight To Comml P&C Price IncreasesUnderstanding Why PGR Is Winning While Competitors Are Losing CML Auto

6、 Follow UpSocial Inflation Getting Personal Not Only Impacting Comml Lines P&C Insurance/Brokers: 2020 Industry PreviewALL: How Many Direct-to-Consumer Clients Does Allstate Really Have? WLTW: What Investors Need To Know About TRANZACTP&C Insurance: Cyber Insurance & Consulting Already Moving The EP

7、S Needle Slide 3Coverage Universe Comp TableCredit Suisse P&C Insurance Coverage UniverseAs of21-Feb-20CurrentTarget ImpliedMkt CapEPS RevisionsPrice PerformanceConsensus EPSCS EPSCS EPS vs. Consensus (%)P/EPrice/BookDiv. YieldRATINGTicker*PricePriceReturn($b)NeutralACGL$47.12$37.00-21%$19.4Neutral*

8、AIG$48.60$51.005%$43.3 Underperform ALL$123.62 $102.00-17%$39.4 Outperform CB$163.75 $165.00 1%$73.9 Outperform CINF$111.32 $110.00-1%$18.3 NeutralHIG$58.05$57.00-2%$20.9 Outperform PGR$81.46$85.00 4%$47.3 NeutralRE$289.85 $259.00-11%$11.7Underperform SIGI$66.18$65.00-2%$3.9NeutralTRV$135.16 $126.00

9、-7%$34.2Outperform WRB$78.65$76.00-3%$14.3YTDQTDYTDQTD3%3%10%10%0%0%-5%-5%2%2%10%10%-3%-3%5%5%4%4%6%6%3%3%-4%-4%1%1%13%13%-6%-6%5%5%5%5%2%2%1%1%-1%-1%-5%-5%14%14%2020E2021E$2.94$3.16$4.62$5.28$10.41$11.06$11.06$11.76$3.91$4.03$5.44$5.84$5.28$5.69$23.94$25.39$4.25$4.42$10.32$11.26$3.11$3.322020E2021E

10、$2.81$2.90$5.02$5.57$10.30$11.14$11.31$12.12$4.03$4.06$5.36$5.89$5.18$5.72$24.20$24.77$4.08$4.18$10.04$10.77$3.14$3.332020E2021E-4%-8%9%5%-1%1%2%3%3%1%-2%1%-2%1%1%-2%-4%-5%-3%-4%1%0%2020E2021E16.8x16.2x9.7x8.7x12.0 x11.1x14.5x13.5x27.6x27.4x10.8x9.9x15.7x14.2x12.0 x11.7x16.2x15.8x13.5x12.5x25.0 x23.

11、6xCurrent1.8x0.6x1.7x1.3x1.8x1.3x3.5x1.3x1.8x1.3x2.4x2020E0.0%2.6%1.7%1.9%2.5%2.4%2.7%2.1%1.4%2.5%1.9%Median-2%5%5%Weighted Avg.-3%5%5%Average-5%5%5%0%-1%14.5x13.5x14.7x13.7x15.8x15.0 x1.7x2.1%1.7x2.1%Shading denotes the companys Operating EPS reporting methodology1.7x2.0%21-Feb-20 Current TargetMkt

12、 CapConsensusOper. EPSCS Oper EPS ex-AmortCS Oper. EPS Incl. Deal AmortPrice/Earnings ex-AmortPrice/Earnings incl. AmortEV/EBITDAFCFYieldRATING TickerPricePrice($b)2020E2021E2020E2021E2020E2021E2020E2021E2020E2021E2020E2021E2020E2021ENeutral AON$231.51$220.00$54.3$10.41$11.68$10.58$11.77$9.67$10.922

13、1.9x19.7x23.9x21.2x17.4x16.0 x4.1%4.5%Outperform AJG$107.83$115.00$20.4$4.15$4.67$5.62$6.29$4.05$4.6019.2x17.2x26.6x23.4x15.3x13.4x5.5%6.3%Neutral BRO$48.36$42.00$13.7$1.54$1.68$1.88$2.06$1.74$1.8825.8x23.5x27.8x25.8x19.5x18.0 x5.0%5.3%Neutral MMC$116.35$110.00$59.0$5.06$5.64$5.54$6.06$5.08$5.6021.0

14、 x19.2x22.9x20.8x15.8x14.7x4.2%4.7%Neutral WLTW$208.44$216.00$27.0$12.05$13.17$12.05$12.86$9.07$10.2417.3x16.2x23.0 x20.3x13.1x12.5x3.8%4.7%Median21.0 x19.2x23.9x21.2x15.8x14.7x4.2%4.7%Weighted Avg.20.9x19.0 x24.1x21.5x16.1x14.9x4.3%4.9%Average21.0 x19.1x24.8x22.3x16.2x14.9x4.5%5.1% *-AIG covered by

15、 Andrew Kligerman.Source: Factset, Credit Suisse estimates.Slide 4Industry QuestionsBroader Industry QuestionsHard Market Dynamics: Given commercial P&C pricing continues to move north, will corporate clients consider buying less insurance as a tool to shield them from higher costs? If yes, how will

16、 this impact the income statement for brokers and carriers? For example, Chubb cited on its 4Q19 EPS call that exposure within its North American P&C book declined slightly this may have been impacted by employers buying behaviors given Chubbs book is biased towards larger employers.Social inflation

17、: Are certain carriers being disproportionally impacted and/or targeted?More on Social inflation: Multiple insurers have said that attorney representation rates have climbed over the past five years. Any color on whether this trend is secular, including what factors are driving it?Investment Yields

18、Impact on Pricing: New money rates are up to 100bps below existing fixed income investment portfolio yields. Barring an uplift in rates, is this dynamic alone enough to keep commercial P&C pricing buoyed in 2020?Broker Bargaining Power: As the commercial P&C brokerage industry consolidates, are brok

19、ers asking for incrementally more revenues from their underwriting partners?Allstate (ALL) Management QuestionsAllstate Neutral TP: $102Investment Portfolio Duration: The P&C portfolios fixed income duration has been extending to 5.2 years from 3.3years a few years ago. Is the current duration at th

20、e high end of ALL risk tolerance given ALLs P&C liability duration is 60% of expenses). Discuss whether wage inflation is biased upwards and what tools MMC is using (if any) to bend the trendline.Marsh & McLennan (MMC) Recent Management Commentary ExcerptsJLT Update: And so in the deal of this size,

21、 theres always a number of puts and takes. And as you mentioned, we think the cost savings are higher. We think the amortization is lower.But we also needed to divest some businesses, principally aerospace, but also some minority interest in other businesses like CRP here in the U.S., which we did n

22、ot anticipate goinginto the transaction. And so - and we also have some revenue headwinds that we had described before, whether that was from new business pipeline issues or some staff inspections.Those are things that were grappling with. So you put it all together, and the deal is tracking in line

23、 with our original expectations. And our original expectations, Ill just remind everybody,were really good. That was going to be a good, solid financial transaction, which was also very strategic in nature for Marsh & McLennan as a company. And when we talk about thingslike accretion and dilution, i

24、ts always a level of how were growing. So its - we expect 2020 to be a strong year in adjusted EPS growth. And thats what breakeven means to us.More on JLT expense saves: .general sense is that the majority of it will fall right to the bottom line. And thats how we projected when we originally put t

25、hings together that obviouslyearnings will go up. So some of it will go into bonus pools and that sort of thing. But a lot of the efficiency gains that we have developed is because of the investments that Marsh &McLennan made over a number of years. When you think about things like financial systems

26、, were Oracle 12, everywhere in the world; HR systems, were Workday, everywhere in theworld. We use Salesforce extensively throughout the world. And so were able to take an organization like JLT and integrate our systems and controls and functions reasonablyseamlessly without adding to a lot of our

27、existing cost base in order to do that, and that gives us a lot of benefit and really should not impact the frontline client-facing people all that much.And so - and thats one of the reasons why most of it will drop.Margin Trajectory: We focus very much on earnings growth and top line growth much mo

28、re than we do on margin. And we certainly dont really pay much attention to any one singlequarter. We were satisfied for the year with 110 bps. And the fourth quarter was pretty consistent to the year. Theres always a lot going on in all of our businesses. And so its not that welook at one versus th

29、e other as in any way coming up short of what our expectations were. I mean when I look at margins in general for the company, 2019 is going to be our 12thconsecutive year of margin expansion. And really significant levels of margin expansion. You go back a decade, and were up by 1,300 bps. You go b

30、ack 5 years, were up 450 bps plus inboth segments and as a company. And so - but just to go back, I wouldnt look at any 1 quarter as being indicative, you need to look at longer periods of time, and margin expansion forus is an outcome of how we run the business, which is revenue growth almost alway

31、s exceed expense growth, and that will give us margin expansion over time. And the only areas thatMarsh &McLennan Rating:we were really driving for some margin this year was in RIS, in parts of the portfolio, particularly, in Guy Carpenter that we felt we needed to adjust JLT to just more similar ma

32、rgin levels than what we had normally been operating within as Marsh & McLennan.P&C Pricing Environment: I think youve got many insurance companies who are dissatisfied with the results they have achieved financially over the last several years. And so there wasa factor impacting many companies at t

33、he same time. And theyve got a little blood in the eye, and they are looking to get back to a better position. You also have the thoughts aroundNeutralTP: $110social inflation and how real that is and how its impacting their prior books as it rolls forward, you have pressures on the reinsurance side

34、. And Ill go to John and Peter in a minute to give a little bit more. But there is pressure on the reinsurance side, which may build throughout the year, which will put some pressure on primary carriers. And so ultimately, its a matter ofwhats the loss activity and the premium levels will, over time

35、, reflect whether its in a benign environment or whether its a harsh one. I mean certainly when I think about this year, I look atthe level of catastrophe potential. And if its a tough cat year, really, were in for quite a ride. If its a benign year in the southeast, particularly, well, maybe some o

36、f the window is out of thecell. But I also think a lot has to do with how casualty develops.More on pricing environment: property is up 13% globally; financial lines, up 17%, meaningful increases there; casualty, up 3%, where we see a real mix where comp continues to bedown. Excess liability, though

37、, particularly in certain classes of business are quite stressed at the moment. And public D&O, particularly, in the United States and Australia are a coupleof classes that are most challenging. I would note, Dan talked about this, again, but our index skews the large accounts. The middle market is

38、flat to low single digits in many markets -in most markets around the world. But were continuing to hear from underwriters. Theyre concerned about rising loss cost, as Dan noted, social inflation or the impact of litigation fundingon the claim environment. Were also observing and working with our cl

39、ients through some challenging verdicts and large settlements in pharma, in chemicals and commercial auto and inD&O. So theres no question theres some stress in the loss environment. And its difficult to predict where markets will head, but there are some storms on the horizon.Capital deployment: We

40、 have acquisitions that are a core part of our long-term strategy. Weve done something like 175- plus acquisitions since January 1, 2009. We tend to be abalanced company. When we look about - we put our dividend first. Its sacrosanct. We want to grow it double-digit every year, and thats going to be

41、 for the sake of argument, look at anumber of circa $1 billion for that, which should leave in most years, 2021 and beyond, roughly a couple of billion dollars to deploy between acquisitions and share repurchase. And asweve said in the past, we favor acquisitions over share repurchase, the very reas

42、on were building a great company. And our focus - and as weve shown over time, weve been able to dothat. You look at Marsh & McLennan Agency in 2009, 0 revenue and no position. And now weve got a terrific platform, $1.7 billion, growing well, good EBITDA margins, et cetera. Were ina business that we

43、 otherwise would not have been in. Thats whats called building a company, and were committed to continuing to do that. And we have all kinds of opportunities acrossthe enterprise, not just in Marsh, but across the firm in order to acquire our way to be a better, stronger, more formidable company in

44、the future. And so when we look at that $2 billion,and our debt-to-EBITDA at that level will probably be in the low 2s. And so we would have the ability to flex if we needed to, but theres certainly nothing that were pining for in terms of alarger or mega acquisition. Well see how the strategy devel

45、ops over time. But certainly, having circa $3 billion to deploy year after year after year is going to make us one of the greatcompanies of the world.Everest Re (RE) Management QuestionsEverest Re Rating: Neutral TP: $259To learn more about Everest Res new CEO, please see the link below: RE: Incomin

46、g CEOs New Set Of Eyes On Loss- Reserving Trends May Lead To EPS HeadwindsPrimary Insurance: The primary insurance segment has grown from close to nothing a decade ago to a fairly large multi-billion dollar insurer. What are the primary insurance segments near-term and long-term profitability target

47、s (note, the all-in combined ratio has been around 95% in recent years)?Does REs lower expense ratio vs. peers enable it to grow its top line because it can be more competitive on pricing?RE recently added new disclosure breaking out investment income between the reinsurance and primary insurance se

48、gments whats the implied RoE of each respective segment? Based on a 96% 9mos 2019 combined ratio for the primary insurance segment, plus net investment income, it would appear the RoE is low double digits is that fair?Mortgage Insurance: Everest Re has highlighted that its pleased with its $200m+ an

49、nual mortgage insurance portfolio. Would Everest consider becoming a player in primary mortgage insurance via M&A?Impact of Alternative Reinsurance: If the retro and CAT bond markets remain constrained, will Everest Re dial down its premium growth appetite?Will recently appointed CEO Juan Andrade la

50、yout a revised strategic plan sometime in 2020? If yes, will any of these details be outlined within the upcoming proxy materials?Everest has been in the camp saying casualty loss-inflation levels havent materially moved higher. Is that correct or maybe RE is setting loss-picks that assume higher ra

51、tes of expense inflation?Reinsurance pricing: What kept pricing subdued during 1/1/20 renewals when pricing was flattish? Is broader European reinsurance risk adequately priced? Outlook for April and mid-year 2020 renewals?Reinsurance: What parts of the Reinsurance portfolio need the most rate and m

52、ay be underpriced today?Source: Credit Suisse ResearchSlide 23Everest Re (RE) Recent Management Commentary ExcerptsEverest Re Rating: Neutral TP: $2592020 Outlook: Heading into 2020, we remain very well positioned. In our Reinsurance division, we were pleased with our January 1 renewals, which repre

53、sents about 50% of our annual reinsurance premium. Underwriting discipline remains paramount, and we were able to underwrite a stronger portfolio with greater balance, diversification, more expected margin and reduced volatility. In our Insurance division, the rate momentum continues to build up mea

54、ningfully in virtually every class of business. Our Insurance division is hitting full stride at an ideal time given the market tailwinds. We have the right culture, platform and relevance with our clients and trading partners. We also have the underwriters and systems necessary to capitalize on the

55、 current market, with the infrastructure in place to ensure underwriting discipline and appropriate risk selection.Rate Environment: As we look to the rate environment, we see accelerating rate improvement across most of the market. In the quarter, we experienced pure rate increases, which excludes

56、the impact of exposure, of 12% excluding workers compensation and 7.9% year-to-date on the same basis. This is the largest increasing in many years and continues to be led by double-digit rate increases within our property portfolio. Financial lines and umbrella excess are also showing significant i

57、mprovement, registering double-digit rate increases as well. And in the case of excess casualty, rate increases are in the high teens.Encouragingly, we also see primary general liability rates moving up in the fourth quarter as well to the mid-single digit range. Every major line of business weunder

58、write showed improvement in rate change momentum in the fourth quarter.Loss Trend vs. Pricing: .every line of business has a bit of a different dynamic. We obviously have a process for tracking or viewing rate and trend assumptions across all of our lines of business. But I would tell you that we fe

59、el quite confident that the written rate is exceeding trend in virtually every area. It will take a little bit of time for that to earn through. And this is a comment a bit ex work comp, of course. But even in that case, were still seeing negative frequency trends. So were watching all of this. The

60、uptick, as I mentioned, of 12% in the quarter ex-comp, thats up from 7.5% in the third quarter, 6.5% in the second quarter, so you get the feel. So we feel really good about the rate environment. We like where were heading, and we do believe on a written basis, we are exceeding trend in almost every