美国保险业AIFA预览：财险前景好于寿险VIP

1、COREUS InsuranceAIFA Preview: Prospects Better for P&C than Life; More M&A?WeanticipateamoreconstructivetonefromP&CinsurersthanLifeinsurersatthe upcomingAIFAInsuranceindustryconferenceonMarch4-5,2019basedonimproving P&Ctop-lineandmargintrends.Also,potentialP&Cindustryconsolidationisusuallya majortop

2、icatthisannualconference.Meanwhile,lifeinsurersfacechallengesincluding asub-3%yieldon10-yearUSTreasuries,aflatyieldcurve,andlingeringconcerns regardinglegacylong-termcareexposure.P&Cmarketconditionsarecurrentlystablealthoughonthecuspoftighteningtheby themostinfiveyears,inourview,followingrecord-leve

3、lglobalinsuredcatastrophe lossesin2017-18.AlthoughpropertycatastrophereinsurancerateswereflatinJanuary 19,thissituationmaytightenastheyearprogressesandwilllikelybeakeyfocusarea for investors. Separately, personal lines results remain strong with PGR gaining the mostmarketsharealthoughautoinsurancera

4、tegainsaremoderating.WeexpectACGLandALLtobethemostupbeatP&CcompaniesatAIFA.Meanwhile, weexpectinvestorstoremainskepticalthatAIGcansubstantiallyimproveitsP&CINDUSTRY UPDATEU.S. Insurance/Life NEUTRAL UnchangedU.S. Insurance/Non-LifeNEUTRALUnchangedU.S. Insurance/Life Jay Gelb, CFA+1 212 526 1561 HYPE

5、RLINK mailto:jay.gelb jay.gelb BCI,USSueLee+1 212 526 8190 HYPERLINK mailto:sue.lee sue.lee BCI, USAndrew Karp+1 212 526 9015EquityResearch1March2019underwritingresultsin1H2019;perhapsitsinvestormeetingscouldhelpshiftthisview.OurOW-ratedP&CstocksincludeBerkshireHathaway(favorablepositioningtohigher

6、short-termrates,andpotentialforaccretiveacquisitionsaswellassharebuybacks), Allstate and Progressive (strongearningstrendsinautoandhomeinsurance),Chubb (coreglobalP&Choldingwithsuperiorfranchisevalue),andArchCapital(tailwinds frommortgageinsuranceaswellastop-tierP&Cfranchise).LifeInsuranceearnings(a

7、swellasvaluations)areunlikelytorisemuchfurtherina challenged macro environment, although bellwether life insurer valuations remain compressedwithamedianP/Eof7x.AmongthelifeinsurersparticipatingintheAIFA conference,weexpectPRUandATHtobeamongthemostupbeat;weanticipatea focusonBHFbasedonthisweeksunexpe

8、cteddepartureofitsCFO.WeSeeValueinPRU,UNM,LNC.PRU hasdeliveredconsistentresultsinitsannuity, assetmanagement,andinternationalbusinesses,anditscurrentP/Eof7xlooks attractive.UNM shouldbenefitfromimprovingemploymenttrends;legacylong-term care exposure is a concern, but we believe this is already disco

9、unted in UNMs valuation.UNMcontinuestodeliverongoingsharebuybacksanddividendincreases, andiscurrentlyvaluedat7xearnings.LNC hasdeliveredsolidresultsinitsUS-focused annuityandlifeinsurancebusinessesalongwithaccretiveacquisitions.Thecompany hasarobustsharebuybackprogramandgroupinsuranceresultsarerecov

10、ering.LNCs currentvaluationof7xearningshasupsidepotential,inourview. HYPERLINK mailto:andrew.karp andrew.karp BCI, USal n rteal n rten I-d e tc itr sReCapitalInc.oneofdoesandseekstodoinitsresearchAsabeawarethatthe mayhaveaofthattheofconsiderthisasonlyafactorinmakingtheirPLEASE SEE ANALYST CERTIFICAT

11、ION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 27.Companies we plan to meet with during the AIFA ConferenceP&C: AIG, TRV, ALL, ACGL, HIG, RE, RNR, BROLife: PRU, MET, UNM, LNC, PFG, AFL, VOYA, EQH, ATH, BHFP&C Re/Insurance Focus AreasP&COutlookImproving,At Least for Top-TierInsurers. P&Cre/insure

12、rs4Qresultswere marred,asexpected,byHurricaneMichaelandrecord-levelCaliforniawildfirecatastrophe losses.Evenso,commercialP&Ctrendsarelikelymodestlyimprovingwithfavorable underlyingunderwritingmarginsatleastfortop-tierinsurersincludingCB,TRVandACGL. Ontheotherhand,AIGshowedfewsignsofstabilizationin4Q

13、andcontinuestoface downwardearningsrevisions.Separately,Personallinesresultsremainstrongalthoughrate gainsaremoderating.PropertycatastrophereinsurancerateswereflatinJanuary19 despitetheworsttwo-yearperiodforglobalcatastrophelossesonrecord,althoughthis situationmaytightenastheyearprogresses.Improving

14、CommercialP&CPricingTrends.Thepaceofrenewalratechangeinbellwether TRVsbusinessinsuranceunitwasmostlyunchangedq/q,althoughthebroaderpricing measurebasedonCIABdatacontinuestoimprove.Basedonourproprietaryearly19 CommercialInsuranceBuyersSurvey,largeaccountP&Cmarketconditionsareonthecusp oftighteningthe

15、bythemostinfiveyears,whichwethinkbodeswellforprimary commercialinsurers.FIGURE 1CompanyFocusCompanyFocusAreaCommentaryCommercial Lines & ReinsuranceTRVP&CRatesCommercialP&Crenewalrateincreasesin4Qweremostlystableat+1.6%comparedto+1.7%intheprior quarterwhichlikelymeansthepaceofcommercialP&Crateincrea

16、seshaspeaked.Workerscompensation ratedeclinesremainadragontheoverallresult.PersonalAuto TRVspaceofpersonalautoinsurancegrowthwasunchangedcomparedtothepriorquarter(PIFdown0.4% y/yin4Qand3Q18).In4Q,thepersonalautounderlyingCRof97%wasweakerthanthepriorquarterbut wasthefourthconsecutivequarterofunderwri

17、tingprofitabilityinthislinefollowingtwoyearsoflosses.ShareBuybacks TRVrepurchased$170mnsharesin4Q(wellbelowourprojectionof$550mn)althoughFY18normalized capitalreturnapproached100%ofearnings.Wenowanticipatesharebuybacksof$1.8bnin2019/20.ACGLTop-LineGrowth ACGLs4Qnetwrittenpremiumgrowthof17%includedso

18、lidgainsinReinsurance(+55%),Mortgage Insurance(+13%),andInsurance(+4%).MortgageArchsmortgageinsurancebusinessgeneratedanotherstrongquarterofearnings.ArchsMIsegment InsuranceunderlyingCRof33.0%wasbetterthanourestimateof42.4%.In4Q,mortgageinsuranceaccountedfor26%(unchangedq/q)ofthecompanyscorenetearne

19、dpremiums.TheMIbusinessgeneratedan underwritinggainof$249mnin4Q,above$231mnin3Q18and$172mnayearago.Source: Company data, Barclays ResearchCommercial Lines & Reinsurance (contd)RECEOSuccessionEverestResCEODomAddessointendstoretireattheendofhiscurrentcontracttermeffectiveYE19.This transitionwaslargely

20、expected,inourview,asheturns65.Thecompanyhassaiditwouldconsiderboth internalandexternalsuccessors.WeexpectthistobeasmoothtransitionforEverestsbusinessandinvestors.Top-Line Growth Everests net written premiums increased 21% y/y in 4Q, above our outlook of +8%.UnderlyingThe4QunderlyingCR(ex-catsandres

21、ervedevelopment)of90.4%wasworsethanourestimate(86.3%)and Resultstheyearagoresult(83.7%).ShareBuybacksEverestdidnotrepurchasesharesin4Q(consistentwithouroutlook).AlthoughweviewEverestashaving sufficientcapital,weexpectittocurtailsharebuybackactivityin2019followinglargecatastrophelosses.IndustryEveres

22、tappearsmorelikelytofocusonorganicrevenuegrowthratherthanacquisitionsinviewofongoing ConsolidationindustryM&AincludingAIGsacquisitionofValidusandAxasacquisitionofXL.ManagementviewsthesetransactionsascreatingpotentialopportunitiesforEverest,includingtheavailabilityofunderwritingteams.RNRTop-LineGrowt

23、h In4Q,totalnetwrittenpremiumsincreased43%y/yincludingthebenefitofreinstatementpremiums.CombinedRatioRNRs4QCRwas114.3%(105.1%underlying)versusourestimateof122.3%(84.0%underlying)and102.5% (75.2%underlying)ayearago.M&ARenRe appears likely to maintain its current independent strategic course despite r

24、ecent activist investor pressure,andanyimpliedboostinitsvaluationfromapotentialtakeoverislargelyunwarranted,inourview. Separately,RenReviewsitsannouncedbolt-onacquisitionofTokioMillenniumResbusinessasfittingwell withitsexistingbookofbusinessbasedonthelinesitexpectstoretain.OursenseisRNRsinitialaccre

25、tion expectationcouldendupbeingconservative,andthedealcouldcloseasearlyas1Q19.WebelieveRNRcould beopentoconsideringadditionalbolt-ontransactions.Multiline InsuranceAIGROEAIGexpectsitcouldtakeuptothreeyears(untilperhaps2021,inourview)toachieveatleasta10%ROE(ex- AOCI/DTA).WenowanticipateAIGsnormalized

26、ROEcouldbearound8%in2019/20.BottomLineAIGsoperatinglossof63c/shrin4Q18wassubstantiallybelowourestimate($0.50profit)andconsensus ($0.42profit)includingagreater-than-expecteddragoninvestmentincomeaswellasreservestrengthening. NetEPSwasa$0.70/shrloss.Basedonourmath,run-ratenormalizedEPSadjustingforunfa

27、vorableitemswas onlyaround75cinthemostrecentquarter,whichconcernsus.P&CResultsAIGs4Qtotalcombinedratio(CR)of115.0%(98.8%underlying)wasworsethanourestimateof109.3% (97.0%underlying).TheunderlyingCRhasnowbeenat99%oraboveforthepastsixquarters.Management hasanticipatedachievingaP&Cunderwritingprofitin20

28、19,whichwethinkcouldbeastretchgoalalthough expensesavingsareexpectedtodroptothebottomline.ShareBuybacksAIGrepurchased$750mnofitssharesandwarrantsin4Q,aboveour$500mnestimate.Italsoincreasedits sharebuybackauthorizationto$2bn.HIGAcquisitionofOnAugust22,2018,HIGannounceditsacquisitionofspecialtyunderwr

29、iterNavigatorsfor$2.1bnincash.The NavigatorspendingacquisitionisexpectedtostrengthenHIGspositionintheUScommercialmiddlemarketandspecialty linesbusinessaswellasaddcomplementaryspecialtyandsurpluslinesinsurancecapabilities.TheacquisitionisexpectedtobeimmediatelyaccretivetoHIGs2019netincomeandresultinm

30、odestbookvaluedilution. Overtime,HIGexpectsthedealtoproducealowdouble-digitreturn,drivenbyrevenuegrowthandmodest expensesavings.ItisunclearinourviewiftheacquisitionofNAVGcouldchangethepotentialforHIGto becomeaconsolidationcandidate.CapitalHIGdidnotrepurchasesharesin4Q,consistentwithouroutlook.Thecom

31、panyannouncedanew$1bnshare Managementbuybackauthorizationandexpectstouseaportionofthisin2019,whichissoonerthanourpriorexpectationthat repurchases would restart in 2020.P&CUnderlyingHIGs4QP&CunderlyingCRof92.2%wasbetterthanourestimateof94.9%aswellas93.2%intheprior CombinedRatioyear.Thepersonallinesun

32、derlyingCRof92.8%wasbetterthanourestimateof94.1%andmostlyconsistentwith 93.1% a year ago.2019Guidance Intermsof2019componentexpectations,thecommerciallinescombinedratiooutlookis94.5%-96.5% (91.0%-93.0% underlying). The personal lines combined ratio outlook is 97.5%-99.5% (91.0%-93.0% underlying).The

33、groupbenefitscoreearningsmarginoutlookis6.0%-7.0%.Source: Company data, Barclays ResearchInsurance BrokersBROOrganicGrowthOverallorganicrevenuedeclined2.1%y/yin4Q18(+1.4%in3Q)versusour+3.5%projectionduetotough &MarginscompsinNationalProgramsandServicesintheprioryear.BROtargetslong-termlow-to-midsing

34、ledigit organicgrowth,whichweviewasachievablein2019/20.The4QadjustedEBITDACmarginwas28.1%,wellbelowourestimate(31.5%).Excludingtheimpactofnewrevenueaccounting,theadjustedEBITDACmargin contracted160bpsy/y.BROtargetsa33%-35%marginoverthelong-term,althoughinternalinvestments havebeenaheadwindtoitsmargi

35、n.M&AIn3Q18,BROannounceda$705mnacquisitionofHaysCompanies(largestdealinBROshistory).Haysis the22ndlargestUSinsurancebroker,expectedtoadd$215mntoBROs$2bnstandalonetop-linein2019. Thedealisexpectedtobeonly2-3caccretiveto19EPS,andwewouldexpectHayslowermarginprofileto beaslightnear-termdragonBROsoverall

36、margin.Personal LinesALLUnderlyingALLs4Qunderlyingcombinedratioof86.8%wasslightlyworsethanourestimate(85.9%)andtheyear-ago CombinedRatioquarter(85.7%).ALLs2019underlyingP&Ccombinedratioguidanceof86%-88%isconsistentwithour87%projection,whichwouldimplyaslighty/ydeteriorationasthecompanyfocusesmoreongr

37、owth.Auto/HomePIF Allstate-brandautoPIFgrowthwaspositiveforthefourthconsecutivequarter.Thecompanyhasbeen Growthfocused ongrowth.ShareBuybacksIn4Q,thecompanyexecuteda$1bnacceleratedsharerepurchaseprogramaspartofits$3bnauthorization.Source:Companydata,BarclaysResearchLife Insurance Focus Areas4Q18life

38、insurerresultswerenoisy,asexpected,includingtheimpactofthesharpdecline inequitymarketsduringthequarter.Eventhoughdownwardearningsrevisionshave persisted,theequitymarketrecoverysofarin2019haslikelyhelpedstabilizeresults.BellwetherlifeinsurervaluationsremaincompressedwithamedianP/Eof7x.However,its dif

39、ficulttofindfundamentalcatalyststhatwouldcausethelifestockstore-ratehigher.For example,asub-3%yieldon10-yearUSTreasuries,aflatyieldcurve,andhighbetaare viewedasfactorsinthesubstantialde-ratingoflifeinsurervaluations.Someinvestors mightconsiderlockinginprofitsonanystrengthinthelifeinsurancestocks.(co

40、ntinued on next page)FIGURE 2Focus Areas for Life Insurers Participating in the AIFA ConferenceCompanyFocusAreaCommentaryMETROETargetMETnowtargetsanROE(ex-AOCIotherthanFCTA)of12%-14%,whichweviewasachievableincludingthe benefitofexpensesavings.CEOTransition MetLiferecentlyannouncedMichelKhalaf(age54)

41、,presidentofUSandEMEA,wouldbeMETsnextPresident andCEOeffectiveMay1,2019,andalsojoinitsboardofdirectors.Weexpectthistobeaseamlesstransition uponcurrentChairmanandCEOStevenKandarians(age66)scheduledretirement.CapitalMETrepurchased$1.2bnofsharesin4Q(aboveour$700mnprojection).Thecompanyhasexpectedfree M

42、anagementcashflowconversiontoaverage65%-75%ofadjustedoperatingearningsin2019/20,whichitviewsas achievableevenwithaUS10-yearTreasuryyieldaslowas2%.Wemodelannualbuybacksof$3bninboth2019/20.PRU2019Outlook PRUs2019EPSguidanceis$12.50-$13.00.Our2019EPSestimateof$13.00impliesa13%ROE.The companytargetsa19R

43、OEattheupperendofitsnear-toimmediate-termROEobjectiveof12%-13% versusitsover-the-cycleROEobjectiveof13%-14%.PRUs2019outlookincludesEPSgrowthevenassuminganunchangedS&P500onadailyaveragebasis (+4%point-to-point).Notably,PRUsupsidescenarioEPSguidanceof$12.75-$13.25assumes4%S&P500 dailyaverageappreciati

44、on(+6%returnpoint-to-point).Intheintermediateterm,PRUanticipateshigh-single-digitEPSgrowthwitheventualimprovementtothelow- double-digitrangeincludingthebenefitofongoingdigitalinvestments.VariableAnnuity4Q18variableannuity(VA)salesof$2.05bnwereup27%y/y.WenowanticipateVAsalesof$8.3bnin2019 Salesandano

45、ther$8.5bnin2020.CapitalPRUrepurchased$375mnofstockin4Q(inlinewithouroutlook),andalsoannouncedan11%increaseinits Managementquarterlydividend.Wecurrentlymodelannualrepurchasesof$2bnin2019/20.Thecompanyhasanticipatedaverage free cash flow as a percentage of after-tax adjusted operating income of 65% o

46、ver time.BottomLine PRUs4QoperatingEPSwas$2.44(-9%y/y).CoreoperatingEPSof$2.98(+4%y/y)wasaboveourestimate ($2.80)andconsensus($2.78).NetEPSwas$1.99.The4Qcoreresultreflectedbetter-than-projected earningsinPGIMandCorporate,andslightlyweaker-than-expectedearningsinUSIndividualSolutions.LNCShareRepurcha

47、ses LNCrepurchased$535mnofsharesin4Q,includingits$500mnacceleratedsharerepurchaseprogramwhich was announced in conjunction with its annuity reinsurance transaction with Athene. We anticipateannual repurchasesof$725mnin2019and$750mnin2020.GroupProtection4QGroupProtectionsalesincreased3%y/y.Segmentear

48、ningsof$50mnwerebelowourestimateof$57mn. ResultsOnMay1,2018,LNCcompleteditsacquisitionofLibertyMutualsgroupbenefitbusiness,whichweviewas favorablefrombothastrategicandfinancialperspective.Managementanticipatesthisdealcoulddeliver6%-7% margin by 2020.UNMLong-TermCare Unums4Q18long-termcareinterestadj

49、ustedlossratioof83.2%wasmorefavorablethanthecompanys guidancerangeof85%-90%followingthe3Q18reservecharge.Inourview,thecostforUnumtoexititsLTC blockwouldlikelybetoohighassuminga50%+premiumtoitsLTCreserves($11bn).Inthemeantime,we estimatetherun-offblockisarounda5pptsdragonROE.Onapositivenote,thecompan

50、yhasmade progressin4QwithapprovedrateincreasesonitslegacyLTCbusiness($500mnofapprovalssofar).SalesGrowth UNMs4QnewsalesgrowthwasmixedacrossUnumUS(down1%),UnumInternational(up1%including thebenefitofthePolandbolt-onacquisition),andColonialLife(up2%).EPSGrowthUnumexpects2019operatingEPSgrowthof4%-7%an

51、danoperatingROE(ex-AOCI)of11%-13%. ShareRepurchases Thecompanyresumedsharerepurchasesin4Q($150mn),inlinewithourestimate.PFGNetFlowsAsexpected,PFGsoverallnetflowsweakenedq/qdrivenespeciallybyoutflowsinthePGIsegment.PFGhad totalnetoutflowsof$3.3bnin4Q18,belowinflowsof$200mnin3Q.CapitalPrincipalrepurch

52、ased$210mnofitssharesin4Q,aboveour$100mnestimates.Weanticipate$400mnof Managementannualbuybacksin2019/20.Long-term,PFGexpectstodeploy65%-70%ofannualnetincome.PFGexpects totalcapitaldeploymentincludingdividends,M&A,andbuybacksof$1.0-$1.4bninFY19.FinancialTargetsPFGslong-termtargetsinclude30-60bpsofan

53、nualROEexpansion,and9%-12%annualoperatingearnings growth.PrincipalexpectstoeventuallyachieveanROE(ex-AOCIotherthanFCTA)inthe16%-17%range.Source: Company data, Barclays ResearchCompanyFocusAreaCommentaryAFLSalesGrowth AFLs4QJapanthird-sectornewsalesincreased1%y/y,slightlybelowourestimateof+2.5%.Theco

54、mpany expects2019Japanthird-sectorsalestodeclineinthelow-to-midsingledigitspercentagerangereflectingtough y/ycomps.Meanwhile,USnewsalesin4Qincreased4.3%y/ywhichwasinlinewithourprojection.AFL anticipatesFY19USsalesgrowthwithinitslong-termtargetrangeof3%-5%.JapanPostInDecember2018,AFLannouncedJapanPos

55、twouldpurchasea7%stakeinAFLthroughopenmarket Stakepurchases,whichwouldmakeJapanPostitslargestshareholder.EPSGuidance AFLsFY19EPS(ex-FX)outlookis$4.10-$4.30.AFLs4Q18operatingEPSof$1.02(+28%y/y)wasaboveour estimate($0.95)andconsensus($0.94),drivenbystronger-than-expectedearningsinbothJapanandtheUS.Sha

56、reShare buybacks of $378mn were above our projection of $325mn. The company has anticipated 2019 Repurchasesrepurchasesof$1.3-$1.7bn.Wemodelannualrepurchasesof$1.5bnin2019/20.VOYAProFormaVoyasearningsmixisnowdependentonbusinesseswithincreasedreturnprofiles,reducedrateandequityrisk, BusinessMixandlow

57、ercapitalrequirementsincludingRetirement,InvestmentManagement,andEmployeeBenefits.Earnings&VOYAs4QoperatingEPSwas$1.32(+52%y/y),aboveourestimate($1.20)andconsensus($1.22)includinga ROE10cbenefitfromalower-than-expectedtaxrate.ThemoreimportantcoreoperatingEPSmetricwas$1.40,also aboveourestimate.Theco

58、mpanyistargeting10%+annualEPSgrowthin2019-21,aswellasanROE(ex-AOCI/DTA) in the 13%-15% range, which we view as achievable.CapitalVOYArepurchased$275mnofsharesin4Q,aboveouroutlook($250mn).In1Q19,thecompanyenteredintoa Management$250mnacceleratedsharerepurchaseagreement.ATHRetirementAtheneexpectsnewde

59、positsin2019tobemodestlyhigherthan2018($13.6bn).Ouroutlookisfor$14.5bnof Servicesorganicdepositsin2019.OperatingearningsinAthenescoreRetirementServicessegmentcouldbe$1.4bnin 2019(up16%y/yincludingafullyearimpactoftheVoyaandLincolntransactions).AportionofATHsinvestmentportfolioisinfloatingrateassets.

60、Each25bpsincreaseinATHsfloatingrateassetswouldbeexpected togenerate$25-$30mnofadditionalannualinvestmentincome(12-14c/shrannually).BlockOnDecember10,2018,AtheneannouncedablockreinsurancetransactionwithLNCtoassume$7.7bnof Reinsurancestatutoryreservesconsistingmostlyoffixedindexedannuities(FIAs).Athen