巴克莱-美股-保险行业-二季度美国保险业预览：财险预期表现复杂-71-96页.pdf
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Equity Research
1 July 2019
CORE
Barclays Capital Inc. and/or one of its affiliates 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 interest that could affect the objectivity of this report. Investors
should consider this report as only a single factor in making their investment decision.
PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 90.
Restricted
- Internal
U.S. Insurance
2Q Preview: Expect Mixed P&C
Results, Volatile Life Earnings
Improving Commercial Re/Insurance P&C Pricing, but 2Q Results Hurt by Tornado
Activity. Although P&C market conditions remain favorable, 2Q P&C results are
expected to be negatively impacted by significantly above-average tornado losses; we
accordingly lower our 2Q EPS estimates. Commercial P&C trends are tightening in every
line except workers’ compensation and we expect this favorable trend to persist.
Property catastrophe reinsurance rates for the mid-year Florida renewals have
substantially increased following large hurricane losses and adverse claim development,
in our view. However, this good news already appears mostly priced-in for the
reinsurance stocks including RNR. Meanwhile, personal lines insurers are generating
favorable underlying underwriting results and the focus appears on growth.
Our OW-rated P&C stocks include Berkshire Hathaway (potential for accretive
acquisitions as well as share buybacks), Allstate and Progressive (strong earnings
trends in auto and home insurance), AIG (turnaround opportunity with top-tier
management team), and Chubb (superior global P&C franchise value).
Life Insurers Benefit from Equity Market Gains, but Low Rates a Persistent Headwind.
Life Insurers are likely to benefit from the year-to-date recovery in equity markets.
However, the 10-year Treasury yield has declined to only 2% and the yield curve
remains flat. This means ’20 EPS expectations could face downward pressure, in our
view. Bellwether life insurer valuations remain compressed with a median P/E of 7-8x;
we envision this situation as being unlikely to change the rate environment’s downward
pressure on earnings power. We expect 2Q 19 life insurer median operating EPS to
increase 11% y/y (+6% on a core basis), although the range widely varies. We expect
ATH, VOYA, LNC and EQH to generate among the strongest 2Q core earnings growth.
Meanwhile, MET, PFG and PRU could show y/y declines in 2Q core operating EPS.
Our OW-rated Life Insurance stocks include: PRU has EPS power of $13 based on our
estimates, and its current P/E of 7x looks attractive. Although 2Q results could be noisy,
PRU has delivered consistent results in its annuity, asset management, and international
businesses. UNM should benefit from improving employment trends. Legacy long-term
care exposure is a concern, but we believe this is already discounted in its valuation.
UNM continues to deliver ongoing share buybacks and dividend increases, and is
currently valued at 6x earnings. LNC has delivered solid results in its US-focused
annuity and life insurance businesses along with accretive acquisitions. The company
has a robust share buyback program and group insurance results are recovering. LNC’s
current valuation of 6x earnings has upside potential, in our view.
EARNINGS PREVIEW
U.S. Insurance/Life
NEUTRAL
Unchanged
U.S. Insurance/Non-Life
NEUTRAL
Unchanged
For a full list of our ratings, price target and
earnings changes in this report, please see
table on page 2.
U.S. Insurance/Non-Life
Jay Gelb, CFA
+1 212 526 1561
jay.gelb@barclays.com
BCI, US
John Dunigan
+1 212 526 2607
john.dunigan2@barclays.com
BCI, US
U.S. Consumer Finance
Mark C. DeVries
+1 212 526 9484
mark.devries@barclays.com
BCI, US
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