Analysts at investment banking firm Keefe, Bruyette & Woods offer their views on what to expect from some insurers they follow as first-quarter financial results are announced.

Overall, KBW says it expects P&C insurers to enjoy a solid first quarter due to relatively benign losses and continuing rate increases in both personal and commercial lines.

Here, KBW breaks down expected results and topics of interest for individual insurers. All Q1 2013 figures are estimates provided by KBW.  

 

Ace Ltd.

Reporting date: 4/22 after close

 

What to look for: 

  • Discussion of 2013 crop outlook and expectation for pricing trends.
  • Commentary on the accident & health environment as it changes in response to the evolving healthcare system.
  • Update on capital-deployment plans for 2013, including continuing emerging-market acquisitions.

Combined Ratio

Q1 2012: 89.2

Q1 2013E: 89.3

Net Written Premium Growth

Q1 2012: 3.7%

Q1 2013E: 6.8%

Investment Income Growth

Q1 2012: 0.0%

Q1 2013E: -4.5%

Operating Earnings Per Share

Q1 2012: $2.05

Q1 2013E: $2.12

KBW Analyst: Meyer Shields

Allstate Corp.

Reporting date: 5/1 after close

 

What to look for:

  • Eventual policy-in-force growth: KBW thinks an inflection in policy-in-force growth implies a shift in focus toward top-line growth goals paired with significant underwriting margin compression.
  • Accelerated share repurchases in light of Allstate's December share-repurchase announcement and overall benign Q1 weather.
  • An update on auto-severity trends, rate trajectories and competition from companies such as Geico and Progressive.

Combined Ratio

Q1 2012: 92.0

Q1 2013E: 92.0

Net Written Premium Growth

Q1 2012: 4.0%

Q1 2013E: 3.2%

Investment Income Growth

Q1 2012: 3.0%

Q1 2013E: -6.3%

Operating Earnings Per Share

Q1 2012: $1.42

Q1 2013E: $1.40

KBW Analyst: Meyer Shields

American International Group

Reporting date: 5/2 after close

 

What to look for:

  • Discussion of expected commercial-lines pricing trends both in the U.S. and abroad.
  • Comments on plans to improve accident-year underwriting margins in the P&C business.
  • Comments on rapid emerging-markets growth.

Combined Ratio

Q1 2012: 102.1

Q1 2013E: 100.5

Net Written Premium Growth

Q1 2012: -3.8%

Q1 2013E: 2.3%

Investment Income Growth

Q1 2012: 3.7%

Q1 2013E: -2.9%

Operating Earnings Per Share

Q1 2012: $1.65

Q1 2013E: $0.94

KBW Analyst: Meyer Shields

Berkshire Hathaway

Reporting date: N/A

 

What to look for:

  • Solid insurance-underwriting performance in light of minor global catastrophes, partly offset by unquantified slowing reserve releases.
  • Improved BNSF Railway Co. freight volumes, as well as modest growth across most of Berkshire's economically sensitive businesses.
  • Strong book-value gains from Berkshire's equity, warrant and derivative investments.

Combined Ratio

Q1 2012: 98.9

Q1 2013E: 95.9

Net Premiums Earned Growth

Q1 2012: 7.8%

Q1 2013E: 29.4%

Investment Income Growth

Q1 2012: -16.4%

Q1 2013E: 3.6%

Operating Earnings Per Share

Q1 2012: $1,615

Q1 2013E: $2,052

KBW Analyst: Meyer Shields

Chubb Corp.

Reporting date: 4/25 after close

 

What to look for:

  • Discussion of the competitive environment for Chubb's specialty products.
  • Comments regarding whether a recovery in housing prices implies greater customer demand for the masterpiece policy.
  • Expectations for reserve development in 2013 and beyond given that the majority of reserves stem from periods of soft pricing.

Combined Ratio

Q1 2012: 90.2

Q1 2013E: 89.1

Net Written Premium Growth

Q1 2012: 3.1%

Q1 2013E: 1.6%

Investment Income Growth

Q1 2012: -0.3%

Q1 2013E: -7.9%

Operating Earnings Per Share

Q1 2012: $1.70

Q1 2013E: $1.80

KBW Analyst: Meyer Shields 

Hartford Financial Services

Reporting date: 4/29 after close

 

What to look for:

  • More thorough P&C discussion in an attempt to establish greater investor focus on core go-forward operations.
  • Declining U.S. and Japan variable annuity "net amounts at risk" with sustained lapses in U.S. and likely accelerating Japan lapses.

Combined Ratio*

Q1 2012: 95.6

Q1 2013E: 94.1

Net Written Premium Growth*

Q1 2012: 0.8%

Q1 2013E: -0.2%

Operating Earnings Per Share*

Q1 2012: $0.87

Q1 2013E: $0.77

*P&C only

KBW Analyst: Vincent DeAugustino

Markel Corp.

Reporting date: N/A

 

What to look for:

  • KBW's estimates include $50 million in net unrealized gains related to the equity portfolio.
  • Estimates also include favorable reserve development of $70.9 million and weather losses of $2.3 million.
  • KBW expects 11.9 percent gross-premiums-written growth, with E&S up 5 percent, specialty admitted up 35 percent (reflecting Markel's acquisition of THOMCO) and London insurance up 5 percent. 

Combined Ratio

Q1 2012: 99.6

Q1 2013E: 96.4

Net Written Premium Growth

Q1 2012: 12.0%

Q1 2013E: 10.5%

Investment Income Growth

Q1 2012: 13.8%

Q1 2013E: -6.1%

Operating Earnings Per Share

Q1 2012: $5.12

Q1 2013E: $7.20

KBW Analyst: Robert Farnam

The Travelers Cos. 

Reporting date: 4/23 before open

 

What to look for:

  • An update on the commercial-lines rate environment.
  • Based on agent commentary, KBW says it would not be surprised to see modest commercial-lines-retention slippage.
  • Likely continued personal-lines policy-in-force declines.

Combined Ratio

Q1 2012: 92.2

Q1 2013E: 90.4

Net Written Premium Growth

Q1 2012: 0.5%

Q1 2013E: 1.8%

Investment Income Growth

Q1 2012: -5.0%

Q1 2013E: -2.3%

Operating Earnings Per Share

Q1 2012: $2.01

Q1 2013E: $2.28

KBW Analyst: Meyer Shields

W.R. Berkley Corp.

Reporting date: 4/23 after close

 

What to look for:

  • KBW estimates include favorable reserve development of $13.1 million and $13.7 million in weather losses.
  • KBW estimates gross-premiums-written growth of 12.7 percent, with specialty up 12.5 percent, regional up 7 percent, alternative markets up 17.5 percent, reinsurance up 12.5 percent and international up 15 percent.
  • Commentary on market outlook including rate increases of 8-10 percent by year-end 2013.

Combined Ratio

Q1 2012: 96.5

Q1 2013E: 96.1

Net Written Premium Growth

Q1 2012: 11.1%

Q1 2013E: 10.9%

Investment Income Growth

Q1 2012: 7.9%

Q1 2013E: -2.3%

Operating Earnings Per Share

Q1 2012: $0.73

Q1 2013E: $0.76

KBW Analyst: Robert Farnam

XL Group

Reporting date: N/A

 

What to look for:

  • Accident-year margin improvement for insurance segment.
  • Commentary on recruitment of underwriting teams.
  • Update on expected operating leverage in 2013 stemming from recently-started underwriting units.

Combined Ratio

Q1 2012: 95.3

Q1 2013E: 92.5

Net Written Premium Growth

Q1 2012: 14.5%

Q1 2013E: 1.8%

Investment Income Growth

Q1 2012: -5.4%

Q1 2013E: -8.9%

Operating Earnings Per Share

Q1 2012: $0.52

Q1 2013E: $0.64

KBW Analyst: Meyer Shields


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