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What do equity analysts look for when rating a life insurance company? Accenture recently commissioned a survey of leading analysts from around the world to find out.
To gain insight into the factors driving the ratings of life insurance companies, as well as the strategies that insurance CEOs should adopt to improve valuations of their companies, Accenture commissioned a survey of leading insurance equity analysts around the world.
Perhaps the most surprising finding of the Equity Analyst Survey is the bullish expectations that analysts have of the life industry’s top performers—they demand strong growth in annual revenue in 2012, as well as a 9 percent increase in pre-tax return on equity over 2011. Buffeted as insurers are by the global economic crisis, and struggling with weak demand and ever-more stringent regulatory requirements, they might have been forgiven for merely maintaining their positions.
Analysts identified three areas that must be satisfied to achieve the coveted higher ratings: risk control, growth and cost reduction. They also stated that insurers don’t have the luxury of choosing which of the priorities they should focus on. Attention to each is the minimum requirement.
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September 25, 2012