Wall Street Transcript Interview with Randy Binner, Managing Director at FBR Capital Markets & Co.: Positive Pricing Trends for P&C and a Rotation Back Into Life Insurance

Wall Street Transcript

67 WALL STREET, New York - June 13, 2013 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors

Companies include: American International Group, (AIG), Hartford Financial Services Gr (HIG), The Travelers Companies, Inc. (TRV), Progressive Corp. (PGR), XL Capital Ltd. (XL), MetLife, Inc. (MET), Prudential Financial, Inc. (PRU), Lincoln National Corp. (LNC) and many more.

In the following excerpt from the Insurance Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You've got "market perform" ratings on roughly half of your stocks. Are there broader industry themes we can derive from your "market perform" ratings? And in each category - life and P&C - what will be catalysts for you to consider upgrades on some of those stocks?

Mr. Binner: We tend to have more "market performs" in property casualty than we do on life. I think that's an accurate statement. It feels that way. And so I would say that in general, property casualty performed very well over the last several years, but now many companies are fairly valued.

And the reason for the stronger performance is the positive pricing trends and lower interest rate exposure that P&C - the insurers have has been very attractive for investors, and so P&C stocks have performed better over kind of the last two years. Although just in the last 12 months, life insurers really started to underperform, because it just has been kind of left for dead by so many investors.

And so in P&C insurers, there are good ideas here and there, but when you talk about kind of high-quality large-cap P&C names, they are pretty well-discovered from a price perspective, and so we currently tend not to recommend large-cap P&C companies. I may have one "buy," which is XL (XL). And so, we still like XL, but it's up 44% in the last 12 months, so I mean, things are really moving.

And so, the real opportunity, we think, still is that life insurance investors are absolutely scared of low interest rates and the implications it has for life insurers - and we are not saying that that's not a big deal. We know the companies are very well-positioned to deal with low rates over time and have very good capital buffers in place to help them work through...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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