Insurance

Puerto Rico woes come with systemic silver lining

8 Jul 2015

Fears that the commonwealth will default on its debt have whacked bond insurers’ shares. Unlike 2008, though, the likes of MBIA and Assured Guaranty now back only a small fraction of the markets they operate in. That should prevent too much pain spreading beyond their walls.

Agnellis jump through hoops to woo PartnerRe

7 Jul 2015

Family scion John Elkann is offering his quarry’s preferred shareholders a higher dividend and a pledge to restrict payouts to his own Exor. That should curb fears of Fiat or other group holdings hurting reinsurer PartnerRe’s credit – if investors take Elkann’s word as his bond.

Aetna’s bitter Humana pill is good long-term care

3 Jul 2015

The two U.S. healthcare insurers struck a $37 bln deal ahead of rivals in a race to consolidate an industry rapidly reshaping under Obamacare. Cost savings will fall short of the premium Aetna is offering. It may be a price worth paying to be first in line with trustbusters.

ACE aims to defy history with $28 bln Chubb deal

1 Jul 2015

The Swiss insurer is buying its upscale U.S. rival. Cost and tax savings don’t cover the premium, implying ACE believes in promised revenue gains, also touted in the Willis-Towers Watson merger this week. The failed 1999 marriage of Provident and Unum, though, provides a warning.

Willis-Towers Watson insure against market turmoil

30 Jun 2015

The insurance broker and the risk consultant plan to merge. There’s positive logic: combining Towers’ knowhow and Willis’ client relationships could drive revenue. But $125 mln of cost synergies would also help the group weather an insurance sector wrestling with low rates. 

Rob Cox: Don’t underestimate Exor’s John Elkann

23 Jun 2015

Fiat Chrysler CEO Sergio Marchionne is the one leading a coercive charm offensive for car industry consolidation, but it wouldn’t be happening without the Agnelli scion’s support. Exor’s hostile bid for PartnerRe signals a hard-nosed approach that GM and others shouldn’t dismiss.

Health insurer M&A is risky Obamacare side effect

15 Jun 2015

Cigna rebuffed Anthem’s $45 bln offer while mulling a $32 bln bid for Humana. The urge to merge is a predictable attempt to boost profit after the controversial law clamped down on premiums. With only five big insurers, though, any deals will get a thorough antitrust checkup.

Judge humbles Greenberg and Uncle Sam in one shot

15 Jun 2015

The former AIG boss proved the insurer’s $182 bln rescue was technically illegal, yet the government owes him no money. What can probably be spun as a victory for both sides will surely please neither. The reality is that huge egos have finally been cut down to size.

Tokio Marine learning lessons in value destruction

10 Jun 2015

The 38 pct premium the Japanese insurer is paying in its $7.5 bln purchase of HCC is only half as absurd as in its two previous U.S. deals. Those extravagant forays should give it scope to cut costs. By slicing 15 pct of HCC’s overhead it might even finally make a deal stack up.

Chinese insurer’s ascent raises known unknowns

3 Jun 2015

Anbang Insurance is vying to add Portugal’s Novo Banco to trophies including New York’s Waldorf Astoria. The group’s prodigious expansion raises questions about its backers and the health of China’s financial system. Whether its targets’ regulators are up to the task is unclear.

PartnerRe debt quirks may hinder Agnelli advances

2 Jun 2015

A deal by the Italians’ Exor vehicle could blow up the reinsurer’s credit ratings, the target claims. That’s debatable, but Bermudan law and other technicalities make PartnerRe’s preferred shareholders a key voting constituency. Some may find downgrade fears hard to ignore.

Generali finds logical response to low-yield pain

27 May 2015

The Italian group’s pledge to hike dividends may look bold: ultra-low bond yields are hurting insurers. But bigger players are relatively better placed, and Generali just hit a set of multi-year targets. Besides, a shift away from guaranteed-return products could help profit. 

Resisting Exor’s $6.8 bln is futile for PartnerRe

12 May 2015

The Agnelli family vehicle sweetened its bid – and rattled a hostile sabre. The offer clearly outguns PartnerRe’s planned merger with Axis, and there are no interlopers so far. A parallel rise in Axis stock suggests that if Exor succeeds, bankers may get a bonus deal to work on.

PartnerRe manages to cede high ground to Agnellis

5 May 2015

The Italian dynasty’s vehicle, Exor, has offered $6.4 bln for the Bermudan reinsurer. PartnerRe’s rigid board is sticking with a sweetened but lower-value merger with Axis. Exor’s hostile stance may put PartnerRe in play – as it probably should have been from the start.

Agnellis pay up to claim mini-Buffett status

14 Apr 2015

Exor, the Italian family’s holding company, is offering a premium to buy PartnerRe out of a merger with fellow reinsurer Axis. The price is full and the bid lacks its rival’s synergies. But debt is cheap, and Berkshire Hathaway-style cash flow could fund further acquisitions.

Tidjane Thiam’s pay is insufficiently prudential

1 Apr 2015

The outgoing Prudential CEO was paid 8.3 mln stg in shares for hitting long-term targets. Given his record, the largesse can be defended. But the UK insurer - and fund manager – should follow peers in requiring such awards to be held until outperformance is proved sustainable.  

Next Prudential chief’s job harder than it looks

10 Mar 2015

Tidjane Thiam’s successor inherits a business with a good strategy that generates lots of cash. As moving the Pru’s domicile is off the agenda, the new CEO’s plan should be more of the same. That makes it difficult to make a mark – but with plenty of downside if things slow down. 

Aviva’s dividend and future get more sustainable

5 Mar 2015

The UK insurer’s 2014 results showed rising excess cash from operations. That’s reassuring, given tricky times for the sector and a 21 pct dividend hike. While the integration of Friends Life is a risk, Aviva doesn’t look to be doing the deal to cover up operating weakness. 

Never mind Bill Gross: Allianz is thriving

26 Feb 2015

The star investor’s acrimonious departure from Pimco caused huge outflows and hurt operating profit at Allianz, the German owner of the U.S. bond-fund firm. That obscures Allianz’s real strength. Annual results underline the insurer’s renewal under outgoing CEO Michael Diekmann.

Prudential makes a drama out of capital surprise

6 Feb 2015

Investors wiped $2 bln off the U.S. insurer’s value after it reported a baffling Q4 drop in excess capital. The company’s belated explanation eventually helped the shares recover. But the episode suggests a failure to manage expectations that SIFIs like Prudential can ill afford.