Barclays on U.S. Insurance/Non-Life: ALL's 3Q11 Results Hurt by Large Cats; PRE 3Q11 Significantly Exceeds Our Outlook
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Price: $253.83 -0.28%
Rating Summary:
16 Buy, 18 Hold, 5 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
16 Buy, 18 Hold, 5 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. Insurance/Non-Life: ALL's 3Q11 Results Hurt by Large Cats; PRE 3Q11 Significantly Exceeds Our Outlook
Barclays analyst, Jay Gelb, said, "Allstate's (NYSE: ALL) 3Q11 results were in line with our outlook, while PRE's results were better than we anticipated. Allstate's 3Q11 results were impacted by large catastrophe losses as expected. ALL's standard auto policies-in-force continued to decline y/y, and we remain concerned about ALL's loss of auto insurance market share to GEICO (NYSE: BRK.A) and Progressive (NYSE: PGR), as well as challenges to achieve adequate returns in its homeowners and life insurance business. On a positive note, however, ALL's auto insurance loss frequency and severity trends continued to improve, which likely reflects lower miles driven in a weak economy. PRE's 3Q11 EPS significantly exceeded our outlook driven by better-than-anticipated underlying underwriting results, positive premium volume trends, and reserve releases. PRE is cautiously optimistic about the direction of P&C reinsurance prices heading into the January 1 renewals. PRE also views its capital base as strong and will assess capital
management opportunities."
"No change to our 2012 EPS estimate for Allstate of $3.50 (consensus=$3.70). ALL currently trades at 0.74x 3Q11 BV (0.79x BV ex AOCI) and 7.5x our 2012 EPS estimate of $3.50, which is below peers."
"PRE reported a 10% annualized ROE in 3Q11 despite a meaningful increase in reserves for 1H11 catastrophe losses (as expected). P&C net written premium growth was +2% ex FX, and represents quarter of growth in one year due to non-renewing ParisRe business."
"We are raising our 2011 EPS estimate for PRE to a loss of $4.82 from a loss of $7.00 in 2011 and to $8.00 from $7.60 in 2012 to reflect better than anticipated underwriting results. PRE has a strong global reinsurance franchise, although results are challenged recently due to large catastrophe losses. PRE trades at 0.73x 3Q11 BV, in line with Bermuda peers."
Barclays analyst, Jay Gelb, said, "Allstate's (NYSE: ALL) 3Q11 results were in line with our outlook, while PRE's results were better than we anticipated. Allstate's 3Q11 results were impacted by large catastrophe losses as expected. ALL's standard auto policies-in-force continued to decline y/y, and we remain concerned about ALL's loss of auto insurance market share to GEICO (NYSE: BRK.A) and Progressive (NYSE: PGR), as well as challenges to achieve adequate returns in its homeowners and life insurance business. On a positive note, however, ALL's auto insurance loss frequency and severity trends continued to improve, which likely reflects lower miles driven in a weak economy. PRE's 3Q11 EPS significantly exceeded our outlook driven by better-than-anticipated underlying underwriting results, positive premium volume trends, and reserve releases. PRE is cautiously optimistic about the direction of P&C reinsurance prices heading into the January 1 renewals. PRE also views its capital base as strong and will assess capital
management opportunities."
"No change to our 2012 EPS estimate for Allstate of $3.50 (consensus=$3.70). ALL currently trades at 0.74x 3Q11 BV (0.79x BV ex AOCI) and 7.5x our 2012 EPS estimate of $3.50, which is below peers."
"PRE reported a 10% annualized ROE in 3Q11 despite a meaningful increase in reserves for 1H11 catastrophe losses (as expected). P&C net written premium growth was +2% ex FX, and represents quarter of growth in one year due to non-renewing ParisRe business."
"We are raising our 2011 EPS estimate for PRE to a loss of $4.82 from a loss of $7.00 in 2011 and to $8.00 from $7.60 in 2012 to reflect better than anticipated underwriting results. PRE has a strong global reinsurance franchise, although results are challenged recently due to large catastrophe losses. PRE trades at 0.73x 3Q11 BV, in line with Bermuda peers."
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