Posted on March 6, 2010 by Heather J. Wietzel
It should come as no surprise that the outlook for the economy was top of mind at the AIFA conference.
I heard a number of investors ask open-ended questions aimed at assessing management’s overall level of optimism about 2010 and beyond, which I view as a good sign. Those questions were looking for insight into both insurance operations and the investment portfolio.
On the insurance front, questions about the economy’s effect on pricing and exposures are sure to continue. Here are a few other topic areas that may generate questions in the coming months:
- Inflation trends, specifically related to setting and evaluating reserves.
- Relationship of the “side effects” of economic weakness to potential loss trends. For example:
Effect on frequency of deferred maintenance by policyholders or
Effect on severity as the “less experienced” return to the workforce.
- Underwriter compensation, which leads to two very different follow-up questions:
How underwriting discipline is monitored or
How a company retains underwriters when their compensation drops because of the formula used.
Beyond the economy, discussions at AIFA confirmed that investors are looking at the potential risks of the changing judicial and tort environment. I looked at the communication implications of tort (un)reform after the NYSSA Insurance Conference in February.
I hope these ideas are helpful. I will be adding detailed posts on a few other topics in the next several days.
Filed under: AIFA, Important ideas | Tagged: economy | Leave a comment »
Posted on March 4, 2010 by Heather J. Wietzel
The AIFA conference is an impressive event that I thoroughly enjoyed again this year.
The presentations cover a vast array of topics relevant to insurance companies and industry investors. I’m sifting through the information from the investor relations perspective and expect to post a variety of thoughts in the coming days.
But there is one recommendation I wanted to make immediately:
Insurance company interim quarter earnings releases/calls should happen in conjunction with the filing of the associated 10-Q.
Putting all the materials out at one time lets a company appropriately focus attention on key strategic messages while meeting investor needs for the necessary details that support results. (Companies also can help by making Schedule D and Schedule P data available at the same time.)
I believe this tactic will be even more appreciated by investors as the accounting grows even more complex, e.g., the potential changes in fair value reporting under consideration by the FASB).
Filed under: AIFA | Tagged: 10-Q, earnings release | 2 Comments »
Posted on February 26, 2010 by Heather J. Wietzel
I’ll be spending the early part of next week at AIFA, listening to insurance company presentations and enjoying the company of investor and industry friends. (Plus, it will be warm in Florida.)
When I return, I’m planning a few posts to talk about the investor relations implications of the topics that are top of mind for insurance investors and managements.
Filed under: AIFA | Leave a comment »
Posted on February 23, 2010 by Heather J. Wietzel
I learned of a “pet peeve” from an insurance analyst this week. He had a legitimate objection to being asked to register every quarter for the conference calls of companies he knows well. Keep in mind, professional investors may listen to 50 or more calls during a single earnings season.
A simple solution can make life easier for your company’s closest followers. Even better, the solution also can help make sure that your company’s call is not overlooked and that investors likely to ask questions are participating in the call rather than the webcast.
As background, announcements of upcoming conference calls often encourage those interested in the company to access the webcast. Webcast participation usually is encouraged because there is no “per user” expense for the company. Those interested in dialing in are asked to register to receive the number.
I recommend working to put your company’s call directly on the calendar of your top followers by sending them a “meeting invitation” after the broadly disseminated announcement of the call. The invitation would include the dial-in number and any necessary pass code.
Top followers normally would include all analysts covering your company, your top holders and selected targets on both the buy- and sell-side. (I do not recommend using these invitations to introduce your company to new investors.) Others who ask for the dial-in number would be registered in your company’s normal fashion.
Your followers will appreciate the convenience.
Filed under: Quick tips | Tagged: tactics, webcasts | Leave a comment »
Posted on February 15, 2010 by Heather J. Wietzel
More than half of the NYSSA presenters talked about a return on equity target. But several presenters faced follow-up questions about the effect of lower investment yields on their ability to achieve their ROE target.
Under normal circumstances, I would applaud companies who choose to talk about an ROE target. Generally, I view providing management’s long-term performance targets as key to the strategic message a company shares with its investors. (Please don’t confuse long-term targets with short-term earnings guidance. Guidance is a different topic altogether.)
But I think the follow-up questions at NYSSA showed that investors have identified a “weak link” in the current messaging for insurance companies. Companies should be aware of this concern because of the potential for it to hamper management credibility.
At this point in the insurance and financial market cycles, I would counsel companies to proactively comment on:
- Current and historic contributions to ROE of insurance and investment operations.
- Distribution of the long-term target between insurance and investment contributions.
- Potential effect of a lower investment yield for the short to midterm.
- Near-term portfolio and capital management plans (investment allocation, duration, repurchase, etc.) with some discussion of the potential effect on yield or investment leverage.
In a future post, I may talk about how companies can use communications to address investor concerns about their ability to achieve the operating side of their target. But that’s for another day (maybe after AIFA).
Filed under: NYSSA | Tagged: NYSSA, ROE, targets | Leave a comment »
Posted on February 14, 2010 by Heather J. Wietzel
My plan is to focus this blog on strategic investor communications topics for insurance companies.
But sometimes there is value in the details. So I’m making a case for PODCASTS. (I was surprised how few of the year-end calls were available as podcasts when I was organizing “entertainment” for my trip to New York last week.)
This is such a simple way to make your company a bit easier to follow. And it is truly simple. With just a call to your Web site vendor, you will have podcasts of your investor presentations and calls on your site (expect a small fee).
Bottom-line, investors can’t be in two places, or listen to two events, at once. For a variety of reasons, your company’s event may not be that day’s top priority. A podcast can encourage interest by making it easy for your followers to take the replay on the road or to the gym!
Sometimes it doesn’t take much to stand out from the crowd.
Filed under: Quick tips | Tagged: podcasts, tactics, webcasts | Leave a comment »
Posted on February 11, 2010 by Heather J. Wietzel
InsuranceIR LLC offers my expertise to property casualty insurance companies looking to enhance their investor communications. This blog is a way to occasionally share ideas on broad topics as a complement to situation-specific advice for clients. (As a bonus, I may meet some new prospects through the blog.)
Earlier this week, I attended the two-day NYSSA Insurance Conference in New York. In total, 16 insurance companies presented to the investor audience. I was able to listen to all but three of the presentations and supplemented my research by reading transcripts of some of the earliest year-end calls.
If you are one of the companies still working on year-end reporting, or if you’re looking ahead to communications for the next quarter, you might want to think about:
- Geographic Growth Potential – If entering new states is part of your growth strategy, distinguish your plans by giving economic or other data on the opportunity. After listening to two days of presentations, I can confirm that just naming new states or showing a map doesn’t make much of an impression. One option for data would be the U.S. Bureau of Economic Analysis statistics on real GDP by state. The president of the Insurance Information Institute included that information in his NYSSA presentation (available at http://www2.iii.org/presentations).
- Tort Reform (or “Un-reform”) – At the conference, the medical malpractice carriers were asked what they are seeing in terms of “slippage” of tort reform in various states. The questions focused on what they are seeing for awards and settlements (longer term) and defense costs (shorter term). Looking at this more broadly, if you have a liability book, you should be prepared for questions about the possible effect on your business.
- Investment Portfolios — The questions at the NYSSA made it clear that investment portfolios aren’t the major concern they were even six months ago (although investors still need all the details, preferably online, in Excel files). Unless there is something unusual in your situation, you should be able to shorten your introductory remarks on this topic. In the comments, key observations would be on interest rate sensitivity and duration, and on the outlook for investment income.
I hope these initial ideas are helpful. Watch for more tips in the coming days. Insurance companies have unique challenges when communicating with investors and I would love to work with you on your outreach. Feel free to get in touch.
Filed under: NYSSA | Tagged: Conference Calls, NYSSA | 2 Comments »
Posted on January 29, 2010 by Heather J. Wietzel
January ended on a high note. I’ve started work for a third client and officially become InsuranceIR LLC.
I’m celebrating by reserving this blog for future (and as-yet undetermined) use. Don’t worry, the plans also include other, more interesting, celebrations!
Filed under: Uncategorized | 1 Comment »
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