• Why Investor Relations?

    For more than 40 years, the CFA Institute has advocated for efficient capital markets that are ethical, transparent, and provide investor protections. One of the Institute’s guiding principles states: “Investors need complete, accurate, timely and transparent information from securities issuers.”

  • Why InsuranceIR?

    Insurance companies face unique challenges when communicating with investors and InsuranceIR is uniquely suited to help with industry-specific support.

    The primary purpose of this blog is to offer specific ideas on how insurance companies can achieve that objective.

    The supporting pages offer information on InsuranceIR's capabilities and how firm principal Heather J. Wietzel can help your company improve your investor communications.

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  • Copyright 2012

Q2 Calls — Are You Ready For Your Hour In The Spotlight?

We are halfway through 2012 and it is earnings season again. As always, managements and investor communications teams are crunching and drafting to get ready for their respective “big day.”

But remember that investors hear from all companies during earnings season. So, how can your management team be best prepared for its turn in the spotlight – that one hour during earnings season when insurance-investor attention is focused on your company?

Well, insurance companies differ enough that there is no absolute, “one size fits all” recommendation. But I have visited with a number of insurance analysts and investors in recent weeks (and read my share of industry commentary). I believe there are some common themes on the radar screen this quarter.

Before I turn to those themes, I wanted to briefly comment on how the call can be used to best effect. Continue reading

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Market Demographics May Support Your Case

So far, first-quarter releases and calls are rolling out in fairly orderly fashion with the biggest question being whether reserve releases are realistic and the biggest debate being whether some companies should have pre-released their catastrophe losses (and not “missed” consensus). Reflecting conversations with a few analysts over the past several weeks, I’m planning to look at the “to pre-release or not” topic for insurance companies in time for consideration for the second quarter.

In the meantime, I was reminded by an SNL marketing email of one valuable way insurance companies can address another topic — helping investors see their potential as the market hardens. SNL is promoting their “Market Demographics” template. According to their email, it’s a “pre-built model” that let’s you “view comprehensive data on key demographic indicators, including population, median income, home value and unemployment” by state, county or MSA. In other words, they are making it easy to do useful research.

The economic recovery is expected to be a major factor in the return to premium growth. But not all markets are equal and supporting your company’s specific plans with market data can help make your case.

For example, when talking about geographic expansion, population growth is expected be above 7% over the next five years in Arizona, Georgia, Idaho, Nevada, North Carolina, Texas and Utah (compared with a 4.6% average for the U.S.). If these are your target states for expansion, you may be able to bolster your case for your outlook.

Or you may already be seeing growth in some states (supporting lagging results in others). You could make a case that you are seeing quality business opportunities if the growth was in Hawaii, Iowa, Kansas, Louisiana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Utah and Vermont. In those states, March unemployment was below 7.5% compared with a 9.7% average for the U.S. This type of data also may add color to discussions of audit premium trends.

* InsuranceIR LLC purchases SNL data services and participates in their “IR Partner Program.” Under the terms of that program, any company that contracts for services from SNL based on my recommendation receives a $500 credit on their initial bill. InsuranceIR does not receive any cash compensation for referrals. By participating in various marketing activities with SNL, I may receive non-cash benefits, such as higher visibility.

Back from the NYSSA Insurance Conference

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.