Investment opportunities in Full Line, Property, and Causality Insurances
The broadening and deepening of global business opportunities as well as growing opportunities for people to migrate to places where they would not been expected to two or three decades ago, has created opportunities for innovators and enablers to come up with new business models and new ways to deploy particular services.
The insurance business is one such case in point. Although it is a knowledge-intensive business and has a historic approach of creating long-term close relationships with its clients, the digital opportunity is tremendous. The knowledge intensiveness can be put to advantage, as can the skill of attaching certain probabilities to risk factors. Implementing comprehensive application processes which collect robust data about applicants would allow consumers to purchase any insurance cover for themselves.
Without doubt, additional new business models will emerge over time to capitalize on the digital trends as they evolve.
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| The Hartforf Financial Services Group | HIG | USA | 20 % | 6.24 |
| Investment case: Hartford is in the process of reorganizing its business away from life insurance (which is work intensive) toward non-life insurance. Moderate prices in the non-life insurance space can be off-set by the implementation of modern technology. The digitization of its services offers the company an excellent long-term opportunity to gain market share. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Allianz | ALVF | Germany | 16 % | 7.44 |
| Investment case: Allianz is one of the largest insurance companies worldwide. It offers life and savings products, health and medical insurance, property and causality insurance as well as asset management services. The digital opportunity for the company is important and it appears that it is addressing the issue through its latest cost-cutting measures and newly developed business growth strategies. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| MetLife | MET | USA | 23 % | 5.54 |
| Investment case: MetLife is the largest US life insurance company; it is the leading provider of individual life and annuity products in the US. Because its business is so highly knowledge-intensive, the implementation of a fully digitalized strategy would require more effort than for a non-life insurance company. However, once a strategy is implemented, we envisage significant upside potential for MET, as its assets are sensitive to interest rates and therefore relatively easy to manage. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Zurich | ZURN | Switzerland | 16 % | 5.89 |
| Investment case: Zurich is one of the world’s largest non-life insurers; however, at the same time it does still maintain some important exposure to the life insurance market. The company’s drive for profitability improvements will inevitably lead to the implementation of more digitalized work-processes. Its geographical exposure to regions where connectivity is not an issue bodes well for the company. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Prudential | PRU | United Kingdom | 19 % | 5.84 |
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Investment case: Prudential is the UK’s largest life insurance company with important operations in the UK, Asia and the US. In Asia, Prudential is the fastest growing insurance company. Its competitive edge lies in its product focus which is supported by a digital strategy and a physical distribution network. |
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