A study by Columbia Business School Professor Doron Nissim, Ernst & Young Professor of Accounting & Finance, reveals a better understanding of how investors value insurance companies. Two alternative approaches are typically used when estimating a company’s equity value: fundamental valuation and relative valuation. Academic research and teaching tends to emphasize fundamental valuation models, although relative valuation models – which typically involve price multiples, or ratios used to compare a company to a group of similar companies – are much more common in practice. Unlike most prior studies, this research, forthcoming in the Review of Accounting Studies, examines the impact of industry-specific adjustments on the precision of estimated value relative to stock price.
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Study compares the accuracy of valuation methods of insurance companies
Insurance industry key to growth
At first glance, you might be asking yourself what the governors of Iowa and Connecticut have in common. We come from different political parties and different regions of the country. But as governors of states with two of the largest domestic insurance industries in the nation, we have one major thing in common — we both are eagerly anticipating the report from the newly created Federal Insurance Office (FIO) within the U.S. Department of the Treasury. We hope and expect that the FIO report will express strong support for our current state-based insurance regulatory system and advocate for our U.S. domestic companies in the burgeoning global marketplace. This is essential to help this nation maintain its stronghold in this important industry.
Mitek Systems Announces Suite of Mobile Imaging Solutions for Insurance Industry
Mitek Systems, Inc. MITK +6.33% ( www.miteksystems.com ), the leader in mobile imaging solutions, today announced a suite of solutions that enables property and casualty insurers to deliver easy and convenient mobile services across the sales, service and support functions. The solutions use the camera on a mobile device (smartphones & tablets) to take photos of documents to eliminate data entry on small keypads and automate tasks creating superior mobile user experience.
Willis Group claims captive insurance companies could be key to future of insurance industry resiliency
The global insurance industry is undergoing extreme change. The change is brought on by the rapidly evolving risks that the industry is facing. As risk changes, insurers are feeling pressure to become more adaptive and resilient against emerging threats. The Willis Groups, one of the world’s largest insurance brokers, believes that captive insurance companies could be the key to weathering the storms of the future. Joe Plumeri, CEO of the Willis Group, attending this year’s World Captive Forum in Miami, Florida, highlighted the usefulness of captives to insurers around the world.
Innovation in Insurance – Take Note Now!
SMA is observing a noticeable shift in mindset among insurers when it comes to the topic of innovation. So just what is really changing and why is it important? The insurance industry has a long history of measured, paced change. For many insurers, taking a planned, conscientious fast-follower approach to solution technology investment is still viewed as a viable and preferable strategy. The tactic has been to watch what is working well for peers and then rapidly try to replicate it. The idea is to let others pave the way and suffer the pitfalls.
ObamaCare Advisers Predict Death of Health Insurance Companies
Two advisers to the Obama administration during the creation of the law known as ObamaCare exposed in the New York Times on Wednesday one of the predictable consequences of that law: the end of health insurance companies in America. Authors Ezekiel Emanuel and Jeffrey Liebman then reviewed all the ways that the new “accountable care organizations” will allegedly improve the delivery of healthcare after those greedy, nasty, selfish, profit-seeking insurance companies are out of the way. The article is so filled with misstatements, half-truths, and just plain lies that only a few of the more egregious ones can be addressed here.
Solvency II risk assessment rules under review
The European insurance regulator has launched consultations on two important aspects of Solvency II, while the U.K. regulator has hinted it will try to minimize the effects on U.K. insurers of having to comply with two sets of rules in 2013. The Frankfurt, Germany-based European Insurance and Occupational Pensions Authority began a public consultation on the Own Risk and Solvency Assessment that insurers and reinsurers in the European Union will have to undergo under Solvency II, which is slated for gradual introduction starting Jan. 1, 2013. The comment period runs until Jan. 20, 2012. Under Solvency II, all insurers and reinsurers will have to conduct regular ORSAs—a view of the company’s own risk profile and solvency assessment, or capital, needs.
Insurance firms slammed for cashing in on Streetly flood
Residents have slammed insurance companies who were touting for business just hours after a devastating flood wrecked their homes. The huge torrent swept through 150 properties in Streetly, Sutton Coldfield, in the early hours of last Saturday. The flash flood was caused by a burst water main and ripped down walls, leaving some homes under five feet of water. It was hours until residents could get back into their houses to assess the damage – but THREE insurance firms were on the scene by then.
ABI chief defines insurance industry “new normal”
The Association of British Insurers’ (ABI) director general, Otto Thoresen, has set out the “new normal” for the UK insurance industry. Speaking yesterday at the Insurance Institute of London, Mr Thoresen outlined three core shifts that the industry needs to accept, beginning with globalisation and the “rising star” of the economies of the Far East (China in particular).
Insurance costs to go through the roof – again
(article by the Daily Telegraph)The car insurance industry is in far worse shape than I had feared. In 2010 it was warned that it was being closely scrutinised by the House of Commons Transport Select Committee, which took the unprecedented step of investigating the industry for a second time in 2011. Last year the Office of Fair Trading added to the woes of insurers by embarking on a long-overdue investigation of its own. Now there’s talk of the Competition Commission and Financial Services Authority wading in, too. But even with these respected and powerful political and consumer-protection organisations breathing down their necks, insurers, brokers, agents, comparison websites and others in and around the car insurance/banking business still hit motorists with inflation-busting price increases over the past 12 months.
Insurance Marketing New Basics: Go Mobile
Be careful if you ask Michael Jans, president of Bend, Ore.-based Agency Revolution, about marketing. He may throw the Yellow Pages at you. Jans isn’t a temperamental thug, he’s just passionate about talking about how much marketing in the insurance industry has changed—from when agents took out an annual advertisement in the local phone directory to a fast-moving, social-media-savvy world where things change about as often as some people can Tweet, add a LinkedIn contact and update their Facebook walls.
Insurance companies forced to summarize each benefit in one document
Under the health reform law, insurance companies are required to summarize each benefit plan in a four-page, easy-to-read document. The Obama administration rolled out a draft format for the summaries this past summer, and they were supposed to roll out this coming March, on the health reform law’s two-year anniversary. Except, they won’t: In the fall, the Department Labor announced that it would no longer adhere to that March 2012 deadline, and instead would give insurance plans “sufficient time to comply.” Insurance companies have pushed for the delayed implementation. As AHIP, which represents the insurance industry, wrote in its comments, “The proposed rule requires almost a complete redesign of how information is provided to consumers and it will be difficult and costly to implement on this timeline.”
S&P Bell May Not Toll for Big Bond Insurer
(by online.wsj.com)Earlier this year, Standard & Poor’s shook the bond-insurance industry when it said it might downgrade insurers by several notches as a result of changes in how the firm assesses risk at such companies. It turns out there was less to worry about. Assured Guaranty Ltd., the only company still providing protection for municipal bonds, is widely expected to move down by no more than a notch or two when S&P announces its new debt rating by Nov. 30.
Financial ‘gatekeeper’ in $670M insurance industry scam enters guilty plea
A man who cooked the books for a $670 million insurance industry scam pleaded guilty Monday to charges he helped mislead thousands of investors worldwide. Jorge Luis Castillo, 56, Hackettstown, N.J., entered pleas in U.S. District Court to conspiring to commit mail and wire fraud in U.S. District Court. He is scheduled for sentencing May 22 and could receive up to 20 years in prison and fined up to $250,000.
Proactive Regulatory Compliance Creates Competitive Advantage for Insurance Companies
(www.insurancetech.com)There is inherent value in an insurer’s ability to rapidly and accurately respond to regulatory demands. A carrier that can quickly react to changing regulatory demands and generate a timely, clear and accurate picture of its financials is a business that can compete on the strength of greater efficiency and agility. And yet, insurers tend to put off compliance initiatives until they are forced to face them.
FDIC says bank earnings rose to $35.4B in Q3, while number of problem banks falls to 844
(by Associated Press & the Washington Post, published November 22, 2011, by the Washington Post)Bank earnings rose over the summer to their highest level in more than four years, while the number of troubled banks fell for the second straight quarter, federal regulators reported Tuesday. The Federal Deposit Insurance Corp. said the banking industry earned $35.3 billion in the July-September quarter. That’s up from $23.8 billion in the same period last year. More than 60 percent of banks reported improved earnings.
Companies going to high-deductible health insurance plans
As workers enroll in health insurance for the new year across the USA, many are discovering their companies are moving to high-deductible health plans. Health care experts say the move reflects a larger shift toward what the industry calls “consumer-driven” health plans, in which lower premiums and a high deductible encourage consumers to be more conscious of medical-care costs and more cautious about undergoing expensive procedures, thus driving down costs for employers.
After MF Global, futures industry rethinks bailout fund
(Reuters) In November 1986, shaken by traders’ losses after a brokerage went bust, the U.S. futures industry considered, and then rejected, the notion of insuring customer funds in a broker default. The collapse last month of MF Global Holdings Inc, and hundreds of millions of dollars of still-missing customer money, is forcing a rethink of that 25-year-old decision. Executives at the National Futures Association have been talking with senior management at CME Group Inc and other market participants about how best to safeguard customer funds in future broker bankruptcies, Dan Driscoll, NFA’s chief operating officer, told Reuters in an interview. Under discussion is the feasibility of a government-sponsored insurance fund modeled after the Securities Investors Protection Corporation (SIPC). Another option is an industry-sponsored bailout fund, Driscoll said.
Non-life Insurance: Global Industry Almanac, MarketLine
(by Reportlinker) Non-life Insurance: Global Industry Almanac is an essential resource for top-level data and analysis covering the Non-life Insurance industry. It includes detailed data on market size and segmentation, textual analysis of the key trends and competitive landscape, and profiles of the leading companies. This incisive report provides expert analysis on a global, regional and country basis.
U.S. Insurance Execs Turn Pessimistic Over Business Outlook: KPMG Survey
( by PRNewswire via COMTEX) In a dramatic reversal, many U.S. insurance industry executives say business conditions in the sector have worsened compared to a year ago. Faced with continuing economic sluggishness and a rapidly evolving regulatory environment, they remain guarded about their company’s performance and the industry’s ability to generate underwriting profit, according to an annual industry survey conducted by KPMG LLP, the audit, tax and advisory firm.
Yes, Insurance Should Cover Autism
(online.wsj.com) The insurance industry for years has discriminated against families who pay thousands of dollars a year in premiums, yet receive no benefits in return for their children with autism. New York Gov. Andrew Cuomo has wisely put a stop to this discrimination by rejecting the insurance industry’s scare tactics. In the process, New York taxpayers stand to save millions of dollars in reduced special education, Medicaid and social service costs.
