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Portfolio > ETFs > Broad Market

Accenture: analysts forecast high growth, profitability for top-performing insurers

By Warren S. Hersch

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Insurance equity analysts expect top-performing companies to achieve high growth and return on equity in 2012, according to new research.

Accenture, Chicago, published this finding in a survey of insurance equity analysts to learn how recent events have influenced their expectations about the companies’ financial performance. Accenture commissioned Institutional Investor Market Research Group to survey 68 analysts from North America, the Asia-Pacific region, Europe, African and Latin America.

When asked, “What performance do you expect in 2012 from life insurers to which you give superior ratings?” the analysts collectively expect an annual mean growth of 9.6% and a mean pre-tax return on equity of 15.1%.

In answer to the question, “What should insurers’ most important priorities be in the year ahead, 50% of the respondents say “risk control” and 44% flag “sustainable growth.”

Respecting the biggest external challenges that insurers face in coming years, more than 8 in 10 analysts (83%) identify “new regulations and reforms.” And 65% peg “volatile investment returns,” the survey states.

When asked about the critical drivers for insurers over the next three years, half of the respondents say “quality of service.” And an additional 38% and 21% identify “pricing strategy” and “data analysis,” respectively.

In response to the question, “How important is it for an insurance company to achieve organic growth in emerging markets over next three years?” more than four in ten (44%) of the respondents identify such growth is “important;” and an additional 44% say it is “critical.”

Smaller percentages flag as critically important organic growth in mature markets (25%), mergers and acquisition growth in emerging markets (20%) and M&A growth in mature markets (4%).

Nearly all of the respondents (92%) say that understanding and predicting customers’ behavior and needs is important (56%) or critical (36%), the survey reveals. More than 8 in 10 analysts also identify as important or critical developing and implementing a multi-channel distribution strategy (60% and 28%, respectively) and developing new products (60% and 24%). However, fewer than of the analysts (48%) say that entering new lines of business is important (44%) or critical (4%).

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