S&P 500 Industry Briefing: Property & Casualty Insurance Yardeni Research, Inc.

S&P 500 Industry Briefing:
Property & Casualty
Insurance
Yardeni Research, Inc.
October 27, 2014
Dr. Ed Yardeni
516-972-7683
eyardeni@yardeni.com
Joe Abbott
732-497-5306
jabbott@yardeni.com
Please visit our sites at
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Table Of Contents
Table Of Contents
S&P 500 Property & Casualty Insurance
Stock Price Index
Earnings
Revenues & Margins
Earnings Growth & Valuation
October 27, 2014 / S&P 500 Industry Briefing: Property & Casualty Insurance
1
2
3
4
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Stock Price Index
Figure 1.
385
335
385
S&P 500 PROPERTY & CASUALTY INSURANCE INDEX*
10/27
(ACE ALL CB CINF PGR TRV XL)
335
285
285
235
235
185
185
135
135
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85
85
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
200-day moving average.
* Ratio scale.
Source: Standard & Poor’s Corporation and Haver Analytics.
Figure 2.
550
S&P 500 PROPERTY & CASUALTY INSURANCE INDEX, FORWARD EARNINGS, & VALUATION
550
Property & Casualty Insurance Index
10/27/14
450
x15
Blue Angels Implied Price Index*
10/16/14
450
350
350
x10
250
250
x5
150
150
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50
2007
2008
2009
2010
2011
2012
2013
2014
50
2015
* Implied price index calculated using forward earnings times forward P/Es.
Source: Standard & Poor’s Corporation and Thomson Reuters I/B/E/S.
Page 1 / October 27, 2014 / S&P 500 Industry Briefing: Property & Casualty Insurance
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Earnings
Figure 3.
36
32
36
S&P 500 PROPERTY & CASUALTY INSURANCE OPERATING EPS
(analysts’ average forecasts, ratio scale)
32
10/16
28
15
Consensus Forecasts
28
Annual estimates
24
Forward earnings*
20
24
13
20
14
16
16
12
12
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8
8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
* Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter.
Source: Thomson Reuters I/B/E/S.
Figure 4.
40
40
S&P 500 PROPERTY & CASUALTY INSURANCE NET EARNINGS REVISIONS*
30
30
20
20
10
10
Oct
0
0
-10
-10
-20
-20
-30
-30
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-40
-40
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
* Three-month moving average of the number of forward earnings estimates up less number of estimates down, expressed as a percentage
of the total number of estimates.
Source: Thomson Reuters I/B/E/S.
Page 2 / October 27, 2014 / S&P 500 Industry Briefing: Property & Casualty Insurance
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Revenues & Margins
Figure 5.
275
275
S&P 500 PROPERTY & CASUALTY INSURANCE REVENUES PER SHARE
10/16
(analysts’ average forecasts, ratio scale)
15
250
250
225
225
13
14
200
200
Consensus Forecasts
175
175
Annual estimates
Forward revenues*
150
150
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125
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
125
2015
* Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter.
Source: Thomson Reuters I/B/E/S.
Figure 6.
18
18
S&P 500 PROPERTY & CASUALTY INSURANCE PROJECTED PROFIT MARGIN
(using analysts’ average earnings and revenues forecasts)
16
16
Consensus Forecasts
14
14
Annual estimates
Forward profit margin*
12
12
10/16
15
13
10
10
14
8
8
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6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
6
2015
* Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter.
Source: Thomson Reuters I/B/E/S.
Page 3 / October 27, 2014 / S&P 500 Industry Briefing: Property & Casualty Insurance
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Earnings Growth & Valuation
Figure 7.
60
60
S&P 500 PROPERTY & CASUALTY INSURANCE LTEG VS STEG
(percent)
50
STEG capped at 50%
50
LTEG*
STEG*
40
40
30
30
20
20
10
10
10/16
0
-10
0
-10
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-20
-20
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
* STEG: 12- month (52-week) forward consensus expected earnings growth. LTEG: 5-year forward consensus expected earnings growth. Monthly data
through 2005, weekly thereafter.
Source: Thomson Reuters I/B/E/S.
Figure 8.
20
15
20
S&P 500 PROPERTY & CASUALTY INSURANCE VALUATION
15
Forward P/E*
10/16
10
10
5
2.5
5
2.5
2.0
Relative P/E**
2.0
PEG Ratio***
1.5
1.5
1.0
1.0
10/16
.5
.5
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.0
.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
* Price divided by 12-month forward consensus expected operating earnings per share.
** Sector or industry forward P/E relative to S&P 500 forward P/E.
*** Sector or industry forward P/E relative to sector or industry consensus 5-year LTEG forecast.
Source: Thomson Reuters I/B/E/S.
Page 4 / October 27, 2014 / S&P 500 Industry Briefing: Property & Casualty Insurance
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