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The Pandemic Puts a New Premium on Performance

The 2020 Insurance Value Creators Report

Davide Corradi, Thomas Seidl and Eric Wick

Boston Consulting Group, 2020

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COVID-19 has not been kind to the insurance industry. In fact, it’s one of the hardest-hit industries of all, but some insurance companies have withstood the crisis and even thrived. This special report from the Boston Consulting Group reveals the differences between top-quartile companies, and those that are floundering, with some vital suggestions for making it through the pandemic and coming out better on the other side.

Summary

The spread in total shareholder return (TSR) between top-quartile insurers and median to lower-quartile insurers is growing.

Over the five years previous to 2019, insurers generated an average TSR of 8.2%, underperforming by 1.4% when compared to the total market. The top-quartile performers achieved 20% TSR annually over the past 5 years, however, representing a substantial spread between top and even median and lower-quartile companies. It appears that multiple expansion and book value growth has made the difference.

COVID-19 has made tough times even tougher for many insurers, and the insurance landscape is unlikely to improve. Investment-dependent industries are hampered by slashed interest rates; credit spreads and equity markets have plummeted, turning asset leverage into liability. Insurers must double down on performance to withstand the storm...

About the Authors

Davide Corradi and Eric Wick are professionals with the Boston Consulting Group, and Thomas Seidl is a BCG alumnus, now head of group portfolio management at Allianz.

The Pandemic Puts a New Premium on Performance

The 2020 Insurance Value Creators Report

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Summary

The spread in total shareholder return (TSR) between top-quartile insurers and median to lower-quartile insurers is growing.

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