美国寿险业2018年Q3预览.docx

16 October 2018 Americas/United States Equity Research
Life Insurance
Research Analysts Andrew Kligerman
212 325 5069
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Wilma Burdis
212 325 1594
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Alvin Huang
212 325 5064
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Jack Matten
212 325 2322
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Life Insurance—3Q18 Preview
SECTOR FORECAST
Positive Macros, Possibly Favorable Mortality
With the life sector appearing undervalued, we like ATH, MET and VOYA into 3Q18. ATH is poised for an upside EPS surprise and strong sales; MET will likely post solid results and no surprises, including no LTC charges; and VOYA should produce solid EPS, absent a pre-announced reinsurance recapture charge, and benefit from likely higher re-deployable capital, initiation of a dividend, and sale of its individual life business.
Lower mortality rates in 3Q18 could provide a lift for RGA. Mortality rates in 3Q18 fell (8)% sequentially and (5)% y/y, based on Center for Disease Control (CDC) data. Although CDC data is best correlated with extreme scenarios such as the 1Q18 flu epidemic, it may imply a benefit to RGA and, to lesser degrees, BHF, EQH and LNC.
Equity markets boosted 3Q18 results, but much of the upside has reversed in early 4Q18. The S&P 500 rose % in 3Q18, boosting expected EPS for equity panies such as AMP and VOYA and variable annuity writers BHF, EQH, LNC and PRU. But, more than 350 bps of that performance has been wiped out since 4Q18 started, reducing the 3Q18 long-term EPS benefits.
Higher Treasury yields providing long-term EPS upside with ATH and FG most aligned. The 10-year rose to % from % at 2Q18 end, signaling improved new money yields. Since 3Q18 end, the yield has risen to %, improving the long-term outlook for investment performance. ATH and FG are the most interest sensitive in the sector, but each of our panies should materially benefit to varying degrees.
Likely higher annuity sales at ATH, FG, BHF, EQH, LNC and PRU and pension risk trans