Repeat first-teamer Joshua Shanker of Deutsche Bank Securities is “direct and to the point,” avers one admirer. “You can have an intellectual debate with him,” reports another. As the economy improves, Shanker believes, what he calls the “remarkably benign” loss environment insurers have enjoyed the past few years could reach an abrupt end. Economic activity portends a rise in loss frequency, meaning insurers may be paying out more claims. And, in relation to rising interest rates, he forecasts an escalation in the severity of those loss cost claims. Finally, he thinks the courts are becoming more plaintiff-friendly, which again signals more and maybe bigger payouts. That marks a change since the financial crisis, when a lack of loss activity boosted profitability. Investors overweighted the group because of that performance, coupled with the perceived safety of the names relative to other financials, Shanker, 39, points out. But buy-sider’s risk appetite is greater now, and they are exiting the sector’s stocks. In this environment he’s still advocating American International Group. The New York–based property/casualty insurer, he says, “possesses a deep-value orientation, and at the same time, it’s viewed as a risk financial.” — Carolyn Koo |
New York Joshua Shanker Carolyn Koo Deutsche Bank Securities American International Group
