How phone consultations can supplement your insurance knowledge

By Andrew Barile

Andrew Barile Consulting Corporation

Many insurance and reinsurance industry stock investment analysts have been using the "phone consultation" concept to supplement their understanding of insurance and reinsurance companies, retail insurance brokers, excess and surplus lines brokers, and general agents. Following the important trends of these publicly held insurance entities requires an in-depth understanding of the insurance business. The stock analysts get that information via a phone consultation with an experienced insurance and reinsurance veteran. This has become an efficient use of the analyst working in investment firms.

Case study: A live conference call is held by a reinsurance company to discuss the financial results. Usually you dial in to the conference call U.S. toll free. On the call are top executives of the reinsurance chief executive officer and chief financial officer, absent are independent directors of the publicly held reinsurer.

After the prepared remarks, the investment analysts are able to ask questions. To improve this process, the analysts need to be better prepared with the questions of management, which requires a more in-depth understanding of the reinsurance business. Phone consultations with reinsurance industry experts would educate the analyst as to what questions to ask.

Many insurance stock analysts now work for investment firms that contracted with firms that provide insurance and reinsurance experts/consultants. Chief executive officers of insurance companies, brokerage firms, and reinsurance companies need to provide sufficient information about their company.

Insurance stock analysts continue to be challenged. Let's look at another example: A purchase of a publicly held insurer where management owned less than 5 percent and the acquiring firm owned less than 10 percent. What would the insurance stock analyst report on this insurer? The analysts covering the insurer never asked why management purchased the stock of the insurer they worked for. Why?

Insurance stock analysts need to reach out to experts with phone consultations and raise the bar of their profession so they provide meaningful information for the institutional investment funds.

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