Building Value: 2017 Insurance Value Creators Report (Boston Consulting Group)

Summary

• From January 2012 through December 2016, the global insurance industry posted an annual median TSR of 18.5%, compared with 16.2% for the 2,400 companies in the BCG database.§1
• Value placed on increased payout accounted for as much as 80% of valuation multiple expansion and 65% of total returns for some players.§1
• Top-quartile insurers had a median TSR of 25.3%, with P/B multiple expansion contributing about half of the increase.§2
• Mature companies that increased top-line growth by 2 points or more delivered shareholder returns 40% higher than the market average.§4
• Digitized claims processes and robotics have lowered costs by 20% to 40% within a year.§5
• A digitized customer journey can yield cost savings of 15% to 25%.§5

Key insights

1. The top-quartile analysis compared against the rest of the 84 companies in the global sample.§2
2. TSR in insurance is broken down into book value growth, change in the P/B multiple, and cash flow contribution.§2
3. Management teams allocate about 60% of their time to new business and 40% to the in-force book, while investors allocate about 70% of their valuation to the in-force book.§4
4. A large global insurer achieved productivity gains of 20% to 30% by digitizing claims, cutting resolution time from up to two months to three days.§5
5. Zhong An, launched in 2013, can launch a new product in as few as five to ten days.§5
6. Capital allocation and cost efficiency strategies can reach a point of diminishing returns, so leaders must refocus on growth.§3