Remote Chance of Bird-Flu Pandemic Spawns Murky Outlook for Life Insurers
If a serial killer were on the loose, it might not make sense to hold stock in a company that has to compensate his victims.
That is a point some analysts and others are starting to consider as the avian-flu virus spreads to new parts of the globe. "A severe outbreak could have far-reaching repercussions for a large number of life insurers," says Morgan Stanley insurance analyst Nigel Dally in a recent report.
Among 14 public companies studied, the report pinpoints one industry giant, MetLife Inc., and smaller firms, such as Reinsurance Group of America Inc., or RGA, as being the most exposed to potential losses based on an analysis of the amount of life insurance they have underwritten.
So far, an outbreak on the order of the 1918 influenza pandemic, which killed more than 40 million people world-wide, looks like such a remote possibility that it is "immaterial," says Eric Veiel, a life-insurance analyst at money-management firm T. Rowe Price Group Inc. The avian-flu virus has killed more than 100 people in at least eight countries since 2003, according to the World Health Organization. That is fewer than the number of deaths caused by lightning in the U.S. over an average three years -- about 160 -- according to National Lightning Safety Institute statistics.
To become a global pandemic, the virus would have to mutate into a bug that could jump easily from human to human. While generally considered unlikely, the global consequences could be drastic. A December report by the Congressional Budget Office concluded that a severe pandemic could cut real gross domestic product about 5% over the following year.
Since the situation remains uncertain, the outlook for stock prices in general isn't clear. Some investors are preparing for the worst.
"I don't want to own stocks in the U.S. or anywhere when U.S. GDP goes from plus-five to minus-five," says David Kotok, chief investment officer for Cumberland Advisors in Vineland, N.J.
If the virus begins moving among humans, Mr. Kotok says he would want to avoid investing in sectors that depend on human-to-human contact, such as restaurants, hotels and travel concerns. He would lean toward sectors that help to circumvent such contacts, such as Internet stocks. Cumberland manages $820 million in accounts in exchange-traded funds, says Mr. Kotok, and the firm is less heavily invested in the retail and consumer sectors than in technology stocks.
The Insurance Information Institute, a trade organization, estimates that a 1918-style pandemic could cost the industry $133 billion in additional death claims. According to Morgan Stanley, that amounts to more than half of the industry's $238 billion in capital, which is an insurer's assets minus its liabilities. A more modest outbreak could amount to a little less than 15% of capital, the report notes. Fitch Ratings estimates that a moderate outbreak could cause additional life-insurance payouts of $18 billion in the U.S.
Morgan Stanley's Mr. Dally ranked the group by looking at the value of life-insurance policies that had been written, compared with the insurers' shareholder equity. Companies that had large ratios of net life-insurance policies "in-force" compared with shareholder equity could be more exposed to a pandemic, the report says.
At the end of 2005, MetLife was liable for a total of $4.4 trillion in life insurance. Because of termination clauses and other factors, a small percentage of policies that are written are typically paid out. But at 164 times shareholder equity, the ratio was at the high end of the range in the study. RGA's ratio was even higher, almost 461 times shareholder equity.
The report also identifies StanCorp Financial Group Inc. and UnumProvident Corp. "as having significant potential exposure." At each of those, the ratio was more than 100 to 1.
"While we believe each of these companies have sufficient reserves to cover expected mortality trends," the report says, "a spike in mortality would result in a significant hit to both earnings and shareholder equity." Mr. Dally says the report is meant to be filed away for future reference. "At this stage, I don't think it's a big threat."
Most investors don't seem overly concerned. Stock prices of MetLife and UnumProvident are slightly lower than their closing prices on Nov. 15, the day before China reported its first human cases. Stocks of some other big life insurers have risen over that period.
In 4 p.m. New York Stock Exchange composite trading yesterday, MetLife's shares rose seven cents to $48.44 and UnumProvident rose 14 cents to $20.62. StanCorp was up 14 cents to $54.25, while RGA was down 46 cents to $46.83.
The four companies generally say they are taking into consideration the risks posed by avian flu. Some cite factors that could limit the financial impact of a pandemic. All four companies have had business relationships with Morgan Stanley.
"We have a very diversified portfolio of products," says John Calagna, a MetLife spokesman. The New York insurance titan was the largest life insurer in the nation during the 1918 pandemic and survived, he notes. "We've dealt with this before."
Bob Greving, chief financial officer of UnumProvident, says the report "overstates the case" and says the Chattanooga, Tenn., company has a number of reinsurance deals, including one under which it pays only half of the value of the claims once losses exceed a certain limit, and reinsurance pays for the rest.
Jeff Hallin, second vice president of investor relations and financial planning at StanCorp, says the Portland, Ore., company's business is spread throughout the U.S. Much of its premium volume comes from group disability-income insurance, a product that he says is exposed to less risk of increased claims than group life insurance.
RGA of Chesterfield, Mo., which is primarily a life reinsurer, says it "continually evaluates all aspects of mortality, including pandemics such as the avian flu, as we manage our portfolio of risk."
人寿保险类股前景难料
如果有个连环杀人犯四处作案，那么就没理由持有必须向受害者支付赔偿的保险公司的股票了。
这就是禽流感病毒在全球范围内扩散途中，有些分析师等人的想法。“禽流感疫情一旦爆发，很多人寿保险公司都会遭受严重冲击，”摩根士丹利(Morgan Stanley)保险分析师达利(Nigel Dally)在最近发布的报告中表示。
更多信息
? 禽流感专题报导他跟踪研究著14家上市保险公司，根据各自承保的人寿保单的情况分析了潜在的损失。报告特别指出了一家业内巨头──大都会保险(MetLife Inc.)和Reinsurance Group of America Inc. (RGA)等几家规模小一些的公司，并认为它们的损失可能是最惨重的。
理财公司T. Rowe Price Group Inc.的人寿保险分析师菲尔(Eric Veiel)说，截至目前，像1918年那样导致全球各地逾4,000万人死亡的流感疫情看起来已年代久远，不大可能重演。世界卫生组织(World Health Organization)数据显示，2003年以来，至少8个国家证实了人禽流感病例，已导致100多人死亡。这比美国三年内死于雷击的平均人数还少，根据美国国家雷电安全研究所(Lightning Safety Institute)的统计，这个数据平均约为160人。
要能引发全球疫情，禽流感病毒必须变异成能够在人与人之间传播的病毒。虽然人们普遍认为这一点不太可能实现，可一旦出现就会在全球引起灾难性的后果。美国国会预算办公室(Congressional Budget Office)去年12月的一份报告称，严重的疫情暴发将导致美国来年国内生产总值(GDP)减少约5%。
因为形势仍不明朗，股价的总体前景也就不明朗。有些投资者正在做好最坏的准备。
新泽西州Cumberland Advisors的首席投资长考托克(David Kotok)说，美国GDP从增长5%放缓至下降5%时，“我可不想持有美国或者任何地区的股票。”
他说，如果禽流感病毒开始在人群中传播，那么就要避免投资依靠人与人接触而开展的行业类股了，例如餐饮业、酒店和旅游行业等。他会选择那些避免这类接触的行业类股，例如互联网。考托克说，Cumberland管理著价值8.20亿美元的上市交易基金，投资方向更偏重科技类股，而不是零售和消费类股。
行业团体Insurance Information Institute估计，类似1918年那样规模的流感疫情会导致保险行业多支付1,330亿美元的死亡赔偿；摩根士丹利则估计，这笔赔偿会比保险行业总资本2,380亿美元的一半还高。所谓资本，指的是保险上的资产减去负债后的净值。该行报告还称，如果疫情规模较小，赔偿金会略低于行业总资本的15%。惠誉国际(Fitch Ratings)估计，小规模疫情会导致人寿保险公司在美国多支付180亿美元赔偿金。
摩根士丹利的达利根据各保险公司承保的人寿保单偿付责任与该公司股东权益之比来确定评级。报告称，比率越高，该公司受到疫情打击的程度就会越重。
截至2005年，大都会保险人寿保单的偿付责任为4.4万亿美元。由于终止条款和其他因素的影响，承保的保单中只有很小一部分需要支付赔偿。但是，大都会保险人寿保单偿付责任与股东权益之比高达164倍，处在达利研究所及的各公司比率的高端。RGA的这个比率更高，几乎是股东权益的461倍。
他的报告还提到了StanCorp Financial Group Inc.和UnumProvident Corp.，称二者“有显著的潜在风险”，因为它们的人寿保单偿付责任与股东权益之比都超过了100:1。
“虽然我们相信每家公司都根据预计人口死亡率趋势提取了充足的拨备，”报告称，“但死亡率激增会给它们的收益和股东权益带来沉重打击。”达利表示，这份报告会被暂时束之高阁，以备将来参考。“目前，我看禽流感并不是个重大威胁。”
大多数投资者似乎也没有过分担忧。大都会保险和UnumProvident的股价只比11月15日的收盘价略低，中国在次日宣布确诊了第一例人感染禽流感的病例。这段时间内，有些大型人寿保险类股的股价甚至有所上扬。
纽约证交所周一收盘，大都会保险股价上涨7美分至48.44美元；UnumProvident涨14美分至20.62美元；StanCorp也涨14美分，收于54.25美元；RGA则下跌46美分，收于46.83美元。
这四家公司一般都表示，他们考虑了禽流感爆发的风险。有人还提到了把疫情给财务造成的冲击限制在一定程度内的种种因素。这四家公司都与摩根士丹利保持著业务关系。
“我们的产品组合非常丰富，”大都会保险发言人卡兰格纳(John Calagna)说。他还特别指出，大都会保险是经历了1918年的流感大爆发并幸存下来的美国规模最大的人寿保险公司。“我们已有对付疫情大规模爆发的经验。”
UnumProvident首席财务长格雷芬(Bob Greving)则表示，摩根士丹利的报告“言过其实了”。他说，该公司有不少再保险协议，其中一项保证一旦损失超过某个限度，公司只需支付索赔额的一半，其余由再保险商支付。
StanCorp负责投资者关系和财务规划的第二副总裁哈林(Jeff Hallin)表示，公司业务遍及美国各地，大部分保费收入来自集团伤残险，其风险要低于集团人寿保险。
RGA的主要业务是人寿再保险，称公司在风险管理过程中“将持之以恒地评估与死亡率相关的各项因素，包括禽流感这类疫情。”
