< The 2016 All-Asia Research Team
Tat Wai (Darwin) Lam & team
Citi
First-place appearances: 1
Total appearances: 12
Team debut: 2003
Reclaiming the No. 3 spot are Tat Wai (Darwin) Lam, 37, and his Citi troupe, which was a runner-up the past two years. “Darwin has been right on the life insurance industry cycle in China over the past two years; his top pick — Ping An [(Insurance) Group Co.] — did outperform last year; and his fundamental research has been solid, in-depth and insightful,” declares one fund manager, who particularly values the group’s “thematic research on China’s aging population.” Lam, who is based in Hong Kong, advises that China insurance stocks will continue to be impacted by A-share market volatility and worries over the sharp decline in interest rates. However, “we do see value in the sector at current levels and believe share prices should hold up, given likely 20 percent–plus net-book-value growth, continued improvement in the agency channel, largely stable [property/casualty] combined ratios and generally solid capital positions,” he adds. His squad is touting PICC Property and Casualty Co., the mainland’s largest casualty insurer, because it enjoys “stable, creditable underwriting profitability, which has a combined ratio consistently below 100 percent,” says Lam. The analysts also like PICC’s “solid return on assets and return on equity, and relative defensiveness, including lower sensitivity to capital market fluctuations than life insurers, conservative balance sheets with low leverage and its low exposure risky nonstandard assets,” he adds. They peg the stock at HK$18.80; it was trading in late April at HK$14.44. The nine-person team, tracking 23 regional names, possesses a comprehensive “understanding of the complicated insurance fundamentals,” a second fan comments, and “publishes detailed and frequent sector reports, which I find very helpful.”