2015 All-America Research Team: Insurance/Nonlife, No. 3: Jay Cohen

Jay Cohen

Bank of America Merrill Lynch

First-place appearances: 3

Total appearances: 18

Analyst debut: 1998

Even though he slips one notch to No. 3, Jay Cohen retains a loyal following. Buy-siders appreciate the Bank of America Merrill Lynch researcher’s longevity — he has appeared on this roster every year since 1998 — and expertise on property/casualty insurers, in particular. Cohen “has seen more market cycles than anyone,” affirms one fund manager. “When Jay opines on the group or a stock, it is a must-listen moment.” U.S. nonlife insurers are facing several headwinds, the analyst reports, such as pricing weakness in many lines and modest interest rates. At the same time, however, capital management — in the form of share repurchases — “has been a nice offset to these pressures,” he adds. “Given where insurance stocks are trading and the low level of interest rates, buybacks generally are accretive to earnings per share.” The challenging environment is also leading to consolidation, in both the reinsurance area — “where profit pressures have been most intense,” notes Cohen, 49 — and the insurance space, where Ace’s acquisition of Chubb Corp. “has investors thinking about where the next deal might be.” In July, Swiss multiline giant Ace announced its intention to buy Warren, New Jersey’s Chubb for $28.3 billion in cash and stock. The transaction, expected to be completed in the first quarter of 2016, should deliver substantial cost synergies and international growth opportunities for Ace, he contends, so he is positive on the name. Similarly, the researcher foresees opportunities in XL Group of Ireland, crediting its attractive valuation and his predicting that management will successfully execute the integration of Bermuda-based insurer Catlin Group, which XL purchased in May.