Valuation+of+a+P+and+C+Company（排版很好的PPT）.ppt

Valuation of a P 34% debt/capital ratio $1,325 new equity issued; equity of Sell Co. eliminated 2% EPS accretive after new shares issued, cost of debt and synergies Simplified Acquisition Model Example Source: Company reports and Bloomberg IBES estimates. Capital Structure Buy Co.Sell Co.AdjustPro Forma Cash$75$100-$175$0 Total Assets$5,400$3,700$0$9,100 Debt$400$200$1,150$1,750 Other Liabilities$3,000$2,000$0$5,000 Equity$2,000$1,500-$175$3,325 Total Assets & Liab.$5,400$3,700$10,075 Debt/Capital17%12%34% EPS Accretion (2008) Buy Co.Sell Co.AdjustPro Forma Earnings$300$150-$7$443 Shares Outstanding300132.5432.5 Earnings per Share (EPS)$1.00$1.02 Accretion/(Dilution)2% 10 Sensitivity analysis highlights the impact on accretion of key deal assumptions Additional equity reduces accretion as additional shares are issued Cost of equity is greater than the cost of debt Sell Co. acquired at a P/E ratio greater than Buy Co. Simplified Acquisition Model - Example Source: Company reports and Bloomberg IBES estimates. Sensitivity Analysis (2008 Earnings Accretion) 2%0%10%20%30% $02%-2%-5%-7% $155%2%-1%-4% $309%6%2%-1% $4513%9%6%3% 2%0% 20%30% 70%1%-2%-5%-8% 60%5%2%-2%-5% 50%9%6%2%-1% 40%13%10%7%4% Purchase Price Premium Purchase Price Premium Synergies Equity Consideration 11 Excess capital of Buyer and Seller can be used to fund transaction The optimally capitalized portion of the Sell Co. business is valued at a full acquisition multiple Excess Capital may not be valued at a full price/book multiple Simplified Acquisition Model - Example Source: Company reports and Bloomberg IBES estimates. Pro Forma Regulatory Capital Buy Co.Sell Co.AdjustPro Forma Required Capital$1,100$800$0$1,900 Available Capital$2,000$1,500-$175$3,325 Capital Ratio182%188%175% Minimum Target Ratio175%175%175% Excess Capital$75$100$0 Adjusted Book Value of Sell Co. Book Value Book Value Multiple Equity Value Capital at 175%$1,4001.60x$2,240 Excess Capital$1001.00x$100 Total$1,5001.56x$2,340 Base Case$1,5001.60x$2,400 12 Actuaries are an integral part of a P&C valuation process by providing forecasts for loss ratios, payout patterns, reserve development, and premium growth The valuation of a P&C company is often an iterative process where the forecasts provided by actuaries can reflect the biases of the acquiring company for example, a purchaser may have a pessimistic view on projected loss ratios Actuaries can provide value to all aspects of a transaction when they are aware of the strategic objectives of their client (while maintaining an objective viewpoint) It is important for all deal team members to have an understanding of the financial model and how their analysis is being inputted into the model Not all members of a deal team will be experts in P&C insurance. Actuaries are often invaluable teac