Sweet Smell of Success

Posted by — June 4, 2006

Global High Performers Sweet Smell of Success Forbes.com staff 06.02.06, 12:00 PM ET New York - In Edith Wharton's novel The Age of Innocence, there is a character of some quality who has fallen into disrepute and who ends his days in exile in Argentina representing a large insurance company. He dies in "an odor of prosperity." Just such an odor wafts over insurance companies. It hangs between them and the dark clouds of misfortune and blacker ones of catastrophe, providing the umbrella of capital. One result is that global behemoths bestride the industry. The five largest insurers on our list of the world's 2,000 largest public companies, the Forbes 2000, are American International Group, France's AXA Group, Germany's Allianz, the U.S.'s MetLife and Italy's Generali Group. All five are among the 70 largest companies in the world. Yet size alone is no guarantee of success, which is why we have taken a second cut at the Forbes 2000 to find big companies that are absolutely great at what they do. The result is a list of elite companies that can truly be described as global high performers within their industries. Out of the 2,000 companies we start with, fewer than 150 clear all our quality hurdles. The top five from the insurance industry, all American, are: --Prudential Financial, a 130-year-old life insurer based in Newark, N.J., that has been expanding by acquisition, particularly in the annuity business, since de-mutualizing in 2001. Known for its Rock of Gibraltar logo, it is also growing its asset management, banking and trust services; a U.S. real estate brokerage; and, through a joint venture with Wachovia, a retail securities brokerage. --Aflac, a Columbus Ga.-based provider of supplemental health and life insurance in the U.S. and Japan, where it is the largest foreign insurer. It is known in the U.S. for its quirky TV commercials featuring a quacking duck. Its name is an acronym of American Family Life Assurance Co. --W.R. Berkley, a Greenwich, Conn.-based property and casualty insurer that acts as a holding company for a number of specialist insurance businesses operating in niche markets such as medical malpractice liability, commercial insurance for small- and midsized business and state and local government, and hard-to-insure specialty risks. --First American, a business information services group that has grown far beyond its original property title insurance roots in Orange County, Calif. As well as title services for the real estate industry, it provides information services for mortgage lenders, and credit and insurance products for consumers as it seeks to lessen its dependence on the cyclical ups and downs of real estate and interest rates. --HCC Insurance Holdings, a Houston-based holding company of specialty insurers, such as accident and health insurance, directors' and officers' liability, and property and casualty insurance for the marine and aviation businesses. The group operates in the U.S., the U.K., Spain and Bermuda, and is growing by acquisition. Apart from the fact that all five of the high performers are from the U.S., what separates them from the five giant insurers mentioned above? All ten are world-class companies. They wouldn't make the Forbes 2000 if they weren't. But our global high performers have a proven and superior record of long- and short-term return on equity, sales growth, earnings growth and return to shareholders. They also have favorable long-term earnings growth forecasts and a clean bill of health when it comes to accounting techniques, earnings quality or corporate governance.

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