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UBS Warburg Hosts Global Financial Services Conference
The UBS Warburg Global Financial Services Conference begins today at the Grand Hyatt Hotel in New York City and runs through Thursday, April 26. The conference will feature presentations by more than 90 senior executives from a comprehensive group of banks, insurance companies, asset managers, specialty finance firms, thrifts, mortgage companies, e-finance companies and government sponsored entities from more then 20 different countries.
For banks in 2001, the economic slowdown and sluggish capital markets resulted in higher credit costs and lower fee income generation for banks. Earnings, however, were supported by the positive impact of declining interest rates on the net interest margin. This year, the sector awaits an eventual upturn in economic growth and market activity, and is preparing for the prospect of higher interest rates. UBS Warburg expects the presenting bank executives to discuss how their firms are dealing with the current environment, and how they are positioning their balance sheets and business orientation to benefit from an eventual rebound. Expense controls are expected to be a common theme, as cost containment will help banks offset sluggish top-line revenue trends. Some of the companies who will discuss these issues, both from a domestic and international perspective, will be: David A. Daberko, chairman and chief executive officer of National City Corporation; Eugene M. McQuade, vice chairman and chief financial officer of FleetBoston Financial Corporation; David Goldfarb, chief financial officer of Lehman Brothers; L. Phillip Humann, chairman, president and chief executive officer of SunTrust Banks Inc.; David M. Moffet, vice chairman and chief financial officer of U.S. Bancorp; Fred Watt, chief financial officer of Royal Bank of Scotland Group; John J. Mack, vice chairman of the Group Executive Board and chief executive officer of Credit Suisse First Boston; Tom de Swaan, chief financial officer of ABN AMRO; Douglas Flint, group finance director of HSBC Holdings plc; and Jackson Tai, president and chief operating officer of DBS Bank.
Victor Menezes, chairman and chief executive officer of Citibank NA, the keynote speaker today, should provide a good overview on how the most diversified financial services company in the world is performing in the current environment.
The mortgage finance stocks and their earnings are largely driven by interest rates. The decline in interest rates over the past year have widened interest margins and increased home mortgage loan origination volume. These trends are expected to start reversing as rates rise this year. The other key issue is credit quality because of the weaker economy. Home mortgage loans should hold up well because housing collateral is in good shape. Presenting companies are likely to discuss how they are positioning themselves for success in a rising-rate environment. Some of the senior executives who will discuss these issues both from a domestic and international perspective will be: Ian Harley, chief executive of Abbey National plc; Thomas S. Johnson, chairman and chief executive officer of GreenPoint Financial Corp.; and Kerry Killinger, chairman, president and chief executive officer of Washington Mutual Inc.
Leland C. Brendsel, chairman and chief executive officer of Freddie Mac, who will be the keynote speaker on Wednesday, April 24, will address the challenges for the mortgage industry in the U.S. and Freddie Mac's strategy in this environment.
Property casualty insurance is a mature, cyclical industry. 2000 marked the beginning of the current firming rate environment, which gained momentum following the events of September 11. The current hard market insurance cycle is distinctly more robust than any cycle in memory, and is likely to be extended. Rate increases, coupled with a "clear-the-decks" fourth quarter 2001, paves the way for distinctly superior bottom-line growth when taking into account the sectors' more disciplined approach to underwriting. Personal lines results appear to be one year behind that of commercial lines, aided by the problems at State Farm. UBS Warburg believes Edward M. Liddy, chairman, president and chief executive officer of Allstate Corp., will stress its goals of improving property casualty profitability, broading its financial services platform, and generating more consistent earnings growth. Don Kramer, vice chairman of ACE Limited, will probably comment on its successful creation of a global platform, its ability to fully capitalize on the hard-market cycle, and its diversification plans. Edward E. Matthews, senior vice chairman of American International Group, the keynote speaker on Thursday, April 25, will likely stress the unique nature of its global franchise, its outstanding growth prospects, enhanced disclosure, and under-valuation in the marketplace. Lastly, Robert I. Lipp, chairman and chief executive officer of Travelers Property Casualty, will stress the key advantages that make it a superior property casualty franchise.
The U.S. credit card sector is a large and consolidating market. Approximately, 80 percent of the industry's loans are held by the 10 largest issuers. The industry is likely to face a number of challenges this year, including a slowdown in consumer spending and rising credit losses. UBS Warburg expects the companies at the conference to discuss strategies for weathering the difficult economy, positioning themselves for an economic rebound, and tackling the challenges of market share expansion both domestically and abroad. Nigel Morris, president and chief operating officer of Capital One Financial Corporation, will address the challenges for the industry in the United States. Christian A. Werner, chief operating officer of KEB Credit Service, will provide an international perspective on the industry.
The life insurance industry is a large and fragmented market, with the top10 players controlling only 30 percent of the $16 trillion in life insurance currently in force. Although consolidation is expected to gradually increase, especially if companies become distressed under prolonged difficult economic conditions, it will likely not be a major theme in 2002. Competition is fierce and margins are under pressure. Companies are focusing on strong product positioning and distribution advantages to improve sales and capture market share, while they supplement lackluster revenue growth with cost savings and share repurchases. UBS Warburg expects presenting companies to discuss their prospects for growth in the current environment and over the long term, with a focus on strategies for product and distribution development. Presentations by the following executives should address these issues: Robert H. Benmosche, chairman and chief executive officer of Metlife Inc.; Michael Hawker, chief executive officer of Insurance Australia Group; David Went, chief executive officer of Irish Life & Permanent plc; and Donald A. Stewart, chairman and chief executive officer of Sun Life Financial.
The asset management business has great long-term prospects given demographic trends, although the glory days of the 1990s are behind it. Individual company performance is dependent on the ability to attract and retain assets, which is driven by superior investment performance. UBS Warburg expects the asset management companies presenting at the conference to focus on their distribution strategies, trends in money flows and how they are coping with the current difficult market environment. William M. Steul, vice president and chief executive officer of Eaton Vance Corp., should address these challenges.
Audio transmissions of company presentations will be available live and by replay. Replays will begin 24 hours after the actual presentation time and will be available on the UBS Warburg's website for a period of four weeks. To access audio transmissions and conference agenda please go to the www.ubswarburg.com home page.
UBS Warburg is a business group of UBS (NYSE: UBS), one of the largest financial services firms in the world with 71,000 employees in more than 40 countries. UBS Warburg is a leader in equities, corporate finance, M&A advisory and financing, financial structuring, fixed income issuance and trading, foreign exchange, derivatives and risk management. The firm is one of four business groups of UBS AG along with UBS PaineWebber, UBS Global Asset Management and UBS Switzerland.
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