Insurance & Reinsurance

Insurance & Reinsurance equity research

Explore the most viewed and latest equity research and media content for companies within the Insurance & Reinsurance sector. Stocks in this sector provide insurance and broker services within life insurance, full line, and reinsurance.

Insurance & Reinsurance equity research

11 Aug 17

Panmure Morning Note 11-08-2017

Prudential has delivered a solid set of interim results with headline IFRS Operating profit at £2358m (+15% or +5% at CRE) better than expected reflecting £188m of management actions suggesting an underlying beat of 1%. On an EEV basis, post-tax Operating profit was £2870m (+27%) well ahead of consensus driven by new business profitability at £1689m (+34%). The formulaic interim dividend was as expected at 14.5p/share (+12%). The surprising news is that M&G and Pru UK/Europe are to merge (£145m cost savings at a one off cost of £250m to achieve) to form ‘M&G Prudential’. Slightly odd given that the market was half expecting some announcement concerning the part sale of Pru’s UK book. We maintain our Buy recommendation and 2061p target price.

Companies: Prudential

10 Aug 17

H1 2017 Results

Companies: Prudential

09 Oct 17

Universe screened for three great investment ideas

In this note we present three ideas that investors should consider given the long-term demographics in the UK. Whilst people are generally living longer and that trend is set to stay, the Faculty of Actuaries has identified a more recent phenomenon of increasing mortality since 2001. We examine the main beneficiaries in the healthcare, consumer services and financial sectors, where we believe the likely impact of changes in demographics and mortality have not yet been fully reflected in share prices.

Companies: BTG DTY LGEN

15 Aug 17

Panmure Morning Note 15-08-2017

Following the better than anticipated interim results last week we have edged up our IFRS earnings and increased our target price to 2210p from 2061p previously. There has been considerable speculation concerning a possible disposal of the UK business, now including M&G and our take on it is that it would be very good news for shareholders. The disposal of the UK business should make the remaining businesses in the US and Asia look even more attractive than they are currently, particularly for Asian investors. Placing a post UK sale valuation on Pru in line with its Asian peer AIA would result in a valuation north of £28/share. Buy.

Companies: Prudential

09 Mar 16

A resilient business model across the economic cycle

Prudential announced an IFRS operating profit of £4,007m, up 22% at CER. The major contributor to operating profit is the US division (£1,691m), while the Asian and UK businesses stood at £1,209m and £1,167m, respectively. EEV new business profit grew by 20% to £2,617m. All business units contributed to this growth, with £1,490m (+28 yoy) from Asia, £809m (+8% yoy) from the US and £318m (+23% yoy) from the UK. APE sales increased by 17% to £5,607m, led by Asia where APE sales were 26% higher at £2,853m. In the US, APE sales were 3% higher at £1,729m as demand for variable annuities remained strong. In the UK, APE sales grew by 23% to £1,025m. M&G experienced net outflows of £7bn vs. net inflows of £7.1bn in 2014. However, Eastspring Investments delivered a strong performance with third-party net inflows of £6bn. The group’s underlying free surplus generation increased by 15% to £3,050m and cash remitted by business units rose by 10% to £1,625m. As at 31 December 2015, the IGD surplus was estimated at £5.5bn and the Solvency II ratio stood at 193%. The board has decided to increase the full-year ordinary dividend by 5% to 38.78p per share (final dividend of 26.47p per share). In addition, the board has decided to award a special dividend of 10p per share.

Companies: Prudential

15 Mar 17

Asia, the winning bet

Prudential announced an IFRS operating profit of £4,256m, up 7% at AER (-2% at CER) relative to 2015. The major contributor to operating profit is the US division (£2,030m), while the Asian and UK businesses stood at £1,644m and £828m, respectively. EEV new business profit grew by 18% to £3,088m: £2,030m (+18% yoy) from Asia, £790m (-2% yoy) from the US and £268m (+33% yoy) from the UK. APE sales increased by 16% to £6,320m, led by Asia (+33% yoy at £3,599m) and the UK (+33% yoy to £1,160m). In the US, APE sales were 10% lower at £1,561m. M&G assets under management rose to £264.9bn. Eastspring Investments delivered a strong performance and assets under management stood at £117.9bn vs. £89.1bn in 2015. The group’s underlying free surplus generation increased by 18% to £3,588m and cash remitted by business units rose by 5.7% to £1,718m. As at 31 December 2016, the Solvency II ratio reached 201%. The board has decided to increase the full-year ordinary dividend by 12% to 43.5p per share (final dividend of 30.57p per share).

Companies: Prudential

19 Oct 16

The risky US business mix starts to be worrying

Prudential is recovering on markets with a 3-month performance of more than 7%. Despite the sharp decrease in H1 16 EPS (-52% to 26.9p), IFRS operating profit is positive with a 6% decrease at CER to £2,059m. EEV new business profit grew by 8% to £1,260m. The group’s underlying free surplus generation increased by 13% to £1,609m and cash remitted by business units rose by 5% to £1,118m. Regarding the performances of the business units, the British insurer continued to perform well in the US market, focusing on variable annuities with an operating profit of £888m. In the UK, there was a 51% improvement in APE sales to £593m. Operating profit increased by 8% to £473m. In asset management, M&G experienced net outflows of £6.9bn, but operating profit decreased by 10% to £225m and cash remitted remained stable at £150m. Asia has delivered an operating profit of £743m, +15% yoy. At Eastspring, external net outflows of £244m and positive market movements have driven total FuM to a record level of £105bn, +5% yoy. The Group Solvency II surplus is estimated at £9.1bn, equivalent to a ratio of 175%.

Companies: Prudential

Latest Content

Swiss Re

Profit warning for Q3 17 and FY2017

Swiss Re estimates its preliminary combined claims burden in Q2 17 from the hurricanes Harvey, Irma and Maria and the earthquakes in Mexico to be c.$3.6bn, net of retrocession and before tax. Of the total combined losses, claims from the two earthquakes in Mexico are expected to be c.$175m. Swiss Re estimates the total insured market losses of the industry caused by these events to be c.$95bn. The CFO said Swiss Re maintains a very strong capital position and high financial flexibility.

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20 Oct 17
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BEZ HUW HSX JLT LRE NVA

The Money Bin

In the week to 17 October the FTSE All Share fell 0.2% vs. +0.2% for the Insurance Index and +0.9% for the Lloyd’s Index. The best performer was JLT (+1.7%); Lancashire (-0.8%) was the worst performer. This week we look at the ‘slightly’ improving picture in US commercial rates (important for Lloyd’s as a leading E&S insurer). This stabilisation/moderation should accelerate into broader rate rises post Q3 cat losses and the increase in D&O class lawsuits. How far rate rises extend across non-affected lines is still open to debate.

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17 Oct 17
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RSA Insurance Group

Bit of a blow

On 25 September RSA announced that trading in Q3 had been positive with the exception of the UK where catastrophe losses will have impacted results in the marine and International portfolios. In addition the UK H1 issues of large losses and damage from later leaks appear to have continued into H2. RSA is protected by reinsurance but we have had to lower our 2017 underlying EPS forecast to 41.0p (-12%) from 46.7p previously. We understand that very few houses have adjusted forecasts which mean that RSA will have to be fairly blunt about its losses in the Q3 trading update on 2 November. There is therefore potential for the shares to react negatively in the short term. Despite this we believe that the shares are currently fairly valued and restate our Hold recommendation.

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12 Oct 17
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BEZ HUW HSX JLT LRE NVA

The Money Bin

In the week to 10 October the FTSE All Share rose 0.9% vs. +2.6% for the Insurance Index and +1.6% for the Lloyd’s Index as loss sizes became clearer. The best performer was Hiscox (+2.3%); Helios (0%) and JLT (0.8%) were the worst performers. We look at the latest catastrophe loss estimates for Q3 but note 2017 is not yet done, with Hurricane Nate making landfall last week and ferocious wildfires in California. Increasingly, talk is of rate rises vs. ‘stability’ previously. NB Hiscox’s proposed 38% increase in Lloyd’s capacity.

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11 Oct 17
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BTG DTY LGEN

Universe screened for three great investment ideas

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09 Oct 17
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Lancashire

Net losses in US$106-212m range

Lancashire has advised that its initial net loss estimate from Hurricanes HIM and the Mexican quakes will be in a range of US$106m-212m. We provisionally cut our FY17E PBT to a loss of -US$8.1m and a base dividend only of 15c. We will continue to monitor as these claims develop. We keep FY18E PBT unchanged but this may prove conservative – certainly the group currently expects more material rate rises and in such a scenario it would be an early beneficiary. Lancashire will update further at its Q3 results (2 November)

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09 Oct 17
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Zurich Insurance Group

Rate turning event may stay elusive

We have updated our 2017e earnings forecast to allow for a preliminary estimate for around USD1bn combined losses in the US hurricane season. However, we expect market capacity to continue to put pressure on pricing overall. On valuation, we downgrade shares from Hold to Underperform

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06 Oct 17
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BEZ HUW HSX JLT LRE NVA

The Money Bin

In the week to 3 October the FTSE All Share rose 2.5% vs. -0.9% for the Insurance Index and +5.4% for the Lloyd’s Index as loss sizes became clearer. The best performer was Hiscox (+7.0%); Helios (-5.5%) and Novae (0%) were the worst performers. We review the Lloyd’s H1 2017 results, which fell YoY but reflected low loss activity in H1: H2 has changed this and Lloyd’s will have large cat losses as these are exactly the exposures it (re)insures. Other news: Novae has now delisted and Beazley and Hiscox have provided loss estimates.

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05 Oct 17
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AEGON

Capital outlook eases, earnings pressure remains

Q2 capital restructuring plans have eased concerns over exposure to the Solvency II volatility. However, the valuation benefit has been offset by further downgrades in earnings outlook and we retain our Underperform rating.

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