Insurance & Reinsurance

Personal Group

Cenkos: Personal Group Holdings Plc - FY18E in-line; weaker FY19E outlook

Personal group (PGH) has confirmed FY18E trading has closed in-line with our forecasts, implying a return to YoY EPS growth this year (+6% forecast). This is despite a number of challenges emerging over H2/18E, some of which are expected to play out more fully in FY19E. This leads to a weaker than expected outlook, which causes us to revise our FY19E forecasts down (EPS -15%), such that earnings return to levels witnessed in FY17A.

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10 Jan 19
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Mapfre

Achieving optimal scale in the US is still far off

Mapfre completed the sale of its New York operations announced in June 2018. This is part of the strategy to focus on core states and lines of business. The US business should continue to post weak operating performances in 2019-20 despite management’s efforts. The performance and the valuation of the Spanish company is largely driven by local and Brazilian operations.

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04 Jan 19
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CNP Assurances

Alert to CNP’s minority shareholders

Le Monde has revealed that La Poste is to seek an exemption for a full takeover of CNP to create the French public financial pole. If it went ahead, La Banque Postale would improve its figures significantly and CNP would benefit from the bank’s Non-Life portfolio (an additional €200m in net income by 2020). In our opinion, this marriage remains unfavourable to CNP and represents a real curb to its strategy. Our valuation already takes into account the discount markets could apply to the insurer relative to peers.

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03 Jan 19
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Assicurazioni Generali

Generali confirms its growth strategy

Generali should be one of the most active insurers on the acquisition side during 2019-20 thanks to its comfortable cash position. The key German market is one area for the expected investments. A focus is likely to be observed on the asset management industry, which is necessary to launch new segments, like the pension de-risking business.

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03 Jan 19
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Randall & Quilter Investment

Global Re acquisition on track for H1 2019

We have adjusted forecasts to reflect the revised timing of the Global Re acquisition. As the expected completion of a major acquisition has shifted by a few weeks, from late December to early January, it will now benefit H1 2019 not FY18. In all other respects everything remains on track.

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17 Dec 18
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14 Dec 18
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Legal & General Group

Another non-core business to sell

According to Sky News, L&G has instructed Fenchurch Advisory Partners to sell its general insurance business. This is a small business unit that has no significant impact on the insurer’s operating earnings. The revealed valuation matches our figures. However, this sale may be difficult to achieve, as the general insurance market remains tough.

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13 Dec 18
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Helios Underwriting

Fattening the goose

We reiterate Buy on Helios and, following a transfer of coverage, present new forecasts and set a 12-month forward target price of 175p (previously 160p). This together with an estimated 3.9% dividend yield implies 67% TSR potential. Following a significant year of acquisitions, we estimate 32% growth YoY in the capacity portfolio in 2018, underpinning +25% in adjusted NAV. Trading at 0.5x adjusted NAV at end-2018E, we see considerable share price upside, with the current valuation not reflecting the recent acquisitions Helios has announced.

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12 Dec 18
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AEGON

Always the same recipe: cost savings and technology

Aegon presented its US strategy, but with no major announcements. All 2018 financial targets were confirmed, including the dividend. The US business is crucial for the Dutch company, as it is the main contributor to underlying earnings and cash remittance to the holding. The entire group is undergoing a deep transformation, making it a technology-driven company. Such investments need time to produce results. We keep our figures and positive opinion on the insurer.

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07 Dec 18
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Axa

Better targets for Ambition 2020

At its investors day, AXA increased its 2020 adjusted ROE target to 14-16% and the dividend payout to 50-60%. Debt gearing (25-28%), underlying EPS CAGR (3-7%) and cumulative FCF (€28-32bn) targets were confirmed. The new Solvency II range is now 170-220%. The insurer confirmed its rapid transformation towards a global P&C operator. We will update our figures, taking into consideration the new dividend payout range of 50-60%. Our opinion will remain positive.

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