Insurance

PG&E takes one for the California wildfire team

14 Jan 2019

The utility is readying a bankruptcy filing, facing $30 bln of fire-related liabilities partly thanks to the Golden State’s questionable legal norms. Poor planning, including inadequate insurance, was its own fault. But state and other government actors have also fallen short.

Wildfires will hasten catastrophe casino shake-out

7 Jan 2019

Hurricanes and wildfires may trigger losses of $79 bln in 2018, and the second bad year in a row for funds that bet on disaster protection. The bigger issue is that damages are getting harder to predict. The flood of money that has poured into the sector may start to trickle out.

Japan Post’s Aflac stake is M&A ugly duckling

20 Dec 2018

The state-owned postal group will buy 7 pct of $34 bln U.S. insurer Aflac. It will get no direct say in the business, though, no board seat, and only limited voting rights. The dubious idea that minority stakes buy commitment to mutual gain, common in Asia, has reached its limit.

Japan Post tries overseas diversification at home

13 Dec 2018

It might buy a stake in $33 bln U.S. insurer Aflac, which does business mostly in Japan. Financial conglomerates that mix banking and insurance have a patchy record; so does Japan Post when it comes to overseas acquisitions. At least this would be a watered-down version of both.

EU gives Mediobanca Christmas gift on Generali

5 Dec 2018

Finance ministers extended until 2024 a generous capital treatment for banks’ stakes in insurers. It allows Mediobanca, which has 13 pct of Generali, to add 100 bps to its capital ratio and delay a sale. CEO Alberto Nagel has a larger buffer to resist market jitters, or do deals.

Allianz’s 2021 vision opens door to big M&A

30 Nov 2018

The German insurer promised more of the same with a set of modest goals for the next three years. Yet CEO Oliver Baete’s tweaked capital target suggests he is leaving room for a hefty deal. Rival AXA’s derided purchase of reinsurer XL, however, should serve as a cautionary tale.

Pimco makes Christmas turkey out of UniCredit

28 Nov 2018

The Italian lender is raising $3 billion from the bond giant at nearly 8 pct, miles more than it would have cost earlier this year. UniCredit’s plight is analogous to a last-gasp Christmas turkey shopper. Having delayed until the last moment, it now has to pay through the nose.

U.S. companies seek to kick big pharma addiction

13 Nov 2018

Walmart and Home Depot are fighting back against drugmaker programs that cut patients’ expenses while leaving employers paying full fare. It’s part of an escalating war between providers, insurers and corporations over healthcare costs. The effectiveness remains to be proved.

Breakdown: Libor habit is hard and costly to kick

23 Oct 2018

Over $300 trillion of financial contracts are linked to discredited benchmark interest rates. Switching to new ones could disrupt economies as well as markets. It will take a lot of money, time, and willingness to reconcile conflicting interests to avoid bad withdrawal symptoms.

Monzo traces faint path to digital-banking profit

16 Oct 2018

The UK startup won a million customers with next-to-no marketing, but keeps most funds at the central bank. CEO Tom Blomfield hopes to make money by selling other companies’ products, like insurance or mortgages, in return for a small fee. The numbers at least work on paper.

Aviva will find strategy harder to switch than CEO

9 Oct 2018

Mark Wilson is leaving the insurer after six years. Although he simplified the firm, boosted capital and bought Friends Life, Aviva’s valuation lags peers. If his successor can’t strategically advance beyond cross-selling and digital forays, it could become a takeover target.

Weather troubles are portent for lower RSA payouts

28 Sep 2018

The UK insurer’s shares fell 10 pct after it warned of bulky claims from freezing and scorching temperatures. Another spell of bad weather could make things worse. Investors who'd been expecting a special dividend are braced for disappointment.

Marsh & McLennan pays hefty price for global push

18 Sep 2018

The U.S. insurance broker is buying UK rival Jardine Lloyd Thompson for 4.3 bln pounds in cash. Mooted savings of $250 million a year don’t justify the hefty 34 percent premium. As competition heats up, Marsh is relying on JLT to continue its rapid growth in emerging markets.

Reinsurers’ lean years will trigger M&A wave

17 Sep 2018

Insurers are bracing for $20 billion of damage from Hurricane Florence, following record losses in 2017. Rising claims aren’t the sector’s only problem: hedge funds and other new investors are eroding margins too. The best way to survive may be swallowing a rival.

AIG’s lost decade is not yet behind it

13 Sep 2018

The insurer, rescued with a controversial $182 billion bailout in the 2008 crisis, has sold assets like AIA, rejigged operations, repaid the U.S. government, worked through CEOs and even started making acquisitions again. A new direction is emerging, but investors remain wary.

Scor’s go-it-alone plan is short on growth

5 Sep 2018

After rebuffing an 8.3 bln euro bid from largest shareholder Covea, the French insurer promised to lift premium income by 5 to 7 pct a year. The board had good reasons to reject an offer worth just 1.3 times book value. Even so, Scor will struggle to achieve that price by itself.

Apollo reinsurance buyout bets on calmer waters

28 Aug 2018

The private equity group paid $2.6 bln for Aspen Insurance, less than expected. Hurricanes and wildfires have weakened small reinsurers, offering a chance to raise premiums. Even then, Apollo will have to contend with bigger players squeezing prices, and avoid more disasters.

Consumers offer Ping An cover from market storms

21 Aug 2018

The $160 bln conglomerate's first-half earnings rose by just over a third, thanks to life and health insurance. Market clouds present dangers for an insurer with lots of investments, but its results suggest Chinese households can provide some protection from the squalls.

Icahn got it half right with Cigna battle

14 Aug 2018

The activist investor has backed away from his fight against the U.S. health insurer's $52 bln deal to buy Express Scripts. On merit alone, his opposition was justified. But for activists, that is no longer enough to win. Shifting shareholder rosters have changed the game.

UK insurer buyout depends on avoiding potholes

14 Aug 2018

Bain Capital is offering 1.2 bln pounds in cash for esure. To justify a multiple of 12 times 2019 earnings, the private equity firm will need to ramp up the motor and property insurer’s digital credentials. An overhaul is necessary to counter the industry’s shaky prospects.