Insurance

UK insurers can reap rewards for clarity

9 Aug 2018

Legal & General delivered a 7 pct rise in operating profit in the first half, beating peer Aviva. Fewer one-off charges meant more of that flowed through to shareholders, delivering a higher 20 pct return on equity. Cleaner results justify the group’s lofty premium valuation.

Standard Life Aberdeen needs more activist touch

7 Aug 2018

The asset manager formed from last year’s merger of Standard Life and Aberdeen keeps losing funds. Cutting costs and returning capital have failed to close the discount at which the company trades to peers. Selling the India business and ditching a twin-CEO structure might help.

Icahn dusts off early playbook chapter with Cigna

2 Aug 2018

Company launches bad deal. Stock falls. Activist buys, shorts target, lobbies to unwind deal. Buyer stock goes up, seller plunges. Investor rejoices. Icahn did it with Mylan – and now he can repeat with Cigna’s value-destructive Express Scripts purchase. Plus ça change.

Lloyd’s insurer battered by twin setbacks

20 Jul 2018

Beazley shares dropped 5 pct after the insurer’s first-half pre-tax profit fell by two-thirds. A hit to its bond portfolio from higher U.S. yields should have been expected. But boosting reserves for property claims following last year’s natural disasters is a nastier surprise.

Lloyd’s of London next CEO faces many perils

3 Jul 2018

Inga Beale will leave the insurance marketplace next year. The 330-year-old business’ first female boss banned lunchtime boozing and modernised underwriting. Her successor must navigate the fallout from Brexit, losses from climate change, and tackle Lloyd’s bloated cost base.

Buffett and pals pick good medic for U.S. tapeworm

20 Jun 2018

Berkshire Hathaway, Amazon and JPMorgan chose Atul Gawande to lead their fight against rising medical bills. The surgeon has written extensively on how the system rewards excess, but not outcomes. Changing this focus would be a good start, even if neither easy nor sufficient.

Aussie cartel case bodes ill for equity bankers

5 Jun 2018

Citi, Deutsche and client ANZ are about to face criminal charges over how they handled leftover stock in a 2015 share sale. That’s a harsh response to common underwriting practice, with no warning. But regulators seem confident - and their success could inspire foreign peers.

Insurers risk retreading banks’ pre-crisis folly

22 May 2018

Companies such as AXA have a new excuse for bold M&A. Recent European rules, like bank regulations before the 2008 crash, reward insurers who spread bets across markets and geographies. The result may be similar: more complex groups, and less capital to absorb losses.

Tax cuts hasten demise of U.S. corporate pensions

15 May 2018

With a $6 bln annuity purchase, FedEx has offloaded a chunk of its obligations. Lower U.S. tax rates are encouraging more companies to do the same. It’s good for older workers, but it’s another nail in the coffin of employer-provided retirement security for millennials.

AXA’s IPO miss is awkward reminder of XL blunder

10 May 2018

The French insurer has raised $2.8 bln listing its U.S. business. It was hoping for more to help fund the purchase of the Bermuda reinsurer. Given CEO Thomas Buberl was already overpaying, investors won’t be feeling any better about the deal.

Elliott weaves snare around subpar Athenahealth

7 May 2018

The healthcare-software firm is long on vision under founder Jonathan Bush, but it has been patchy on performance despite the activist’s presence. Elliott’s $6.9 bln bid, including debt, raises the pressure on the board to do more and may force other bidders out of the woodwork.

Time to put Generali’s nest egg to work

4 May 2018

The Italian insurer has stockpiled 1 bln euros of cash by shedding unloved assets. The sale of a German life unit could double that. With a high dividend and plenty of capital, Generali could turn into a predator. Italy or fast-growing Asia may offer some appealing prey.

AIA sends mixed signals on growth

4 May 2018

New business at the $107 bln insurer rose 20 pct in the first quarter. That’s sluggish by AIA’s standards, hinting at the challenges of sustaining growth rates at ever-increasing scale. On the plus side, there are signs the group could reduce its heavy dependence on China.

Aviva’s investor climbdown sets tricky precedent

30 Apr 2018

The UK insurer will compensate preference share owners who lost out by selling their holdings after it threatened to redeem them early. That comes after protests forced Aviva to abandon a buyback that it argued was legal. The fiasco sets a high standard for investor protection.

Australian hospitals operator given LBO lifeline

27 Apr 2018

An unwanted $3.1 bln offer values Healthscope only a bit higher than its 2014 IPO price. The deal is also being led by the same buyout executive who bought and sold the company for TPG. Healthy skepticism is warranted, but there's a chance to be discharged without further injury.

Capita swerve averts Carillion-style crash

23 Apr 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

Ping An healthcare IPO looks pricey but fit

23 Apr 2018

The Chinese finance giant has launched a $1 bln IPO of its medical arm. By connecting patients with doctors, drugs and health services online, the Good Doctor app supports policy while accumulating valuable data. It’s not yet profitable, but the premium looks justifiable.

Swiss treasure helps AXA pay for XL folly

10 Apr 2018

The French insurer is restructuring its Swiss life insurance business, freeing up $2.6 bln of capital. The move provides some extra funding for its $15 bln takeover of Bermuda reinsurer XL. Reduced financial risk is welcome, but doesn’t help justify what remains a pricey deal.

Aviva fumble leaves no room to miss targets

23 Mar 2018

Chief Executive Mark Wilson has been forced to scrap a plan to cancel 450 million pounds of preference shares after a row with institutional and retail investors. He can start winning back their trust by doing more to boost the insurer’s sales and by reducing debt.

Aviva reminds investors to read small print

21 Mar 2018

The UK insurer has riled shareholders with a plan to retire supposedly “irredeemable” preference shares at their 450 mln pound face value. The juicy 8.5 pct average coupon made them a hit, but also encouraged Aviva to seek legal loopholes. It’s a powerful lesson in buyer beware.