Insurance

Generali has buffer against Italian political risk

15 Mar 2018

The insurer’s record operating profit should be set against its chunky exposure to domestic debt. But an improved product mix should see Generali benefit more than peers from rising rates. And if political strife widens Italian spreads, strong solvency offers a defence.

Prudential breakup is only a partial solution

14 Mar 2018

The global insurer is to demerge its European operations into a separate UK-listed arm. That could help unwind a discount to the probable sum of its parts but carries costs as well. Pru investors might have been better served by a sale, or an unpicking of the U.S. and Asian arms too.

Profit is only part of U.S. healthcare sickness

12 Mar 2018

America spends about 18 pct of GDP on healthcare – almost twice as much as most developed countries. Pricing to reward investors accounts for perhaps a fifth of this gap. High pay, fights over the spoils and the fetishization of costly high-tech medicine are other factors.

Aviva’s spring clean justifies buyback downer

8 Mar 2018

The UK insurer’s CEO Mark Wilson is using his newly created pile of cash to pay off expensive debt. The move has irked investors who were hoping for a bigger share buyback. But given Aviva’s legacy debt problems, cleaning up the balance sheet will reap its own rewards.

L&G’s bet on UK and pensions paying off for now

7 Mar 2018

A roaring retirement business helped the British insurer boost operating profit by nearly a third to 2.1 bln pounds in 2017. More than rivals, L&G depends on a growing UK economy and its ability to buy pools of pension funds others don’t want. Investors still need convincing.

AXA pays XL premium to insure more stable future

5 Mar 2018

The French insurer is offering $15.3 bln for Bermuda-based XL to beef up coverage of storms and other catastrophes. Cost savings don’t even cover half of the 33 pct premium, while reducing debt depends on a successful IPO of AXA’s U.S. arm. It’s a hefty price for diversification.

Poste Italiane tries to catch some Amazon sparkle

27 Feb 2018

The mailing incumbent is targeting a 60 pct EBIT jump to 1.8 bln euros by 2022. Its loss-making delivery business is a drag on the lucrative financial segment, but parcel shipments should rise as Italy catches up with a global e-commerce boom. If Amazon grows, Poste can follow.

Provident Financial faces cleaner but leaner future

27 Feb 2018

The UK doorstep lender is raising 300 mln pounds to settle with regulators over complex loans, and fix its capital. The business that emerges should be better run but less profitable. Shareholders would have been better off with the lower-octane version to start with.

AIA’s warchest is good omen for investors

27 Feb 2018

After a 28 pct surge in new business last year, the Asian life insurer is sitting on a cool $12 bln. It is hard to see all of that being consumed by modest M&A or investments in growth. That means before long shareholders should be in line for a big special dividend or buyback.

Buffett generational shift applies to investors too

24 Feb 2018

The Berkshire Hathaway chairman’s fans will lap up his ample returns and folksy advice as they always do. But will their kids? Away from Omaha, big investors like BlackRock and Vanguard are positioning for a new generation of investors. A similar challenge awaits Buffett’s successors.

Anbang is big test of China’s non-market market

23 Feb 2018

The state seizure of the insurer looks designed to leave markets unruffled. It will probably work, since capitalist forces in China are still on a tight rein. The real impact will be subtle, as investors and foreign regulators weigh up this new hands-on approach.

Standard Life Aberdeen sale exposes core problem

23 Feb 2018

The recently merged group sold its insurance business to Phoenix for 3.2 bln pounds. Though the price looks unexciting, the deal releases capital and leaves behind a pure fund manager. But as long as the group continues to lose assets, the benefits of scale remain unproven.

Anbang seizure flips script on Chinese takeovers

23 Feb 2018

Authorities have commandeered the acquisitive insurer and prosecuted its boss. It is the boldest step yet in Beijing’s battle against financial excess, and is meant to protect policyholders and avert systemic trouble. The move may also be a worrying omen for HNA and others.

AA roadside repair prolongs debt hazard

21 Feb 2018

The UK breakdown group’s shares lost of a fifth of their value after its new CEO warned of lower earnings and slashed the dividend. A costly push to sign up younger members is necessary but risky. Pulling it off is the only way to shrink the company’s 2.7 bln pound debt load.

M&A is the best policy for Hong Kong life insurers

20 Feb 2018

Axa and MassMutual have already sold local life-insurance businesses, and MetLife could soon follow. This is a competitive, mature industry and there are plenty of Chinese buyers circling. European insurers like Generali and Zurich may be tempted into disposals or stake sales.

MetLife pension gaffe leaves CEO on thin ice

30 Jan 2018

Steve Kandarian’s big coup was getting the $725 bln insurer knocked off the list of systemic institutions. But MetLife’s failure to pay benefits to 30,000 retirees overshadows that achievement. After poor returns and a disappointing spinoff, it looks like his time is up.

U.S. healthcare bloat faces new triple threat

30 Jan 2018

Amazon, Berkshire Hathaway and JPMorgan are getting together to cut medical costs. Details are few and obstacles many, but they bring relevant skills and a lot of employees to the mix. A multibillion-dollar hit to health-sector stocks shows the shakiness of the status quo.

China’s finance watchdogs best off in same kennel

26 Jan 2018

A mooted merger of the troubled insurance commission and its banking counterpart would reduce risk. Similar unions work well elsewhere. This could help pave the way for a “super-regulator”, perhaps led by bank tsar Guo Shuqing. Further judicious consolidation would be healthy.

AIG’s $5.6 bln deal lacks sufficient cover

22 Jan 2018

New boss Brian Duperreault is paying a rich 46 pct premium for Validus. The tie-up gets the insurer into Lloyd’s, crops and reinsurance. But AIG won’t provide any details on cost cuts or projected returns. The worry is this sets a black-box precedent for bigger deals to come.

Insurance M&A benefits from thin U.S. safety net

19 Jan 2018

Lincoln National is paying $1.4 bln for Liberty Mutual’s employer-based insurance business. It gives the buyer added heft in a growing field as more Americans top up life, health and disability coverage through the workplace. Cost cuts give this deal an added bit of assurance.