Insurance

L&G falls victim to bank-style capital envy

15 Mar 2016

The UK insurer met forecasts and hiked its dividend for 2015. But investors seem concerned that L&G’s position under the incoming Solvency II capital regime is relatively weak. It may be unfair, but as banks have found to their cost, capital adequacy tends to be a race to the top.

Hotel spree sates China’s taste for overseas glitz

14 Mar 2016

Foreign hotels are becoming corporate China’s trophy assets of choice. Buyers want to reduce their exposure to a slowing domestic market and capture the growing flow of overseas tourist dollars. Anbang Insurance’s mooted $6.5 bln takeover of Strategic Hotels won’t be the last.

Old Mutual splits for good reason: it can

11 Mar 2016

The Anglo-South African financials group is breaking into four. It has that rare combination of businesses that don’t go together, a boss willing to empire-shrink rather than build, and potential hidden value. Other groups have the same problem, but lack a clear way to fix it.

Best U.S. health-insurance merger may be none

10 Mar 2016

UnitedHealth’s four main rivals are fighting to push their deals past state and federal regulators. The $115 bln UnitedHealth will look smart if the mergers, each worth about $70 bln in current combined market value, are blocked. It might even win out if the deals pass muster.

Aviva investors upgrade Friends deal to so-so

10 Mar 2016

The UK insurer has said it will deliver hoped-for synergies from its late-2014 deal to buy Friends Life a year early. Its capital position is greatly improved. But a minus 12 pct total return since the deal broke implies shareholders are still waiting to be convinced.

Old Mutual carve-up a question of when, not if

7 Mar 2016

The UK group has always looked a weird mix of British wealth manager, U.S. asset manager and African financials arm. Old Mutual is now considering a breakup. The big question is whether South Africa’s troubles are reason to push ahead or wait. 

AIA offers timely antidote to Asian worries

25 Feb 2016

The insurer’s net operating profit jumped 10 pct in 2015 despite slower economic growth and volatile equity and currency markets. The group has deep demographic trends on its side. A 50 pct dividend hike should provide further reassurance to skittish investors.

Delta Lloyd sweetens investors’ bitter pill

24 Feb 2016

The Dutch insurer plans to raise only 650 mln euros through a rights issue, rather than the 1 bln euros many shareholders feared. If the firm can pull that off, its solvency headache will be eased. But owners are still being asked to cough up over half the value of the company.

China web finance craze sows confusion and risk

19 Feb 2016

Web giants, insurance groups and even China’s top taxi app are piling into online finance. Fast-growing services like payments and wealth management are attracting big valuations. But competition is fierce, and investors have little way to judge which business models are viable.

Two U.S. scandals evoke Galbraith’s bezzle

9 Feb 2016

Bad practices led to CEO departures at Blackstone-backed mall owner Brixmor and HR software unicorn Zenefits. It’s a useful reminder of a Depression-era observation that good times mask bad behavior, but hard times expose it. These examples may be just a taste of what’s to come.

Generali CEO exit bearish sign for corporate Italy

26 Jan 2016

Mario Greco’s imminent departure from the Trieste insurer to rival Zurich is a direct transfer of Italian talent across the Alpine border. His new employer could use the help. But concerns that Generali’s board was returning to its “salotto buono” days would be worrisome.

AIG makes late push toward mediocrity

26 Jan 2016

The mega-insurer unveiled plans to sell businesses, slash costs and return $25 bln to shareholders. That’d be a lot for most companies under siege from an activist like Carl Icahn. It’ll only get AIG to a subpar return on equity of 9 pct. This breakup story has further to go.

MetLife spinoff plan hedges SIFI and activist risk

13 Jan 2016

The $50 bln insurer may offload its U.S. retail arm. Boss Steven Kandarian is fighting watchdogs over the systemic label, but carving out the parts most vulnerable to capital hikes lessens the impact of losing. And Carl Icahn’s agitation at AIG shows insurers need to stay alert.

Aegon investor cheer more about cash than capital

13 Jan 2016

The Dutch insurer has divulged a higher-than-feared position under Solvency II capital reforms. A strong showing is vital, but the real point is that it means Aegon can give clarity on dividends. The ability to make payouts is becoming the de-facto sign of insurers’ health.

L&G swells ranks of quarterly report refuseniks

11 Dec 2015

The UK insurer and asset manager has ditched quarterly reporting and will update the market on a semi-annual basis. Reduced transparency is forgivable: Legal & General’s business is long term and lumpy. Rivals could follow, though saying less rather than more isn’t for everyone.

Foreign insurers buy protection for Indian IPOs

10 Dec 2015

New rules have allowed giants like AIA and Sun Life to lift ownership of their Indian ventures to 49 pct. With no clear path to control, that means tying up more capital in minority stakes. At least bigger shareholdings will help them retain influence if the ventures go public.

Delta Lloyd waves white flag on insurer capital

30 Nov 2015

The Dutch insurer is raising capital equivalent to over half its market value to prepare for new Solvency II rules. But it’s also ditching its own solvency model for a tougher version supplied by regulators. If peers follow suit, insurer capital would be much more simple.

Time for Germany to let EU banking union fly

24 Nov 2015

The European Commission wants a mutualised deposit insurance scheme for banks by 2024. Berlin may be averse to the idea of financing non-German busts. But there are some safeguards, and unpicking the link between banks and states would better avoid trouble in the first place. 

Allianz coal ban will change investment climate

24 Nov 2015

The German insurer is to pull $4.3 bln out of investment in coal companies, ditching its scepticism against blanket anti-carbon policies. This rethink suggests big asset managers are taking climate change seriously. Other carbon-heavy industries like oil and cement may be next.

Willis could kill merger-of-equals conceit

18 Nov 2015

The UK-based insurance broker’s $18 bln union with U.S. consultancy Towers Watson is on the rocks. Investors have turned some $5 bln of promised synergy value into $1 bln of value destruction. A rescue would probably unbalance the economics, undermining the promised equality.