Legal & General Group (LGEN)

Sector:

Insurance

Index:

FTSE 100

299.20p
   
  • Change Today:
      4.90p
  • 52 Week High: 317.70
  • 52 Week Low: 216.70
  • Currency: UK Pounds
  • Shares Issued: 5,965m
  • Volume: 13,804,671
  • Market Cap: £17,848m
  • RiskGrade: 128

RBC forecasts outperformance for European insurers, wealth managers

By Oliver Haill

Date: Tuesday 11 Dec 2018

LONDON (ShareCast) - (Sharecast News) - European insurers should outperform the market in 2019, RBC Capital Markets predicted, with strong balance sheets and stronger pricing boosting earnings, though Standard Life Aberdeen was downgraded.
"An increase in underlying customer demand with little change in supply should increase insurers' pricing power, leading to growing earnings," RBC said in a note to clients on Tuesday.

"Investors can be assured by a highly prudent solvency regime which keeps balance sheets strong and high-yielding dividends safe."

Top picks for the sector were Aviva, Beazley, Just Group, Legal & General, with 'outperform' recommendations for Ageas, Direct Line, Lancashire, Munich Re, Phoenix and RSA Insurance.

On the UK life insurance sector, the "limited Brexit risk" is creating a buying opportunity, RBC said, with recent underperformance due to the uncertainty caused by the political situation. Even in a no-deal Brexit, RBC said life insurers' solvency and growth would be "only dented".

Bulk annuities are seen as "the best structural growth opportunity" in the life sector, with "significant latent demand which is independent of economic growth and the prospect for large reserve releases due to slowing life expectancy", plus attractive and "extremely safe" dividend yields.

Looking at wealth managers, RBC said there was an "underappreciated" £1trn future prize from the opportunity in defined benefit pension transfers. Share prices of the subsector "do not reflect the scale of the potential" as analysts feel management have downplayed the opportunity due to worries that it be related to the 1988-1994 mis-selling scandal.

The market backdrop for Lloyd's insurers "is improving" after a number of years of underlying price declines and there prices "should" improve in most specialty lines of business in 2019.

In UK non-life, 2019 prices are expected to be stable before another step down in 2020. Looking forward, both whiplash reforms and changes to the Ogden rate "will in all likelihood lead to falling prices for customers", RBC said, with the FCA review into pricing another potential drag next year.

Standard Life Aberdeen was downgraded to 'sector perform' from 'outperform', with a new target price of 260p.

RBC analysts see SLA's earnings and potentially dividend being hit as its assets under management falls by more than 9% on a compound annual basis between mid-2018 and end-2020, with outflows from the Global Absolute Return strategy forecast to have accelerated in the last month and reach £7bn for 2019E and £5bn for 2020E.

Falls in financial markets have exacerbated the lack of dividend cover, which the analysts think will put the current dividend policy under pressure.



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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

Legal and General Market Data

Currency UK Pounds
Share Price 299.20p
Change Today 4.90p
% Change 1.67 %
52 Week High 317.70
52 Week Low 216.70
Volume 13,804,671
Shares Issued 5,965m
Market Cap £17,848m
RiskGrade 128

Legal and General Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
93.12% above the market average93.12% above the market average93.12% above the market average93.12% above the market average93.12% above the market average
25% below the sector average25% below the sector average25% below the sector average25% below the sector average25% below the sector average
Price Trend
52.16% above the market average52.16% above the market average52.16% above the market average52.16% above the market average52.16% above the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average
Income
86.09% above the market average86.09% above the market average86.09% above the market average86.09% above the market average86.09% above the market average
25% below the sector average25% below the sector average25% below the sector average25% below the sector average25% below the sector average
Growth
61.05% above the market average61.05% above the market average61.05% above the market average61.05% above the market average61.05% above the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average

What The Brokers Say

Strong Buy 5
Buy 0
Neutral 6
Sell 1
Strong Sell 3
Total 15
neutral
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

Legal and General Dividends

  Latest Previous
  Interim Final
Ex-Div 15-Aug-19 25-Apr-19
Paid 26-Sep-19 06-Jun-19
Amount 4.93p 11.82p

Trades for 17-Jan-2020

Time Volume / Share Price
16:35 5,892,331 @ 299.20p
16:29 45 @ 297.40p
16:29 1,328 @ 297.40p
16:29 439 @ 297.50p
16:29 556 @ 297.50p

Legal and General Key Personnel

Chair John Kingman
CFO Jeff Davies
CEO Michelle Scrimgeour

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