with Michael Faulkner
In a week when the global markets went into a tailspin following the rejection of the US government’s $700bn bail-out plan, the insurance sector has outperformed both its banking peers and the market as a whole. As Insurance Times went to press on Tuesday, the FTSE 100 was down nearly 12% on the week; but bank shares had fallen by as much as 15% over the course of the week.
Specialist insurers fared particularly well. Lloyd’s insurer Beazley was the week’s biggest riser, up 6.25% at 119p, followed by Amlin, up 3.6% at 309p.
RSA was also one of the week’s top gainers with continued speculation about a potential bid. Henri de Castries, chief executive of AXA Group, fed the rumour mill after he reportedly commented on French radio: “The situation today will offer us opportunities to reinforce our positions in the next few months.”
AXA is RSA’s largest shareholder. RSA has been linked in recent weeks to potential bids from Allianz, Generali and Zurich. Its share price surpassed 160p last Thursday, just shy of its
52-week high of 165.80p. The stock has been rising since July, when it hit its year low of 116.50p, as bid rumours gathered pace. The insurer is seen as an attractive purchase for a European insurer looking to enter, or extend its presence in, the UK market. Some analysts, however, have suggested that with some of AIG’s assets coming on the market, interest in RSA will wane.
Lloyd’s insurers Novae and Hardy and motor specialist Admiral also enjoyed a lift in their stock prices. The biggest faller of the insurance stocks was Chaucer. The Lloyd’s insurer’s share price took a battering this week, faring worse than the banks, dropping more than 13% to 54.25p. Chaucer’s stock has fallen sharply since it published disappointing first half results at the end of August. Brit Insurance Holdings also had a bad week, its share price falling nearly 12%. Aviva’s stock was down 8.38% to 481p as Insurance Times went to press.
The AIM-listed insurers had a gloomy week, with no companies reporting a share price climb. Run-off consolidator Tawa was the biggest faller, its stock down 20%. Lancashire’s share price was down more than 5% for the week, closely followed by broker, CBG Group, down 4.92%.