with Michael Faulkner
Another week and another battering for insurance stocks on UK markets. But while many companies’ share prices fell over the week – Novae was particularly badly hit, losing more than 13% of its value – insurance stocks were swept up as the world’s markets rallied on Monday and Tuesday.
The FTSE 100 recorded the second biggest gain in its 24-year history on Monday and jumped 5.7% on Tuesday morning, taking it close to the 5,000 level, as European governments pledged to invest €1,873bn (£1,466bn) to shore up the financial sector.
Aviva was one of the week’s biggest risers, with shares up nearly 4%. Andrew Moss, its chief executive, had told investors that the insurance group’s capital position remained strong. Aviva’s surplus regulatory capital is estimated to be £1.9bn at 30 September 2008, up from £1.8bn at 30 June 2008.
Chaucer, whose share price has lost a third of its value over the past six months, was the week’s biggest riser, up 9%.
Admiral published its third-quarter results, saying it was on track to exceed analysts’ consensus profit forecasts for 2008, despite the financial turmoil.
Turnover was up 13% to £718m year-on-year. “Being a boring car insurer has its benefits,” quipped chief executive Henry Engelhardt in the company’s announcement to the stock exchange, which led to Admiral’s stock rocketing from 760p to 940p.
Admiral was trading at 902p as Insurance Times went to press, down 3% for the week.
Meanwhile, Lancashire Holdings’ share price enjoyed a boost after it estimated that hurricanes Gustav and Ike would have a combined net negative impact on its financial results of about $150m (£85.4m). The insurer also predicted that annualised total investment return would be 1.2% for the nine months to the end of September.
The market reacted positively to the news and Lancashire’s share price jumped to nearly 290p from about 250p on
Monday, the day of the announcement. As Insurance Times went to press, Lancashire’s shares were trading at 286.75p down 1% for the week.