Aviva Share Discussion Threads

[w1ndjammer] 23/3/2020 15:46

it looks like Shell are going to maintain their Dividend, so more confidence to buy.

WJ.

[p0pper] 23/3/2020 15:40

Can't believe Shell and BP are up today with us and LGEN down 8% and 10%

[hhhold2] 23/3/2020 15:36

when this gets into double figures it will be fair value.

[w1ndjammer] 23/3/2020 15:22

Its ok being 92% cash but is that cash 50% down on what it would have been in January, because that means you have got to find some stocks that will double just to
get you back to break even.. hoping that you don`t catch the top of a DCB...

WJ.

[uppompeii] 23/3/2020 15:04

Out of interest, when will you start re-investing?It'd be interesting if you could compare in say a year whether being out and then back in has made you more than just staying in.Aside being able to sleep at night of course...

[eurofox] 23/3/2020 14:54

Well, I own up into selling some into this morning's rally. Now 92% cash.

[wba1] 23/3/2020 10:06

The above comments about divis and assets are generally true, but there are cases which should be exceptions. Perhaps the best example is another insurer, Sabre, which is a pure motor insurer. They are due to report tomorrow and I will be interested to see their comments as whatever they say about the motor market has implications for Aviva and others (I have holdings in Aviva and have just bought Sabre and Direct Line).
My rough idea of the effect of the current situation on motor accounts is that it should produce something like a 10% reduction in claims ratio (eg 70% to 60%). This is assuming a halving of claims for 3 months and some tail effect. If lock down lasts even longer then the reduction in claims will be even greater. This sort of benefit is worth perhaps £300m to Aviva in 2020 (and circa £20m to Sabre, added to a base profit of £50m). And for Aviva there will also be major benefits on the EL and PL accounts so I would estimate at least a £500m claims benefit in total to Aviva in 2020. The impact on reserves is, of course, important (and even more important for Aviva may be the impact on its investor business). However the impact on reserves depends on how it is held. I have not examined the Aviva breakdown, but given its size it is bound to have some equity exposure. However I would expect most of the reserves to be held in bonds and cash instruments, where the main risk would be corporate bond default from business failures. But given that insurers apply security ratings to eligible bond investments (at least investment grade and often higher), this should be controlled. One of my reasons for liking Sabre, as well as the pure motor exposure, is that it has no equity holdings in its reserves.

Two things should also be noted. First; insurers may choose not to recognise the full benefit of reduced claims in 2020 (if they can afford to do so) by delaying release of surplus prior year margins (or even strengthening prior year reserves). And however claims ratios turn out for 2020 may effect future business and pricing. Motor rates may be depressed at renewals as insurers compete for business and commercial insurance may be hit by lower demand caused by business failure.

[cjac39] 23/3/2020 08:27

yes sure divis will all be cut as companies preserve cash for a while and credit books will suffer but life insurers are not that exposed to equities anymore having all hedged their residual with profit exposures so headlines like that are bit daft.

[eeza] 22/3/2020 22:04

"“The coronavirus crisis will be the final straw that plunges commercial policyholders into crisis with soaring insurance prices, massive reductions in cover and a hard line on large claims as insurers seek to rebuild their balance sheets, just as they did after 9/11,” says Bruce Hepburn, chief executive of Mactavish, an insurance consultancy.

The biggest impact on insurers will not be the raft of claims but the collapse in value of assets they hold on their balance sheets to make sure they can pay out, experts say. Almost $20  trillion (£16.8 trillion) has been wiped off global stock markets in the past four weeks. Direct Line, owner of Churchill, has suspended a £150m buy-back to protect its reserves....more

[spud] 22/3/2020 20:34

Everything is dragged down regardless. It'll all go back up again once we get some visibility on the virus but in the meanwhile hunker down and if you've any spare loot any investment now will have you wondering why you didn't cash in the farm in 24 months or so. Hindsight, great ain't it! spud

[cjac39] 22/3/2020 20:09

whats funny is no one has explained why life insurers go down with market at beta of 1.2-1.4. id get some contagion if the general book had loads of business interuption or travel insurance without pandemic exclusion. id also get it if the life business had exposure to interest rates or us style whole of life vs annuities. noone has explained any fundamental or accurate reason why life cos have traded down. i defy anyone to explain to me why apart from some modest mtm losses and a few isolated gen ins cases any of the insurers have suffered. sectorally its the best bargain going.

[cassini] 22/3/2020 02:28

I think it has shown some 'promise' as Trump said. The South Koreans and one Italian medical agency seem to think it may help. It's on the WHO list of world 'essential medicines' so is quite cheap. I think people who are coughing up their lungs will take a chance on anything that might plausibly help, so if the dose is properly monitored, why not?

[123trev] 22/3/2020 01:03

Very quiet here yesterday any thoughts on possible malaria drug cure for corona virus ! Reports say it’s been very successful,Trump rushing it through already used in several states with great success could be a game changer evidence mounting around world about its success as a treatment.

[actybod] 20/3/2020 21:20

Chunky buys today. Held up well in the end.

[cjac39] 20/3/2020 20:12

spud i think you may be mechanistically right but look at what govts and cbs are doing. they are going to throw 15% of gdp at this which is 100% * 70% consumer * roughly 3 months at the problem. for me since they announced quantum thats enough. delivery mechanism needs work and today uk announced better version. therefore my take is macro will change quickly and levered bets on uk macro like aviva will fly

[uppompeii] 20/3/2020 20:11

Probably a dry cough..

[spud] 20/3/2020 19:53

I see the DOW has sneezed this eve. I guess we'll catch a cold on Monday. Isn't that how it always works??spud

[wba1] 20/3/2020 08:56

Lako42; you are right about the Aviva reputation but, looking from the outside but having worked with many of their people, they have greatly improved in recent years. The real problems date back many years. The various botched mergers/takeovers (I saw them pay £350m for L&E 20 years ago and promptly lose all the schemes they bought it for). Then there was the civil war battle between Moss and Snowball for the top job. The best you could say of that was that whilst Moss is a preening idiot, Snowball was worse. Known as Duke in the industry due to his similarity to Stephen Fry's Duke of Wellington in Blackadder. And after Moss they were far too slow to address his failings. But at last they had seemed to be moving forward. There may be more reason to buy them than trading gains in the current climate (but I am happy to get the general market recovery which will occur sometime in the next 1-2 years).

[lako42] 20/3/2020 08:43

Aviva has always been an absolute dog in terms of share price growth compared to market rivals.

The only real reason to be here in normal circumstance is the divi. You have to imagine that there will be actual share price growth as well at these levels though.

[matchupitchu] 20/3/2020 01:55

Then why has it lost near 50% of its value when the underlying market is down less ?

[bo90] 20/3/2020 00:32

who's the 20%??