Aviva Share Discussion Threads

[cjac39] 16/5/2020 10:34

Quite. The only good thing about the PRA is they have crawled all over the uk insurers through the internal model process with multiple consultants so the one thing I’m not worried about is hidden surprises in their balance sheets. Indeed at times like this it’s quite nice that the PRA went so crazy stuffing the insurers full of capital. The solvency 2 capital they hold now is pretty much double the old icas s1 capital for which we should all be thankful.

[wba1] 16/5/2020 10:16

cjac. Our posts crossed over or I would have added this to the other post. I agree with your analysis as it relates to insurers based in the EU (and UK!). I am always more careful in making any assumptions about US domiciled companies for three related reasons;
* Regulatory oversight is highly variable, divided and differs by state.
* Capital adequacy of US insurers has been more marginal in the past.
* Some US insurers have a history of playing in dodgy areas. You would hope that they would have learnt their lessons after the AIG debacle, but who knows.

Some years ago (but well after the financial crisis) I (with others) was looking at the reserves of a US subsidiary and we found it had been hiding a substantial reserve hole from the parent (or trying - it turned out the global board had been told a little while before and were dealing with it quietly so we were an embarrassment). If that could happen in a simple US P&C subsidiary I would hate to think what can happen elsewhere.

[wba1] 16/5/2020 10:03

cjac. I completely accept your point. The only real issue is that it is a stress assumption of Fitch that they fall a max of 10%, which is the only point in their model where I can see them having to revise assumptions negatively. But I would hope that would be insufficient to affect ratings given the rather more draconian view on other matters, which should provide counterbalance.

[cjac39] 16/5/2020 10:00

Well in simple terms insurers are 7-8x levered bets on asset markets and there is a non zero probability that we should all be buying gold and tents. The US is also in total meltdown and lots of clever people are betting that real estate and loans and lots of other things are going to tank. However what I think people miss time and again with insurers is they don’t have hard mtm triggers that cause them pain like other levered investors and they have significant management actions to obviate rating downgrades or lower prices of assets. They survived 08 when actually they were technically bust with bank sub debt that was worthless but got rescued. This is different but way less scary.

[salver2] 16/5/2020 09:38

I feel we all must be missing something as how can the shares be so low compared to assets and profits or is it the ignorance of the market - this share has shown no defensive qualitities yet there has been little or no short interest - I fail to see the catch unless there are some nasty gremlins on the balance sheet somewhere!

[cjac39] 16/5/2020 09:30

but the good thing is wba that house prices today arent that meaningful - its the level of house prices in 10-20 years when the nneg bites thats most important. throw into the mix a long running housing shortage and a conservative govt that relies of keeping house prices high and buoyant as a core strategy and it should be mitigated. offsetting this is house prices do follow long term real yields and these are grounded now with limited upside so there is a dark scenario there but this would bankrupt all uk banks so im less bothered by this.

[wba1] 16/5/2020 09:16

Sorry - should have added to my last message (for those interested given the posts) that Fitch also confirmed current ratings for M&G yesterday.

[wba1] 16/5/2020 09:00

Interesting that the Fitch stress case would only hit the rating by one notch given the severity of the assumptions. I had forgotten about equity release mortgages and this seems to be the only optimistic assumption as I suspect property values could fall more than 10% in the short term.

[moontheloon] 15/5/2020 18:09

I decided on aviva today at -2.4% long termer in favour of bt, see which recovers the most...

[eurofox] 15/5/2020 18:08

neo - as explained the other day I trade up and down and sometimes down and up. I bring attention to the trades bought at the lows of each day because they are always an over-reaction and result in profits on the rebounds - you just have to be patient. I must admit the core holding has grown at these low prices as well.

[neophytos] 15/5/2020 17:51

cjac39

Agree that at yesterday's price, M&G was a steal, though you may have been right about them potentially going to £1 before long, as they down more today (9p shy of that £1 mark).. curious what Monday brings.

Neo

[neophytos] 15/5/2020 17:49

eurofox

You seem to be adding 'infinitum'.. don't ever hear of you selling.. you must own half the company by now LOL!

[chambersiain] 15/5/2020 17:42

Interesting article, fundamentals strong, it's only a matter of time

hxxps://www.fitchratings.com/research/insurance/fitch-affirms-aviva-plc-at-ifs-aa-outlook-stable-15-05-2020

[eurofox] 15/5/2020 12:24

added at 227.91

[cjac39] 15/5/2020 10:35

it does seem crazy but i think you'll see the numbers in Q2 earnings for US (re)insurers. this seems more reasonable albeit a wide range

hxxps://www.artemis.bm/news/covid-19-pc-insurance-industry-loss-estimated-40bn-80bn-dowling/

[wba1] 15/5/2020 10:30

The 107bn is the world estimate (as were the estimates from Zurich, Allianz and the reinsurers). The only way the numbers add up (unless you include state expropriation) is to assume that smaller insurers and insurers in less developed markets have been extremely careless in their wordings (like Hiscox) and reinsurance covers and have a much greater exposure (relative to their premium income) than the big boys.

[dodge meister] 15/5/2020 09:52

The $107 included the US. Only 15% of Lloyds risk was UK

[wba1] 15/5/2020 09:13

Hi cjac. Agree completely about reinsurers being a lot more exposed to loss than primaries. The recent Zurich estimate for Covid reserves is pretty similar to Allianz in relation to P&C exposure - which seems pretty definitive about the primaries when 2 of the biggest see it as an irritant rather than a huge matter. But recent reinsurer estimates surprised me (as lower than I expected). Swiss Re took a $476m charge (plus a $300m hit on investments) and other reinsurers like Hanover Re, Sirius and Lancashire also indicated lower than I expected. Even Munich Re (who I expect to be most exposed) indicated less than $1 bn less than a week ago. I just cannot get it up to $107bn without what amounts to property expropriation by governments forcing payouts where no valid claim exists.

[jomac2412] 15/5/2020 06:16

There. are not MM's covering themselves on large FTSE 100 companies, shares are traded electronically on SETS which matches buys and sells.

[whatsup32] 14/5/2020 18:46

yf23

Most shares shot up near the end of trading AV. was no different. MMS covering themselves comment makes no sense to me ,

[gary1966] 14/5/2020 18:33

Yep that was a strong bounce off the lows which bodes well, especially if the Dow holds or increases its current gains.

[waterloo01] 14/5/2020 16:37

Thanks fr the M&G feedback.

[eurofox] 14/5/2020 16:31

excellent trading day