2 August 2018

Half year results round up: 02 August

Generali seeks non-life and asset management expansion

Italian insurer Generali has been selling businesses around the world in the first half of 2018 with the aim to fund expansion and rebalancing its portfolio.

The insurer sold its entire shareholding in Generali Nederland N.V. in February, followed by the sale of its operations both in Panama and Colombia in April. In June it completed the sale of its Irish subsidiary Generali PanEurope and in July agreed to sell 89.9% of Generali Leben and signed the transaction with Viridium Gruppe.

In an analysis call Generali chief executive Philippe Donnet said the group was looking at M&A opportunities in different geographical areas to help diversify its business, as reported by Reuters. “That means we are very interested in opportunities in property and casualty as well as asset management.”

Overall the group expects to raise €1.5bn ($1.74bn) euros from asset disposals carried out this year and in 2017.

Generali reported its best half-yearly profit in a decade, even if Italian bond spreads widening dented its solvency ratio and assets under third party management grew five times faster than the group’s own funds.

 

Aviva Investors posts strong half term results despite parent’s misfortune in “choppy market conditions”

In the first half of 2018, Aviva Investors grew operating profit 7% to £76m.

Revenues increased 4% to £284m while operating expenses rose 3% to £208m as the firm invested to strengthen its distribution and equities capabilities. Assets under management (AuM) ended the half year at £347bn, a slight decrease on the same period last year (£351b), which Aviva said was “primarily due to negative net fund flows of £3.7bn”.

Parent company, Aviva, recorded a decrease in its operating profit for the first half of 2018 largely due to weather related claims and weaker profits in Canada.

Speaking during a media call this morning, Aviva chief executive Mark Wilson said: “We remain on track to achieve our financial targets."

 

Reinvestment at lower yield dents RSA Group H1 results

RSA Group reported a 6% decrease in investment income in the first six months of 2018 compared to the same period in the previous year, to £136m.

The insurer attributed the hit on its investment income to ongoing reinvestment at lower yields.

“The average book yield across our major bond portfolios was down slightly to 2.3% (H1 2017: 2.4%),” RSA Group said in a statement. “Based on current forward bond yields and foreign exchange rates, it is estimated that investment income will be c.£300-310m for 2018.”

RSA reported a slight increase in government bonds investments in H1 2018 compared to December 2017, at £3.9bn up 3% from £3.8bn. Similarly, property investments grew slightly (2%) but investments in non-government bonds decreased (-4%).

 

Metlife net investment income up 7%

Metlife reported a 7% increase in net investment income in Q2 2018 compared to the same period in the previous year, up to $4.5bn.

The firm reported Variable investment income was $176m, compared to $222m in Q2 of 2017, primarily due to lower private equity and hedge fund income.

"MetLife delivered a very strong second quarter driven by solid underwriting and expense management around the globe," said Steven Kandarian, chairman, president and CEO of MetLife.

"During the quarter we divested our remaining stake in Brighthouse and returned approximately $1.5 billion to shareholders through common stock repurchases and dividends. We remain focused on improving our return on equity, maintaining strong free cash flow, meeting our expense targets, and distributing capital to shareholders.”

 

Prudential Financial’s profit down while asset management unit reports 17% growth

Profits from Prudential Financial’s investment management business PGIM were up 17% to $254m, driven by higher asset management fees and an increase in AuM.

Net inflows of fixed income and equity market appreciation boosted PGIM’s AuM to $1.156trn, including a record-high $611bn of third-party institutional and retail assets. Third-party net inflows, excluding money market, reached $7.3bn in the quarter.

Individual annuity sales were up 37% on Q2 2017 to $2.1bn.

Prudential Financial reported net profits of $197m in the second quarter, less than half the $491m recorded in Q2 2017, as it boosted reserves for its long-term care (LTC) business.

 

Direct Line’s AuM decrease but yearly target still on tack

Direct Line Group reported a 6% decrease of AuM for the first half of 2018 compared to the same period last year, down to £6.3bn.

The group reported investment return of £95.4m for the period, up 2.6% from H1 2017. “The Group expects total investment return in the region of £150m after taking into account hedging costs and lower assets under management,” the group said – in line with their stated target in their 2017 annual report.

 

Axa and affiliates Q2 fortunes

Axa’s decision to hedge 20% of its equity portfolio has paid off, by helping in part to boost the group’s solvency ratio by 28 points to 233% over the past six months.

The group’s affiliates helped boost profits in the first half, with Alliancebernstein in the US reordering its mix of products and lowering its cost to income ratio, to increase revenues by 11% to €1.3bn.

Higher management fees were at work to boost the revenues from Axa Investment Managers (IM) as well, by 5% to €631m. Some €4bn of third party net new money flowed into Axa IM last half, helping total AuM inflate by 4%