As a regulatory revolution is poised to deliver big dividends and share price growth… How to get insurers to pay out

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  • Maybe it’s time to bet on Aviva, Legal & General and Phoenix.
  • Chancellor Jeremy Hunt’s reforms in Edinburgh should boost the city’s attractiveness.

Dumb, dumb, dumb. This is the opinion of the stock markets among a number of British companies, who claim that British investors are tediously risk averse.

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These companies avoid Britain, preferring instead to list their shares in the United States, where gambling is more popular.

Software giant Arm and construction company CRH are among those taking the voyage across the Atlantic. The rest are determined to follow them.

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You may feel somewhat offended by this assessment of your investor profile, believing that you too can be cocky.

But you may also feel that focusing on the UK markets could be an opportunity as the government is forced to act to restore Britain’s image as cool, not dull and backward.

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In particular, now is the time to bet on the FTSE 100 insurers. Aviva, Legal and general And Phoenix.

These giants, which focus on managing retirement and other savings, offer huge dividends plus growth prospects.

One of the key sources of this growth will be a revision of the rules and regulations, which promises to give new dynamism to the British markets.

Chancellor Jeremy Hunt’s reforms in Edinburgh should boost the city’s attractiveness. Meanwhile, amendments to the Solvency II regime (the EU directive regarding the capital that insurers are required to have) should also bring significant benefits.

Insurers are delighted with the shake-up. Andy Briggs, head of the Phoenix Group, which owns Standard Life, is ready to invest billions in British infrastructure.

Aviva chief executive Amanda Blanc also highlights the company’s willingness to invest billions in energy, housing and startups. Such projects would revive the economy. But they should also help insurer share prices flourish.

This optimism contrasts with the gloom that surrounded insurers after the mini-budget, whose measures triggered a sell-off in the gilt market. The debacle caused alarm among defined benefit pension plans, which were required to meet cash margin requirements on compound liability investments (LDIs). Insurers are the main players in the £1tn LDI sector.

Today, however, this unfortunate set of circumstances is seen as a “black swan”, a once-in-a-lifetime event that could prove to be another boon for insurers. Due to the LDI’s concern, more company executives may outsource defined benefit schemes to Aviva, Legal & General and Phoenix.

Investing: Aviva CEO Amanda Blanc

Investing: Aviva CEO Amanda Blanc

Phoenix is ​​best known as a buyer of closed-end life funds (where no new policies are sold), but is more in the annuity business. Analysts rate the company as a buyable due to the potential for more such lucrative transfers. Shares are trading at 617.8 points. This week, Legal & General, which William Meadon, manager of JP Morgan Claverhouse investment fund, describes as “one of the UK’s most capitalized insurers,” reported a surge in large annuity transactions.

Job Curtis, City of London investment fund manager and shareholder, calls the high valuation a “good company”.

The share price is 252 pence and the dividend yield is 7.3%. Boss Sir Nigel Wilson claims there is “strong headroom” for further payout increases given its “high synergies, strong capital support and ambitious growth targets in each of its markets.”

Blanc is also ushering in a new era at Aviva. The group this week unveiled a £300m share buyback scheme following a 35% jump in operating profit.

The acquisition of shares in Aviva, Legal & General and Phoenix should allow you to support a regulatory revolution that will give the UK a new boost. You can also spread your bet across the entire UK market and further boost your income with Dividend Hero Trusts such as City of London, JP Morgan Claverhouse and Merchants. Unloved British stocks are seen as attractively cheap. This could be the start of a great adventure with solid dividends as a great company.

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