Strength shines through at GA
Wednesday 28 February 1996
But the strength of the Perth-based insurer still shone through in results which more than maintained 1994's record. Operating profits, struck ahead of gains on the sale of investments, edged ahead to pounds 436m from a restated figure of pounds 434m. The market was particularly impressed with the 49 per cent uplift in net assets to 653p a share, which helped send the share price 13p higher to 650p yesterday.
The weather was no help to the UK results. The big freeze in the last quarter alone led to pounds 40m of losses on burst pipes and the like. But the rain falls on both the just and the unjust alike and GA continues to outpace its major rivals in the domestic market.
Profitability is higher and the trend in premium income, broadly flat at pounds 1.53bn last year, is significantly better than other groups which have reported so far. Commercial Union, Guardian Royal Exchange and Royal have seen premiums falls averaging around 10 per cent in 1995.
The question is how GA will manage the downturn in the cycle, particularly now that direct insurers have become such a major force. To date, it has avoided a head-on confrontation by building market share in less competitive areas. But its own direct business has been slow to take off, with the motor side still representing less than a fifth of the total policies in force and the newer home side just an eighth. It remains to be seen how easy it will be to get the intended 4 per cent increases in personal motor premiums to stick from April.
Whatever happens at home, GA should be buttressed by most of its other major businesses. As the chart shows, the US cycle is still moving in the right direction and the UK life business has stormed ahead, raising profits 20 per cent to pounds 71m as premiums soared by over a half to pounds 936m. The addition of Provident Mutual's business, mainly pensions, which should start contributing next year, will further strengthen this operation.
NatWest Markets believes profits could rise to around pounds 410m this year, putting the shares on a prospective multiple of 12. Backed by a forward yield of 6.3 per cent, they are amongst the pick of the sector. But any slip in bond markets later in 1996 would undermine the sector. Hold.
- 2 Smartphones are making children borderline autistic, says psychiatrist
- 3 Why this father didn’t hide his daughter’s heroin overdose in her obituary
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
Smartphones are making children borderline autistic, says psychiatrist
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Nepal earthquake: The race is on to help thousands trapped under rubble around Kathmandu, while remote villages face a long wait for help
Royal baby: Live updates as superbug closes ward at St Mary's Hospital where Duchess of Cambridge is due to give birth
Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...