Aviva PLC, Legal & General Group PLC and Prudential PLC go to the races next week week

The coming week will be a busy week for insurers, with Aviva, Legal & General and Prudential among the latest crop of blue chips to release their first-half earnings, as analysts report a return in risk appetite among investors on both sides of the Atlantic .

Shareholders will be eager to see whether the insurers can circumvent industry-wide pressure on insurance sales since the pandemic amid a recent rise in the cost of claims, which was particularly severe in the car insurance sector.

Aviva, the insurance and pension provider with a market cap in excess of £11bn, and £27bn insurance firm Prudential will announce their financial results on Wednesday.

L&G, which featured among the top 10 most-bought funds on investment platform Interactive Investor, will have a headstart when it releases its results on Tuesday.

Following recent profit warnings among peers in the motor insurance sector, analysts expect the focus to be on the UK personal lines business at Aviva PLC (LSE:AV.), anticipating pressure on its combined operating ratio.

However, the insurance and pension provider is heavily diversified, with UBS analysts forecasting growth in both its general insurance and life insurance business lines.

In May, Aviva’s chief executive Amanda Blanc was forced to contend with sexist heckles from shareholders at its London annual general meeting.

The firm has also faced pressure from Swedish activist investor Cevian Capital, which is pushing for cost reductions and higher cash returns, as well as union intervention in staff pay.

UBS estimates that Aviva will post 6% year-on-year growth in its operating profit for the period, above market consensus estimates.

Analysts predict a “dampening” in business volumes for Prudential PLC (LSE:PRU) in the first half, due to lockdowns in Asia, and will look to see if it secures a licence in Macau that could allow it to tap Hong Kong and China markets.

The growth outlook may be even more important, with investors likely to be hanging on every word management will say about how Pru’s business can withstand a macroeconomic downturn, especially in a scenario where rising costs of living could dampen new business sales.

Making demonstrable progress towards its yearly capital generation target of £1.8bn would also put Legal & General Group PLC (LSE:LGEN) on a firm footing. The consensus among analysts is that it will grow its operating profit across all divisions.

Investment service provider Interactive Investor has meanwhile observed an increased appetite for risk among investors seeking to buy shares in listed funds and investment trusts.

Kyle Caldwell, collectives specialist at Interactive, noted that L&G’s investors had “increased exposure to risk assets” in July. He noted “a strong showing for stock markets in July, particularly across the pond in the US, caught the eye of some of our customers, who during the month increased exposure to risk assets.”

Zurich Insurance Group’s stock is meanwhile expected to “perform well” if it gives a robust message on inflation next week, given Switzerland has experienced lower inflation than many other countries in Europe.

The market consensus among analysts is that it will generate nearly US$3.3bn of group operating profit during the reporting period.

Abrdn PLC (LSE:ABDN), M&G PLC (LSE:MNG) and Quilter PLC (LSE:QLT) are also expected to release results next week, putting them among the crop of asset managers and insurers that will release results shortly after recent inflationary shocks and the latest base rate hike from the Bank of England.

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