|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||34.61 - 34.93|
|52 Week Range||19.10 - 38.25|
|Beta (5Y Monthly)||1.04|
|PE Ratio (TTM)||8.15|
|Earnings Date||Feb 18, 2021|
|Forward Dividend & Yield||2.26 (6.48%)|
|Ex-Dividend Date||Aug 10, 2020|
|1y Target Est||41.63|
(Bloomberg Opinion) -- The unloved insurance sector is proving a rich territory for acquirers. Apollo Global Management Inc., Blackstone Group Inc., Carlyle Group, KKR & Co. — the big guns of private equity have been conspicuously active in this industry lately.Now an investor consortium backed by former Lazard Ltd. banker Mark Pensaert has emerged as suitor to Belgian insurer Ageas SA, capitalized at 7 billion euros ($8.3 billion). A sector facing disruption clearly also offers opportunities.Life insurers face challenges all round. Complicated long-term savings products have lost their luster, especially as guaranteed savings rates have plummeted. Low-fee asset managers are competing hard for savings. Traditional methods of selling, typically relying on local reps, are expensive and carry the risk of mis-selling. Regulatory capital requirements have become tougher.Many of the big listed insurers have been shifting emphasis toward general insurance such as car, home and business cover. Piecemeal disposals have offered private equity the chance to roll up disparate assets and reap economies of scale. Big portfolios of existing policies may not offer growth, but they generate cash and release capital over time. Then there’s the opportunity to grab a role managing the insurer’s assets — as in the Blackstone-backed takeover of Fidelity & Guaranty Life in 2017.Could Ageas be next? It recently had an approach from Pensaert-backed BE Group, Bloomberg News revealed on Friday. The company said the indicative offer was “highly conditional” and “not realistic.”The market appears doubtful BE can return with a successful bid. A takeover would be complicated by the fact that Ageas has sizable domestic market shares in life and general insurance, and multiple joint ventures in Asia with change-of-control clauses, analysts at UBS Group AG say. Some 10% of the company is held by Ping An Insurance (Group) Co. and Fosun International Ltd.But Ageas still looks vulnerable. Its market value is not so big as to preclude a consortium bid. The stock’s 40% discount to book value reflects pandemic risks. Nevertheless, the shares trade at roughly 13% below analysts’ consensus price targets.In the insurance industry, stock-market investors have backed strategies that focus on paying out reliable dividends rather than aggressively chasing growth in an increasingly difficult competitive and regulatory environment. Think of Elliott Management Corp.’s recent activist attack on NN Group NV of the Netherlands, demanding hard commitments on the annual payout and cash returns, and a more aggressive approach to investment asset allocation.The market has also favored simplicity and a focus on core markets where insurers can demonstrate genuine competitive advantage. Aviva Plc was applauded by investors for saying it would concentrate on the U.K., Ireland and Canada, while its European and Asian businesses would be “managed for long-term shareholder value.”Ageas needs to marshal defenses and could draw inspiration from Elliott and Aviva. It’s a sprawling global empire with a particularly big Asian presence. With a new chief executive officer starting in October, it has the chance to rethink its direction. The next approach might not be so easy to swat away.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It’s time for someone else to have a go at one of the toughest jobs in European finance: deciding the future of Aviva Plc.The U.K. insurer’s pick of Amanda Blanc as chief executive officer has brought a leader with the necessary sense of urgency. The appointment of a woman to such a prominent leadership role at a European financial institution should be celebrated too, not least given it’s mainly men who enter the actuarial profession.Aviva is an incoherent global empire with life insurance, general (home and motor) insurance and asset management operations. Adjusted for currency movements, the shares have roughly halved in value in the last five years, against a European sector down 6%. They are where they were in 2012, trading on just six times expected earnings, a discount of 20% to peers Legal & General Group Plc and 45% to Prudential Plc.Against that backdrop, this latest strategic reset thankfully sounds more substantial than what’s gone before. A former executive at Zurich Insurance Group AG and Axa SA, Blanc brings an outsider’s perspective to Aviva’s problems. Since May, there’s also been an outsider in the chairman’s seat.There are no big-bang fixes without snags. The weak share price precludes a transformative merger or acquisition. Some investors want a breakup, potentially separating Aviva’s life and general insurance pieces. Unfortunately, that would end the capital benefits in combining the two.But there are moves that could work over time, so Blanc’s promise of an end to “business as usual” is unlikely to be a hollow claim. Slaying sacred cows could mean gradually selling off some of Aviva’s businesses to buyers who put more value on them than what’s implied by Aviva’s lowly 11 billion-pound ($14 billion) market capitalization.For instance, there’s no need for the company to own its own fund management unit when it can buy in those services externally.The international operations could be cut back too. Analysts at Barclays Plc last year argued Aviva should retrench to its domestic business and use the proceeds from overseas disposals to cut debt and return cash to shareholders. The resulting payout today may be smaller than the 10 billion pounds mooted at the time. But the logic of creating a simpler, U.K.-focused Aviva that’s easier to manage, and easier to understand, remains.The difficult question is why Aviva hasn’t attracted an activist investor when some of its rivals have. The likely answer is that Aviva is just next on the list. There are worrying alternative explanations. Perhaps agitators are struggling to construct a campaign arguing that management is neglecting to take some obvious action that would boost the shares — such as the U.S./Asia split Dan Loeb sought at Prudential — because they know no such silver bullet exists. Worse, perhaps they don’t see much upside from shaking up Aviva, whereas Elliott Management Corp. reckons NN Group NV is worth almost double its share price. Blanc won't want any activists on her back, but she'll also want to quickly dispel the notion that Aviva isn't worth the bother.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Activist-in-chief Elliott Management Corp. sometimes nudges companies to agree with its strategic ideas in private. The target firm then announces a new plan or some stretching targets and gets an endorsement from the feared hedge fund at the same time, sparing itself a public battle. Think of recent shifts by enterprise software group SAP SE and life-sciences group Bayer AG that met with simultaneous applause from Elliott. Dutch insurer NN Group NV, with a fresh chief executive officer, has chosen confrontation.Investors see insurance as dull and complicated and best left to experts. That creates a shortage of buyers for some quality stocks. NN is a classic case, Elliott reckons, and its shares should be double the current price. The company just needs to get investors to stop seeing it as a mysterious black box. To Elliott, it’s a reliable dividend machine which, run more aggressively, could pay out even more cash to shareholders.The activist tried to influence new CEO David Knibbe behind the scenes in the run up to this week’s strategy day. That evidently didn’t work so Elliott started a campaign, calling on NN to cut costs and shift some of its government bond portfolio into riskier but higher-yielding corporate bonds to boost annual cash flow. That would justify setting a target for 7 billion euros ($8 billion) of free cash flow over the next five years.The fund also wanted Knibbe to release capital by hedging out more of the company’s exposure to longevity — policyholders living longer — and by selling assets. It wanted a 3 billion-euro target for that, some one-third of the market capitalization.In true insurance style, NN’s rebuttal is oblique. Knibbe’s pledge has set a goal for organic capital generation, most of which will turn into free cash flow, for 2023. That will be achieved partly by moving into riskier investments, as Elliott requested. The number, 1.5 billion euros, is consistent with Elliott’s five-year cumulative target. A shame then that NN couldn’t just make the commitment Elliott sought.Meanwhile, Elliott wants NN to say it will pay out 80% of its free cash flow in dividends. NN is pledging to raise the dividend each year in line with its business performance without committing to a particular payout ratio. Again, the two sides aren't so far apart.The real differences are on the one-off capital releases. NN says it’s open to doing more longevity transactions, and to jettisoning units that don’t earn their cost of capital. But again, there’s no commitment to releasing a specific amount of capital this way. Its position is defensible: Insurers need to be careful with anything that weakens solvency as regulators can be capricious. What seems like excess capital one day can be essential the next.Even so, there’s enough common ground here that it’s odd that Elliott’s engagement didn’t culminate in a joint announcement this week, SAP-style. NN has now played into Elliott’s hands by being conservative on its targets and vague on precisely what might trigger a capital return. Between them, Elliott and the company have pushed out over 200 pages of slide presentations in the last month. The way to pull in new investors here is clarity and simplification, and this battle is hardly helping. No wonder the shares have gone nowhere.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.