UK Insurers Tumble on Pension Reforms and Inquiry

Nigel Thomas
28 Mar, 2014
New York City

Deutsche Wohnen profit surged 46% and sales climbed 55%. Intesa Sanpaolo annual net swung to a loss

[R]4:00 PM Frankfurt – Deutsche Wohnen profit surged 46% and sales climbed 55%. Intesa Sanpaolo annual net swung to a loss €4.55 billion as fourth-quarter loss widened. U.K. insurance companies tumbled after a regulator plans to investigate the sale of 30 million policies between 1970s and 2000.[/R]

In London trading, FTSE 100 index rose 0.4% or 25.58 to 6,613.90 and in Frankfurt the DAX index jumped 1.1% or 105.38 to 9,556.59.

In Paris, CAC 40 index gained 0.5% or 22.13 to 4,401.19.

Deutsche Wohnen AG closed unchanged at €16.60 and Germany-based property developer said revenue in the year ending in December climbed 55.4% to €372.9 million from €240 million a year earlier.

Profit for the year surged 46.2% to €212.7 million compared to €145.5 million and diluted earnings per share increased to €1.20 from €1.15 a year ago.

Intesa Sanpaolo SpA climbed 4.8% to €2.43 after the Italy-based banking group reported operating income in the year ending in December declined 8.9% to €16.30 billion from €17.88 billion a year ago.

Net in the year swung to a loss €4.55 billion compared to a profit of €1.61 billion a year earlier.

The bank said fourth-quarter loss widened to €5.19 billion from €83 million a year ago period, as it wrote down goodwill and keeps aside more funds for bad loans.

Legal & General Group Plc declined 7.5% to 196.37 after the U.K.-based investment management company requested the Financial Conduct Authority to bring forward publication of its business plan for next year.

The Financial Conduct Authority is planning to investigate the sale of 30 million policies sold between the 1970s and 2000.

According to the regulator, the insurance companies are letting the old policy management stagnate and use these policies to charge for the business expenses of newer policies that are sold in the last decade and also penalize policy holders to switch to cheaper policies.

The broad scope of regulator review is likely to cover policies worth as much as 150 billion.

Resolution Limited tumbled 13.8% to 275.04 after the RBC Capital decreased their target price on Guernsey-based life and health insurance provider.

A week ago, Finance Minister George Osborne shook up insurance industry with a new proposal during his annual budget. The new proposal will allow pension contribution to be in any financial product from the current requirement of compulsory investment in annuity for investment between 18,000 and 310,000 a year.

Since then, most leading annuity providers have dropped between 5% and 15%.

Aviva plc declined 6.8% to 450.50 pence and Prudential Plc dropped 3.6% to 1,267.50 pence.

Phoenix Group Holdings plunged 19.7% to 591.94 pence after the Financial Conduct Authority will publish a plan of examination of treatment of long-standing customers in the life-insurance market and its priorities for the year on March 31.

Pirelli & C. SpA jumped 3.9% to €11.65 after the Italy-based tire maker said revenue in the year ending in December climbed 8.4% to €6.15 billion from €6.07 billion a year ago.

Net profit in the year plunged 21.7% to €306.5 million compared to €391.5 million a year earlier.