Aviva is set to reveal the UK floods in December put a £100m dent in earnings for 2015 when it reports its annual results on Thursday.
The impact of the floods, as well as the recently announced acquisition of RBC Insurance in Canada, is likely to drag operating earnings per share from 49.2p to 47p, according to Barrie Cornes at Panmure Gordon.
However, Cornes added: “We believe that the general insurance arm of Aviva will have had a good year.”
Prudential is also reporting this week, on Wednesday, and is expected to post another increase in earnings. Analysts are predicting that the insurer will report earnings per share of 108p in 2015, up from 96.6p in 2014, while profit has been forecast to rise to £2.76bn from £2.13bn. Analysts at Barclays have singled out Prudential as “the one true large cap growth stock in the sector”.
Meanwhile, both firms could find some relief from recent foreign exchange movements.
Weakened sterling resulting from volatility across global markets and concerns that the UK could leave the European Union is likely to be a huge boon to the UK’s embattled life insurance sector, according to analysts.
Aviva and Prudential are the “prime beneficiaries” of the deterioration in sterling, analysts at Barclays said, because they have the largest international operations of any UK insurers.