Insurers Aviva and Legal & General are expected to report profit rises when they report on Wednesday and Thursday respectively next week.
Analysts expect Aviva’s full-year operating profits to rise 8 per cent to £2.9bn and Legal & General is likely to advise operating profit increases of £1.6bn, an increase of 13 per cent, compared to last year. Analysts expect Aviva’s dividend to be raised by 15 per cent to 23.1p.
Last month, Aviva said that it expects a £385m exceptional charge to its 2016 reported profits because of the government’s lowering of the discount rate for personal injury damage payments. The Ministry of Justice said victims of life-changing injuries accept lump sum compensation payments, and the amount they receive is adjusted using the discount rate according to the interest they could expect to earn by investing it.
Legal and General may also restate its concerns about that EU’s Solvency II capital rules. The insurer has previously said that it is not happy about the regime because it believes the rules make it harder to invest in assets such as infrastructure. The insurer reported in its 2016 interim results that its Solvency II ratio was 174 per cent, with a capital surplus of £9.5bn. In 2015, operating profit before tax was £2.bn.
Last month, Aviva said that it is selling half its stake in life insurance joint venture Antarius to French bank Société Générale, for £425m (€500m). The sale, which is expected to complete on 1 April subject to regulatory approval, is for £425m. The deal represents approximately 1.7 times Aviva's share of the net asset value of Antarius and 16.4 times Aviva's share of Antarius’ earnings after tax.