Investors will need to figure out the impact of new accounting rules next week as three of the country’s biggest insurers report their financial results.
It will also be the final set of half-year results for Legal & General boss Sir Nigel Wilson, who is set to depart later in 2023.
“Sir Nigel steps down at the end of this year, before the end of the five-year spell, but he will presumably be looking to go out on a high after almost 12 years in charge and these interim results will be initially benchmarked against the (company’s) 2020-24 plan,” said Russ Mould and Danni Hewson at investment platform AJ Bell.
The plan means dividends should grow by between 3% and 6% a year, earnings per share should rise more rapidly, and capital generation should reach between £8 billion and £9 billion.
Whether failing against these benchmarks will dent the future hopes of Sir Nigel – who has recently indicated he might be interested in a political career after he steps down – remains to be seen.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said that Legal & General will be particularly impacted by new accounting rules for insurance companies.
“The key difference is that profits from the insurance business are stored in the balance sheet and released over time, causing a hit to reported profits in the short term compared to the old regime,” he said.
He added that rising interest rates are helping the parts of the business. It is expected to report an operating profit of £834 million.
But Legal & General’s results on Tuesday are only one of many from insurance companies. Aviva and Admiral Group will report on Wednesday.
Mr Britzman said: “It’s safe to say markets were unimpressed by Admiral’s full-year results back in March.
“Profits missed analyst expectations as higher claims and an increase in the cost of servicing them weighed on performance.
“But, broadly speaking, Admiral’s performance in this tricky environment has been strong to date compared to peers.
“Analysts are expecting to see price hikes support the top line in next week’s half-year results, with markets expecting double-digit growth in gross written premiums.”
August Graham – PA