Insurance shares hit after Brexit vote

Shares in London-listed insurance firms have taken been hit as analysts try to judge the damage that Brexit could inflict on their customer base and investment portfolios.

Insurance firms, while suffering less than the British banks in the aftermath of the referendum, are exposed to the global financial markets through their investments and generate sales that are dependent on the broader UK economy, according to a report by The Telegraph.

Aviva’s shares fell 4pc by 11am, worsening the pain after a 15 percent drop earlier. Analysts at Macquarie said the slump “reflects the Aviva balance sheet of three years ago rather than today”.

The analysts pointed out that Aviva has recently made efforts to stabilise its balance sheet by selling off distressed property loans and paring back its exposure to volatile equities. “While we do not believe Aviva has a ‘fortress’ balance sheet, it does offer a compelling valuation and dividend yield,” they said.

Canaccord Genuity, meanwhile, cut its share price targets for Aviva and Legal & General by a fifth, with smaller reductions for other insurance groups, which it sees as less vulnerable to a shock from the fall in many global assets following the referendum result.

“We have lowered our price targets effectively to reflect a higher cost of capital, with the biggest price target cuts for those most sensitive to the macro environment,” said Canaccord.

RBC Capital Markets analysts said Legal & General, as well as the specialist bulk annuity firm Just Retirement Partnership, were among the most vulnerable firms to Brexit.