Legal & General remains broker's top choice for life insurance
28th April, 2014
The German bank Berenberg has named Legal & General as the 'top pick' in the life insurance sector following the recent government shake-up of the UK savings and annuity market. The broker claims the newly transformed insurance market is entering 'a brave new world', but says it remains hopeful that there will be a positive impact in spite of a pending FCA investment and endowment enquiry, an end to compulsory annuitisation, and a cap on corporate pension fees.
Berenberg anticipates a low-cost, scaled, and controlled consolidation market in the future as more flexible pensions encourage longer term savings volumes. The broker says it is hopeful that this flexibility will ultimately result in a highly regulated and highly commoditised marketplace, as more people shop around and use websites that compare life insurance quotes to find the best deals available.
After its recent sell-off, Legal & General is Berenberg's rated 'buy' as the company is 'well placed to meet the demand of an ever-changing UK life insurance landscape'. Due to its growth in Asia, Prudential is the broker's second top buying choice, whilst the recently closed life consolidator Resolution has been raised from 'sell' to 'hold'.
Aviva remains a firm 'sell' due to what the broker describes as dividend expectations 'getting ahead of themselves'. It said the company’s stock is valued fully compared with the sector. The Berenberg recommendations keep Standard Life and Phoenix Group on 'hold', and St James's Place is consistent in its position as a 'buy'.