Head-to-Head: Morningstar Analysts Compare UK Insurers

The recent stock performances of Prudential and Aviva couldn't be more different

Vincent Lui, CFA 28 May, 2013 | 10:12AM
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The recent stock performances of Prudential (PRU) and Aviva (AV.)--both no-moat UK insurers--couldn't be more different. While Prudential's share price doubled in 2012, Aviva's shares remained sluggish. We think Prudential's risk has elevated significantly and the market valuation cannot be justified based on the company's prospects. On the other hand, we think Aviva has made some tough decisions to de-risk its balance sheet and strengthen its capital position. Although we don't see Aviva as a growth company, we give it credit for being a safer company with higher predictability of cash flows. As a result, we believe Aviva could present a more attractive investment opportunity compared to Prudential.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Aviva PLC481.50 GBX0.31Rating
Prudential PLC673.80 GBX-1.29Rating

About Author

Vincent Lui, CFA  Vincent Lui, CFA is an equity analyst for Morningstar, covering life insurance companies.

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