Legal & General results and FTSE 100 reshuffle eyed on hump day


Wednesday will be marked by the first results set from an insurance giant as Legal & General Group PLC (LON:LGEN) delivers its finals.

Meanwhile, investors will also be awaiting the results of the FTSE quarterly reshuffle, which will be delivered after session based on the closing prices from Tuesday.

There will also be some macro data to chew on with services PMI’s due form both the UK and the US.

L&G lines up numbers

L&G will report its results on Wednesday amid a period of increased market volatility and investor concerns about low interest rates, falling bond yields and rising credit spreads.

In the first half of last year, L&G reported an 11% jump in profits after securing the UK’s largest bulk annuity deal, with 33,000 Rolls-Royce pensioners moved over in June.

However, other business lines were below market expectations, according to analysts at Hargreaves Lansdown.

In a November update, L&G estimated that its all-important solvency ratio will be in a range of 171% to 176% by the year-end.

Analysts at UBS expect that around a nine-percentage-point fall in L&G’s Solvency II ratio will put concerns about this metric “back in focus” as it is “driven by a combination of falling bond yields, rising credit spreads and weaker equity markets” though it noted that this was “not at a level that would risk the dividend, in our view”.

However, taking a cautious view of the UK insurance subsidiary, the analysts warned that if low bond yields persist and joined by more normalised credit conditions, there is the potential to create “constraints to cash” at the group level — ie put pressure on the dividend — or lead to changes to annuity new business volumes and/or reinsurance strategy.

But since falling to a two and a half year low last August, L&G’s shares soared to an all-time high in February before coronavirus concerns struck markets.

FTSE reshuffle quiz

With the ongoing coronavirus virus having caused a bloodbath for equities last week, the question of who exactly will be demoted from the FTSE 100 index in the latest quarterly reshuffle next week is anyone’s guess.

The prime candidate for demotion is NMC Health (LON:NMC), which has lost around two-thirds of its value since last summer after a report by short-seller Muddy Waters questioned its accounting policies, setting off a chain of events that has resulted in the resignation of all the company’s executives and the sacking of its CEO amid questions over its shareholder register.

Others that analysts have earmarked as potential casualties are B&Q DIY stores owner Kingfisher plc (LON:KGF) and travel firms TUI AG (LON:TUI) and easyJet PLC (LON:EZJ) which have been hit in recent weeks by coronavirus disruption.

Meanwhile, potential candidates for promotion are silver miner Fresnillo Plc (LON:FRES), housebuilder Bellway PLC (LON:BWY) and asset manager Intermediate Capital Group PLC (LON:ICP).

Significant announcements expected for Wednesday 4 March:

Finals: Legal & General Group PLC (LON:LGEN), Attraqt Group PLC (LON:ATQT), BATM Advanced Communications Ltd (LON:BVC), Devro PLC (LON:DVO), Elementis plc (LON:ELM), Hill & Smith Holdings PLC (LON:HILS), Hostelworld Group PLC (LON:HSW), Polymetal International PLC (LON:POLY), Vivo Energy PLC (LON:VVO)

Interims: Allergy Therapeutics PLC (LON:AGY)

Trading announcements: DS Smith plc (LON:SMDS)

Economic data: UK services PMI, US services PMI, US non-manufacturing PMI, US ADP employment


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