Banks aren’t the only British companies that investors sold hand over fist after the U.K. voted to leave the EU last week.
Despite the broader market rallying back during the latter part of this week, some sectors are still being feeling the pain.
Insurance stocks Aviva Plc (ADR) (AV), Prudential Public Limited Company (PUK) and Metlife Inc (MET) all plummeted in the days following the vote.
While none of these insurers is facing the same imminent catastrophe that American International Group Inc (AIG) was facing back in 2008, a closer look at the stocks reveals why the market is so concerned.
Insurance Stocks to Watch: Aviva Plc (ADR) (AV)
About half of AV’s business comes from the EU, and company management has been very outspoken when it comes to the risks the company now faces. Prior to the vote, AV CEO Mark Wilson called the market uncertainty surrounding Brexit “kryptonite to business.”
At a shareholder meeting in May, chairman Sir Adrian Montaguebluntly said, “There’s no turning back if we get into the Brexit situation, and for us there’s no insurance policy against Brexit.”
Kryptonite may be the best analogy when it comes to the stock’s share price, which came crashing down and is currently sitting at a loss of 21% since the Brexit vote.
To reassure investors, the company released a statement highlighting its robust Solvency II coverage ratio of 180% and surplus of £9.7 billion.
A company’s solvency ratio is a measure of whether or not its cash flow is sufficient to meet its liabilities.
Investors around the world hope that AV’s balance sheet is as strong as it claims. AV and PUK were the only two out of nine U.K. insurers that the International Association of Insurance Supervisors deemed “global systemically important insurers.”
Insurance Stocks to Watch: Prudential Public Limited Company (PUK)
Speaking of PUK, the stock took…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
