The reporting season for UK insurance companies begins next week, with Aviva (AV.L) and Standard Life SL.L announcing their full-year results. A sample of 11 City analysts by Aviva indicates the company will record a fall in global life and pensions sales of 13.7 percent to 31.3 billion pounds for 2009. A similar survey of 13 analysts by Standard Life concluded that it would disclose a 25 percent drop in new sales to 1.83 billion pounds over the course of the year.
The repairer of UK social housing Connaught CNT.L has lost its chief executive. Mark Davies unexpectedly resigned from the company with immediate effect, giving “new challenges” as the reason for his departure. His position will be filled by the executive chairman Mark Tinckell from next Monday. The surprise exit of Davies sent Connaught’s share price tumbling 11 percent to 320.2 pence in yesterday’s trading, making the company the biggest faller in the FTSE 250.
BRITISH AIRWAYS HEADS FOR ONE BILLION POUND LOSS DURING RECESSION
It is anticipated that the release of British Airways’ BAY.L results for the three months to the end of December 2009 will expose more grievous losses at the airline. BA is expected to reveal a loss of 151 million pounds for the third quarter of the financial year, which would bring total losses up to the end of March to 602 million. Such a figure would exceed the 401 million pound loss recorded for 2008, itself a record. The threat of strikes prior to Christmas and very bad weather are two factors that have exacerbated the company’s already poor situation.
The oil group BP (BP.L) has appointed Paul Anderson, a former chief executive of the mining company BHP Billiton (BLT.L), as a non-executive director. Anderson joins the board to fill the vacancy created by the departure of Sir Tom McKillop last March, who left after BP shareholders complained that he was a liability to the company, citing his record in his previous role as chairman of the now part nationalised Royal Bank of Scotland (RBS.L). Anderson’s appointment is likely to be the start of significant boardroom changes led by both the new BP chairman, Carl-Henric Svenberg, and chief executive Tony Hayward, with three other non-executive directors set to retire either this year or early in 2011.
The U.S. private equity firm Warburg Pincus [WP.UL] has completed the purchase of Belfast-based survival equipment maker Survitec for 280 million pounds. Survitec was aquired by Montague private equity for 146 million pounds in 2004, in which time the company has earned more than twice Montague’s initial investment. The deal is the third-largest British buy-out deal announced in the past three days following Advent International’s purchase of the pensions consultancy Xafinity and KKR’s purchase of the retailer Pets at Home.
Part-nationalised UK banking group Royal Bank of Scotland (RBS.L) has received several expressions of interest from potential bidders for the 318 retail branches that it is being required to sell off by the EU as part of a penalty for having received state aid. The initial deadline for potential bidders to request information about the sale was Friday but sales may not be completed for a year. RBS has said it is making progress in reducing the size of its balance sheet and that it is working in the interests of customers and shareholders.
The Daily Telegraph
Barclays (BARC.L) says it is still owed three billion dollars in securities assets held by investment bank Lehman Brothers. The claim relates to a September 2008 deal in which Barclays agreed to buy the bulk of the assets of Lehman Brothers’ U.S. brokerage business. Lehman’s estate has previously said Barclays should return an alleged five billion pound “secret” profit on the deal. A New York bankruptcy court trial is set for April 26, with a judge expected to rule on what is owed to each institution.
The successful placing of 2.5 billion pounds of mortgages with investors by Lloyds Banking Group (LLOY.L) has raised hopes that securitisation markets are reopening for banks. A four billion pound issue last September by Lloyds represented the first attempt by a bank to tap the securitisation markets since the onset of the credit crisis, but Friday’s issue was the first to find interest among U.S. investors for prime residential mortgage securities. The issue price of 115 basis points over Libor compares to September’s issue at 170 points above Libor.
FSA TO ENFORCE FIVE-YEAR TENANCIES IN THE “SALE-AND-RENT-BACK”
New Financial Services Authority guidelines for the “sale-and-rent-back” sector rule that companies offering to buy a property from the owner and rent it back to them must guarantee tenancies for five years. The FSA also said affordability checks must be carried out on customers, who will be given a 14-day cooling off period in which to consider whether to pursue a deal. The use of emotive phrases such as “mortgage rescue” and “cash quickly” will be prohibited in advertising. The regulation will come into effect on June 30.
Prepared for Reuters by Durrants