This week we had figures from Admiral Group (ADM)  which is primarily a car insurer that also happens to operate the price comparison site confused.com, see the insurance category to the right for more information on them. The results themselves were not that well received as they continue to be hit by falling car insurance premiums which has been going on for the last couple of years.

I don't want to write about that, I'm going to suggest ways you can save money so you have more available to spend or invest. You may not have realised that Car Insurance Premiums have been going down and if you wanted to keep track of this in the future then there is an index produced by the AA that you can check out. For your convenience I attach a copy of the latest quarterly report below which shows that car insurance premiums have actually fallen by 19.3% in the year to June 2014. This also covers home insurance premiums which might also help when you come to renew you home insurance too.

So the next time your Car insurance comes through do not let it auto renew or just pay up regardless. Check out the advice at moneysavingexpert.com which I'm sure you are aware of and which is now owned by the major independent comparison site moneysupermarket which is also an interesting stock, but perhaps more on that another day.

I used these services recently after my Car insurance company tried to put my premium up by nearly 12% despite the fall in premiums, my car being another year older and me qualifying for another year of no claims. In the process I managed to slash 31.9% off of my premium and got a years free breakdown cover thrown in too.

Finally for a cherry on top or the price of a cup of tea I got paid £1.95 by Quidco just for doing a search on confused.com which I would have done anyway. If you would like to to the same and get cash back on your car insurance quote and a range of other things to save you money so you have more to invest, then click on the highlighted link above to sign up if you can be bothered or are not already a member. In the interests of full disclosure I will get a small reward if you sign up using the link and then go onto earn £5 in cash back, but I have set it up so you will get a share of that too. This will I believe be larger if you sign up before the end of August - cheers have a great weekend.

I have written about various insurance stocks in the past see the highlighted link above or the Insurance category to the right of the blog. Briefly we have had results from Catlin Group the Bermuda based international specialty property/casualty insurer and reinsurer which operates on the Lloyds and Bermuda Insurance market but also more widely globally in the US, Europe, Asia-Pacific and Canada hubs.

These results look very good (see the link above for full details) but be aware they probably reflect top of the cycle returns for insurers such as Catlin as premium rates are now declining. However, they mention this and say theat their global coverage helps them to pick and choose and offset some of the worst effects of these premium reduction.

As with other insurance stocks I have highlighted in the past this one comes with a great yield of 6% based on the historic dividend and they have just announced a 5% increase in the interim dividend. They are quite shareholder friendly and they note that they have increased their dividend by 176% since listing in 2004. In addition they are trading a little below their book value of 547 pence which given their current ROE of 17% in these figures and the 13.2% they have acheived on average on this measure since they listed in 2004 (source: company website and todays announcement) this seems on the low side.

This discount to book has occured given a recent sell of in the stock which left it looking oversold ahead of these numbers. I think this has therefore thrown up a possible buying opportunity for a short term trade for a possible return to 550 pence plus 2% from the interim dividend of 10.5 pence. Or you could buy it for a longer term holding if you are prepared to ride the insurance cycle, although it is probably never going to set the world on fire. I know Neil Woodford has also been a holder of this one in the past and he also seems to have it in his new fund - which you can see the holdings for on this Citywire article.

This is one I have written up a couple of times earlier this year and in particular when it had been hit on the back of changes to annuities in the budget and a clumsy announcement by the reguulator. It was about 207 pence then and has since gone ex the final dividend which was worth 3.3% and the shares are today trading at 233 pence to give a total return of around 15% since the end of March if you bought in around those levels.

They have annoucned interims today which look pretty strong and you can read by clicking the blue link. The highlight for me was the 21% increase in the dividend which they say is in line with their dividend guidance announced at the 2013 full year results. This was to take net cash cover down from 1.8x to 1.5x in two years. So exceptional growth in the short term which is nice while it lasts but the business seems to be growing well on an underlying basis and is generating lots of cash so looks good for the medium term too - especialy when it starts from a yield of around 4.7% with 16% growth forecast for the full year which I guess now might be exceeded given the increase in the interim.

I also like their strategy which they say is based on five key macro trends which in the statement they describe as follows:

"The Group continues to execute on its clear and focused strategy based on five key macro trends: ageing populations; globalisation of asset markets; welfare reform; digital lifestyles and retrenching banks, through both organic growth and selective bolt-on acquisitions. Our response to these trends: Retirement Solutions; LGIM international expansion; Protection; Digital Solutions and Direct Investments are continuing to drive growth in our cash and earnings."

See the full annoucnement at the link above for more details.

It just so happens that we have had announcements by stocks in these two sectors today. When you think about it they are quite good partners in a portfolio as one is exposed to longevity risk in its business while the other sells products that help to reduce life expectancy, despite what the picture above might suggest. Indeed back in the days of conglomerates BATS even owned a life company (Allied Dunbar / Eagle Star) and Imperial was part of the infamous Hanson Trust before it was broken up and Imperial was de-merged. 

Imperial Tobacco (IMT) announced their interim results to 31st March 2014 in which they saw revenues down by 5%, operating profits by 4%, earnings by 1% but the dividend was increased again by 10% which is around the rate of growth forecast for the full year. Aside from the headlines numbers being down they point to Specialist & growth brands / markets being up. While they also suggested significant stock reductions were achieved, which impacted volume, revenue and profit - begs the question if they had stuffed channels in the previous years to hit numbers? They also said they are on track to deliver £60 million of cost savings from their cost optimisation programme this year and a total of £300 million by 2018.

Looking ahead they said they will move to paying quarterly dividends from 2015 and expect modest adjusted earnings per share growth at constant currency and further dividend growth of at least 10%. They talk about their actions providing a stronger platform for generating quality sustainable growth. They say that trading conditions are unlikely to materially improve in the coming months but that they are experienced in growing their business in a demanding environment and remain on track to achieve their targets and create further value for shareholders. 

They also emphasise that their cost and stock optimisation programmes supports their growth ambitions. On this it looks to me like cost cutting and share buy backs are probably supplying up to half of the likely 5%(?) or so underlying growth, which I guess is not surprising for a mature business such as this. It does beg the question how they can sustain dividend growth at 10% per annum in the medium term, especially as the dividend is only covered 1.6x or so by earnings and cash flow. The other concern with this one for me is the balance sheet as I have noticed it coming out badly on Z-Score screening (risk of bankruptcy). This reflects the £9 billion or so of debt versus the £24 billion or so market capitalization and I note that the interest cover is forecast at less than 3 times (2.85), a level which I use a threshold for identifying financial risk.

So in summary - a bit of a curates egg this one - OK value around 12x earnings with a good yield and growth of 5% & 10%, but lowish cover and a geared balance sheet. However it is a pretty stable / declining business with strong cash flows and I guess it does have some assets like Logista in Spain that it is looking to IPO which would reduce the debt burden. I guess it will depend how much they can get for it versus the £73 million operating profit as to whether it goes and helps the finances or not. Thus on balance I'm inclined to run with it but it looks to have got over bought recently and is towards the top of it range over the last three years so I wouldn't be adding to it or chasing it up here. It should probably outperform if the market sags back from here but will likely lag a renewed rise in the market, but Ok as part of a diversified income portfolio.

I'll also be watching developments in the e-cigarette market and how they cope with this. It seems they have started to respond to this with acquisitions and their own products, but this could easily be a threat rather than an opportunity - lets hope they don't go the way of EMI and HMV after they failed to adapt to new technology.

Meanwhile in the Life sector we have had a Q1 IMS from Legal & General (LGEN) today which I wrote up recently after it got hit by the announcement on annuities in the budget. So I'll not dwell too much on the operations here but note that they highlighted lots of strong growth across board and posted record results. They also highlighted that "they benefit from favourable demographic trends; we have economically and socially useful products for customers; and with our LGIM economists forecasting 3% plus economic growth in the UK and US, we are excited about the prospects for our business."


So in contrast to Imperial they offer socially useful products! The shares are up now by around 5.7% since I last wrote about them at the end of March and they have now gone ex the final dividend which is worth 3.3%. This is another 5% or so yield stock with double digits growth forecast and around 1.5x cover in a fairly mature industry. However, it looks to me that the growth prospects and cash flow here should be more robust although uncertainty about the longer term impact of the annuity changes remains. On that basis I'm happy to hold this one as a well managed play on demographics and funding a decent retirement for people and me!

Legal and General (LGEN) and other life insurance related stocks have been under the weather since the shock announcement in the recent UK budget about reform of the annuities market for individuals. L & G put out an informative RNS post the budget which suggested they were well placed for the new arrangements. Within this they felt the new rules and general under provision would lead to greater pension savings going forward. LGIM, as a leader in pension fund management with £450bn of assets under management, and Cofunds, as a market-leading savings platform with £64bn AUA, are well-positioned to benefit from increased savings rates. They are also well place to serve and benefit from this further with their comprehensive suite of individual retirement solutions including protection, draw down, DC funds, Unit Trusts and ISAs. Finally they pointed out that Legal & General's Retirement Solutions business is broad-based, with £21.1bn out of a total of £34.4bn annuity assets derived from corporate transactions, which are outside the scope of the new regulations. Their cash guidance of Operating Cash of £290m (2013: £260m) for Legal & General Retirement given at Preliminary Results on 5th March for 2014 remains unchanged.

In addition last week we had a botched announcement from the new regulator the FCA about an investigation into closed life funds dating back to the 1970's. This will not be another compensation bonanza because of sales practices but could lead to some costs if exit charges are reduced or quashed. However, I do not think Legal & General are as exposed to these policies as others like Resolution and Phoenix.This announcement was handled incredibly badly by the FCA creating a disorderly market in the insurers share, which begs the question who regulates the regulators? In a badly timed announcement today they have apparently just raised their annual funding requirement by an inflation busting 3.3% to an incredible £446.4 million. This comes after there were calls over the weekend for the head of the FCA, Martin Wheatley, to resign after the botched announcement on Friday. You couldn't make it up - I guess next we might hear he had stepped down with a bonus and a big pay off.

Any way, nevertheless Legal & General and the others have all put out reassuring statements and the FCA have suggested subsequently that the review may not be a far reaching as first suggested so a relief rally is currently underway. The effects of all of this can be seen in the graph below:

which shows the damage done to the Legal & General share price on the back of all this. Thus the shares are bouncing around their 200 day moving average and coming of an over sold situation on the RSI which has shown some positive divergence - a buy indicator normally. So technically it looks a tempting time to buy, but what about the fundamentals?

I would argue they look good too, especially on the yield front which is usually the main attraction with insurers.
Dividends here have been on a strongly rising trend +18% per annum over the last five years with 12 to 14% growth forecast for the next two years. Thus they are on a forecast yield of 5.2% for this year based on a 10.7 pence dividend forecast and a 207 pence share price. The yield range it traded on in 2013 was 3.4% to 5.2% so the yield is now at the top of its recent range. In addition to this they are still cum the final 6.9 pence dividend for a further 3.3% yield, xd 23rd April, paid 4th June 2014. So you could get an 8.5% yield over the next 14 month or so plus or minus whatever the share price might do over that period. So looks like this could be an interesting entry point / chance to add to holdings, although if there was more volatility and it were to get as over sold as it got over bought and fell 40 pence or so below its 200 day moving average, then 170 pence looks like a longer term support area. It would yield over 6% there so I'm not sure it will get there, but I think I'll set up an alert just in case.

Finally. please note I have added a Feedback section (see navigation tab above) which contains six simple questions for you to help influence what you see on here. I am also considering a new service so it would be great to get your feed back on that too.