Aviva PLC (LSE:AV.) remains a better option for investors than rival insurer Legal & General Group PLC, at least according to the analysts at UBS.
In the absence of a buyback, the Swiss bank sees no re-rating for L&G before next year when the new chief executive joins.
The new boss needs to switch away from capital-intensive pension risk transfers (PRT) towards fee-based business asset management earnings, according to UBS.
Aviva, by contrast, is well positioned for improving general insurance trends and diversified sources of earnings.
A high capital return yield (12%) is also the most attractive in the sector, according to the bank.
Given Aviva’s strong management team and L&G’s new chief executive only joining in 2024, the former is the preferred option of the two, UBS said.
Its ratings are ‘buy’ for Aviva with a target price of 480p (25% upside) and ‘neutral’ on L&G with a target of 235p (7% upside).