Aviva PLC (LSE:AV.) is UBS’s preferred UK life insurer pick versus Legal & General Group PLC (LSE:LGEN), with the broker also favouring Phoenix over L&G and M&G.
In a 26 January 2026 note, analyst Nasib Ahmed said the Swiss bank continues to like Aviva "due to its well-protected balance sheet, high capital generation yield and diversification".
For L&G, which was kept on a 'neutral' rating, he flagged “high sensitivities to a market downturn and a medium-term solvency ratio drag”.
M&G PLC (LSE:MNG) is also seen as fairly valued, with “relatively high market sensitivities”.
Ahead of FY25 results, UBS expects investors to focus on Aviva’s general insurance performance and management actions.
For L&G, the focus is likely to be on its institutional retirement arm's new business margins, the scale of share buybacks, and investment variances.
On UBS forecasts, Aviva offers a higher operating capital generation yield, with an estimated 12% for 2027. It also sees a lower payout ratio of around 75%.
L&G is put at a 10% capital generation yield and a 100% payout ratio.
UBS expects Aviva to build solvency by about seven percentage points a year to 220% by the 2030 financial year.
L&G, meanwhile, is facing a four percentage point a year drag to 205% by FY30E.
Under an “extreme credit shock”, UBS estimates Aviva would stay above its 160% to 180% working range, while L&G could fall to 130%.
UBS has a 750p target price for Aviva (current price: 626p) and 260p for L&G (current price: 259.6p).