ITV and Hiscox

A 0.2% decline in the FTSE 100 on Monday morning was driven by weakness in insurers and banks. The negative trend was also seen across Asia including a pullback in Hong Kong following last week’s rally. Markets are likely to remain choppy ahead of the US midterm elections on Tuesday,” says Russ Mould, investment director at AJ Bell.

ITV

“Broadcaster ITV looks to have secured a heavyweight replacement for well-respected retiring finance chief Ian Griffiths.

“The appointment of Chris Kennedy may initially look a bit odd given he presided over a major profit warning at his current employer, software firm Micro Focus.

“But given that said warning occurred just two months into his tenure, blaming him would equate to shooting the messenger.

“Instead shareholders may be enthused by his previous experience at technology firm ARM and EasyJet where he, alongside his new boss Carolyn McCall, presided over strong returns for shareholders.

“The pair will be reunited in February and, in the meantime, the company has an important third quarter release coming up this week.

“Advertising revenue is likely to be in focus despite the progress the company has made with diversifying into TV production.

“Just as much as the figure for the third quarter, guidance for the all-important fourth quarter, encompassing Christmas, is likely to be under the microscope.

“Longer term it will be interesting to observe if the appointment of her former colleague will be a trigger for McCall to consider more radical action to energise a share price which has drifted since she took over at the beginning of 2018, albeit against the backdrop of a weak market.”

Hiscox

“Investors continue to punish companies which issue the slightest bit of bad news. They are searching for flawless perfection in company updates and financial results; in reality few companies can deliver a grade-A performance.

“Lloyd’s of London underwriter Hiscox is the latest company to feel the wrath of disappointed investors as it says growth in insurance premiums could moderate. It also reports an uptick in claims activity and warns that its full-year investment return will be subdued as a result of ongoing economic and global political tensions.

“One could argue that this part of the insurance market regularly goes through ups and downs and that panicking about short-term issues is not the right thing to do.

“Higher claims levels from hurricanes, earthquakes and wildfires, for example, often lead to higher insurance premiums which gives a boost to future earnings. However, the industry has been slightly disappointed with the scale of recent price hikes.

“Compounding the problem is the fact that Hiscox’s capital requirements are being driven up by various factors including Brexit.

“Short-term issues are likely to weigh on the business and potentially its share price, yet management will have navigated through various crises in the past and they are sure to steer a clear path through the latest one. The big unknown is how long it will take for Hiscox’s situation to improve.”

These articles are for information purposes only and are not a personal recommendation or advice.