Sector movers: Insurance stocks dragged down by Admiral and CPP

2nd Nov 2012 15:04

Heavy falls for car insurer Admiral ensured that the non-life insurance category was firmly at the bottom of the pile on Friday afternoon, with a plummeting CPP Group doing little to help the sector.Shares in FTSE 100 constituent Admiral were trading 4.9% lower at 1,086p by mid-afternoon, after the company reported the group turnover declined by 2% to £570m in the three months to the end of September."Little has changed since the half year. The UK car insurance market is cyclical and we are in the softer part of the cycle with premium rates coming down," said Chief Executive Henry Engelhardt. "We believe that the sensible strategy in this part of the cycle is to slow our rate of growth," he said. Investec today maintained a 'sell' rating for Admiral, saying that it believes that group's earnings growth will slow from here. "We believe that, while the forecast 7% yield will support the stock, paying 12x earnings for what is essentially a UK motor insurer is too much," said analyst Kevin Ryan. Meanwhile, identity theft and credit card insurer CPP plummeted today on the back of profit-taking: the stock has surged over the past few weeks on takeover speculation, which was confirmed on Wednesday by the company. Shares, down a third today at around 28p (from 42p yesterday), are still up from the 52-week low of 5.5p reached in early October.CPP revealed on Wednesday that it had received an initial, preliminary approach from US peer Affinion Group. This was then followed a day later by confirmation from Affinion that early stage discussions are taking place.Elsewhere in the sector, insurance groups Lancashire Holdings, Hiscox and Catlin were also trading in the red.Top performing sectors so far todayAutomobiles & Parts 5,050.22 +1.89%Electronic & Electrical Equipment 3,431.31 +1.44%Personal Goods 19,421.09 +1.36%Industrial Metals & Mining 2,645.06 +1.19%Tobacco 35,438.90 +0.96%Bottom performing sectors so far todayInsurance (non-life) 1,569.10 -1.57%Health Care Equipment & Services 3,625.01 -1.25%Mobile Telecommunications 3,914.95 -1.25%Pharmaceuticals & Biotechnology 9,419.17 -1.11%Electricity 9,081.95 -0.99%BC