Sector movers: Insurers drop as Admiral and Aviva disappoint

9th Jul 2014 14:43

Sinking share prices of Admiral and Aviva ensured that the insurance sector was firmly in the red on Wednesday afternoon."Insurers are feeling the brunt of the bearishness today," said Will Hedden, Premium Client Manager at IG.Motor insurance group Admiral disappointed the market with a gloomy outlook as it reported a 9% decline in revenues in the first half despite higher customer numbers, as premiums fell on last year. The stock was nearly 6% lower.The group also said that a return to growth in premiums still remains elusive and that margin expectations for business earned this year are lower than in recent years.The update prompted Canaccord Genuity to downgrade its rating for the stock from 'hold' to 'sell', saying that it sees downside risks to its forecasts.In other news, Admiral also announced its first bond issue in history and plans to offer up to £200m of 10-year, tier-two subordinated notes.Analysts at Berenberg said that markets were likely "surprised" that Admiral needs to raise debt and will question the reasons behind it. "For a company that has previously prided itself on having no debt, this represents something of a U-turn."Shares in home and car insurer Aviva also dropped 3% after the firm underwhelmed investors with plans to double cashflow over the next two years and reduce its debt as part of an overhaul. "These are good targets but we do not see them as overly challenging," said Shore Capital.Life insurance peers Legal & General, Prudential, Old Mutual and Standard Life were all trading in negative territory today, along with non-life providers Lancashire Holdings, Amlin and esure.Top performing sectors so far todayConstruction & Materials 4,079.29 +0.38%Pharmaceuticals & Biotechnology 13,150.48 +0.22%Industrial Transportation 2,882.56 +0.17%Real Estate Investment Trusts 2,709.29 +0.17%Mining 17,295.23 +0.10%Bottom performing sectors so far todayInsurance (non-life) 1,912.21 -1.87%Life Insurance 7,087.65 -1.35%Industrial Metals & Mining 1,202.89 -1.22%Oil Equipment, Services & Distribution 23,889.06 -1.21%Food & Drug Retailers 3,601.31 -0.95%BC