The past year has been a little unusual for Aviva (NYSE:AV). That the shares of this large European insurance company haven't performed well isn't so unusual, as Allianz (OTCQX:AZSEY), AXA (OTCQX:AXAHY), Prudential Plc (NYSE:PUK), and Legal & General (OTCPK:LGGNY)
have all seen so-so results from their ADRs, due in no small part to
adverse currency moves. What makes Aviva unusual is that the company
undertook a sizable M&A transaction that significantly improved its
capital position and should deliver meaningful revenue and cost
synergies, but the market has been underwhelmed to say the least.
I
understand the skepticism to a point. Euro insurance M&A hasn't
often delivered the targeted synergies and in many cases it has led to a
prolonged period of underperformance (has been the case with Aviva in
the past). I think it's worth noting, though, that Aviva is led by a
different team now and one that has done well with past cost-reduction efforts.
I don't think a mid-teens ROE is an unreasonable goal for the new
leader in U.K. life and protection, and these shares look as though they
could be 20% undervalued today.
Continue reading here:
A Bigger, Better, But Less-Loved, Aviva
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