JPMorgan Turns Bullish on Aviva, Bearish on M&G as UK Insurers’ Relative Value Shifts

JPMorgan shook up sentiment across the UK life insurance sector on Thursday, upgrading Aviva to “Overweight” from “Neutral” while cutting M&G to “Underweight” from “Neutral” — moves that reflect what the bank calls a shift in relative value within the space.

Legal & General was also downgraded to “Underweight”, while Standard Life retained its “Overweight” rating with an upgraded price target of 1,075p from 975p.

Aviva shares responded positively, rising to around 713.6p in the session, up roughly 1.4% from Wednesday’s 704p close, as JPMorgan lifted its price target on the stock to 800p from 715p. M&G, by contrast, traded broadly flat-to-slightly-higher near 353.4p, up about 0.6% on the day — a muted reaction that suggests the downgrade had already been partly priced in or was offset by broader market moves. Legal & General shares slipped around 1.1% to 299.2p.

In its note, JPMorgan argued that UK life insurers have outperformed the Stoxx 600 insurance index and FTSE 100 by 2 and 6 percentage points respectively this year, driven largely by restructuring and M&A speculation — with Aviva the notable laggard. The bank said Aviva has “lagged and de-rated” versus peers, leaving “attractive relative upside potential.”

JPMorgan’s thesis centres on cash generation rather than IFRS earnings, using Solvency II “economic operational capital generation” as a free-cash-flow proxy. On this measure, Aviva and Standard Life screen better than L&G and M&G, with superior dividend cover and capital-return potential. The bank also flagged stabilising UK retail general insurance pricing as a tailwind for Aviva, while pointing to margin pressure in the pension risk transfer market as a headwind for L&G.