Aviva plc, Legal & General Group Plc And Old Mutual plc’s Growth Looks Unstoppable!

The past few months have turbulent for investors. After a rough August and September, the market roared back in October, racking up one of the best monthly gains since the financial crisis.  

But throughout this turbulence, Aviva (LSE: AV), Legal & General (LSE: LGEN) and Old Mutual (LSE: OML) remained bastions of safety. Indeed, since the beginning of July all three companies have outperformed the FTSE 100 by 3%, 11% and 2% respectively. There’s plenty of evidence to support the conclusion that this impressive performance is set to continue. 

Bright outlook 

Aviva is already reaping the rewards of its £5.6bn deal to buy peer Friends Life. The group has seen a 23% jump in quarterly new business profits at its life and pensions operation. Cost savings are also helping to reduce the enlarged group’s overall cost base. £90m of cost savings have already been achieved from the integration, putting the group ahead of schedule in its plan to reduce annual costs by £225m by the end of 2017. 

Better-than-expected synergies with Friends means that Aviva will be able to start returning additional cash to investors going forward. City analysts believe that the group has room to return around £1bn per annum to shareholders from 2017 in the form of share buybacks. This is on top of the company’s existing dividend yield.  

City forecasts suggest that Aviva’s shares will support a dividend payout of 24.4p per share during 2016, up from 21.0p per share this year. At present, Aviva’s dividend yield is 4.3%. The company’s shares currently trade at a forward P/E of 10.5. 

Growing sales 

Just like Aviva, Legal & General reported a surge in business during the third quarter. Legal & General, the third-largest UK insurer by market value, generated net cash of £943m during the third quarter, up 14% year-on-year. Assets under management at the group’s investment arm rose 8% to £717bn. Management also announced that a plan to cut costs by £80m per annum is ahead of schedule. 

City analysts expect Legal & General’s earnings per share to jump 14% this year as costs fall and sales expand. Further growth of 7% is expected next year. Legal & General’s shares are currently trading at a forward P/E of 14.1 and support a dividend yield of 5%. Based on current forecasts for next year, the company is trading at a 2016 P/E of 13.2 and yield of 5.4%. 

Record quarter 

Some investors might not be familiar with Old Mutual, but the company just announced a record quarterly performance. For the three months ended 30 September 2015, gross group sales jumped 31% year-on-year, and Old Mutual Wealth saw a 71% increase in pension sales. Old Mutual South African business reported sales growth of 28% and the group of the group’s Africa business grew sales by 32%.

Old Mutual is the cheapest of these three insurance giants. The company’s shares currently trade at a forward P/E of 10.3, and City forecasts predict earnings per share growth of 11% this year. Based on these figures, Old Mutual is trading at a 2016 P/E of 9.8. The shares currently support a dividend yield of 4.6%.