Millions of pounds will be wiped off insurers’ profits after the Government announced significant changes to way compensation payments are calculated. The Ministry of Justice has moved the discount rate from 2.5% to -0.75%, being an assumption on how much interest any money paid out would earn when it is invested. The lower the rate, the higher the lump sum required.
The new figure is much worse than many analysts had expected, sending tremors across the insurance sector. Direct Line (DLG) and Admiral (ADM) are worst hit with their share prices falling by up to 8%. Lloyd’s of London insurer Novae (NVA) falls 1.5% to 665p as a result of being exposed via its motor reinsurance business.
London Stock Exchange (LSE) falls 2.4% to £30.51 after doubts were raised whether its merger with Deutsche Boerse would proceed. The London market operator says it is highly unlikely it will be able to meet antitrust conditions set by Brussels.
Housebuilder Persimmon (PSN) reports a good start to its 2017 spring selling season, helping to drive up its share price by 2.2% to £20.69. The news coincides with full year results that show 8% higher revenue, 23% rise in underlying pre-tax profit and an extra 25p dividend per share on top of its existing dividend plan.
Associated British Foods (ABF) jumps 1.2% to £26.42 after saying it expects ‘excellent’ progress in half year operating profit and earnings per share. Sales at its fashion business Primark are expected to be 11% ahead of last year on a constant currency basis or 21% ahead on actual exchange rates.
Full year like-for-like sales are down 1.9% at convenience store operator McColl’s Retail (MCLS). There is barely any growth in profit excluding one-off costs and the dividend is being kept flat at 10.2p. The new financial year hasn’t got off to a good start, either. Like-for-like sales are down 1.3% in the 13 weeks to 26 February. However it is news that margins have improved which drives a 2.3% rise in its share price to 181p.
A more positive second half period puts shares in Rotork (ROR) back on an upwards trajectory, rising 4.4% to 246.2p. The engineer says trading stabilised in the second half of 2016 and that it should be able to make progress in 2017.
Wireless solutions group Starcom (STAR:AIM) dives 18.3% to 2.45p after flagging delays to previously-anticipated revenue.
Stellar Diamonds (STEL:AIM) falls 22.8% to 5.5p as its shares resume trading following a lengthy period of suspension in which it made plans, and then scrapped them, to buy a miner in Sierra Leone with an adjacent project. Stellar will now work the neighbour’s land and share the proceeds from any diamond sales. It is also raising up to £250,000 at 5.5p per share via an open offer.
A heavily discounted proposed share placing drags gas storage firm Infrastrata (INFA:AIM) down 25.9% to 0.5p. It is trying to raise up to £750,000 to repay a loan and have money for working capital.
