City & Corporate: In the News - Insurers

- Bring us up to speed

Worries are mounting that the UK insurance sector will be the next victim of the credit crunch as the industry's share prices plummeted last week. Prudential's shares fell by 29 per cent, Aviva's by 25 per cent and Old Mutual's by 18 per cent over concerns about their investments. Prudential is trying to finance the possible purchase of AIG's Asian business and Aviva is facing reports that a promised £1bn payout to policyholders is in jeopardy.

- The media reaction?

The Observer asked if insurers 'might be the new banks' and The Sunday Telegraph talked of 'turbulent times for the UK's insurance companies'. The insurers reacted quickly, with Aviva and Prudential both publicly insisting their capital positions remained strong and denying they were preparing rights issues. The Association of British Insurers (ABI) also insisted the industry remained solid.

- Who are the PR players?

Aviva's PR division is led by Hayley Stimpson, director of group media relations, alongside retained corporate comms agency Finsbury. Prudential this month appointed Ed Brewster as group head of media relations, to work under Jon Bunn, group director of public relations. The ABI has an in-house media team led by Huw Evans.

- What happens next?

There is little doubt the assurances from the ABI and the insurers themselves needs to get through to a jittery market. Most commentators feel the sector is better prepared for the financial carnage than the banks, but investors could have other ideas. A UK rights issue from any major player would be very difficult to manage effectively, so Prudential may need to sell a hefty stake to raise the cash for an AIG acquisition.

£1.3bn - The amount Prudential is tipped to raise by selling 20 per cent.

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