Insurers: Despite Bad News, Short Interest Low

On Thursday night, Prudential (PRU), was forced to deny that it was planning an imminent rights issue, as worries about the global economy spread to the plight of insurers as a whole. Shares in PRU fell almost 20% to 297.75p on concerns that it may have to raise capital. Goldman Sachs, one of the company's corporate brokers wrote a note that initially catalysed concerns.

Prudential currently has 0.79% of its Market Cap out on loan (%MCOL), down from 1.9% on August 26. Utilisation is at just 9.5%. Aviva (AIVAF.PK) also saw its shares decline sharply, with its shares slipping 10% after Goldman Sachs said the insurer's ability to pay future dividends could be in doubt. Like PRU, Aviva has a very small percentage MCOL, at 0.5%, down from 1.9% since mid-September.

Legal and General [LGEN.L] has reassured investors that it has enough surplus capital after volatile stock markets and share repurchases deflated its cash cushion by £500m. The company has also called for a re-think on its bank dividend block. L&G has 2.28% MCOL, down from 6% in mid-September, when the insurance group lost 8.3% in the wake of the collapse of Lehman Brothers (LEH).

Standard Life (SLFPF.PK), Admiral (AMIGF.PK), and Friends Provident (FRDPY.PK) all lost between 4 - 11%. Standard Life has 0.96% MCOL, Friends Provident 1.5%, and Admiral has 1.3%, with some short covering since July from 3%.