将M&G评级上调至增持；将英杰华评级下调至持有

Upgrade M&G to OW for growth;downgrade Aviva to EW We consider M&G's steps on expansion to be promising, witha strong capital base supporting growth. We are positive onAviva's pending acquisition of Direct Line, but believe thatpotential is reflected in the share price. U/g M&G to OW ongrowth expectations, d/g Aviva to EW on price action. European InsuranceNEUTRALUnchanged European InsuranceLarissa van Deventer+44 (0)20 3555 1527larissa.vandeventer@barclays.comBarclays, UK Listen Both M&G and Aviva have had strong share price performances YTD. Following M&G's recentannouncement of a strategic alliance with Dai-ichi, and Aviva's pending closure of its proposedacquisition of Direct Line Group (DLG, EW, PT GBp275, covered by Ivan Bokhmat), we considerthe growth prospects and potential catalysts for the two stocks. In our view, M&G's growthpotential is not reflected in its current share price, while Aviva's share price exceeds our pricetarget that includes the potential impact of Direct Line. We switch our ratings on the two stocks: M&G - Well positioned for growth: We see three key reasons to own M&G: (1) M&G has a strongsolvency position relative to UK life peers and an improving leverage ratio. We believe that thestrong capital position could support growth initiatives, whether organic or acquisitive. (2) Wehave started seeing a turnaround in the asset management operations. Fees continue toimprove, and the cost-to -income ratio suggests signs of a turnaround. In addition, we see M&G'srecently announced alliance with Dai-ichi as a good strategic fit with upside long-term potential.(3) We expect operating cash generation to grow consistently, supporting the attractive dividendyield of c.8% with the dividend cover at c.1.8-2.0x in FY25-29e. With a strong Solvency II ratio of223% at FY24 and improving operating metrics, we consider M&G to be well positioned forgrowth. We see upside risk to our expectations if management invests excess capital in thebuoyant bulk annuity market, with capacity for bolt-on acquisitions to add scale to their assetmanagement franchise. Aviva - Direct Line's drive home reflected in the share price: We consider Aviva's proposedacquisition of Direct Line to be a good strategic fit, driven by promising scale benefits andsynergies. Our forecasts already incorporated the potential impact of Direct Line. However, weare wary of downside risk to costs over the next year, as Direct Line's operations are integratedinto those of Aviva. In our view, management has built strong operations in the group's three Barclays Capital Inc. and/or one of itsaffiliatesdoes and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that couldaffectthe objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts basedoutside the US who are not registered/qualified as research analysts with FINRA. Please see analyst certifications and important disclosures beginning on page 14.Completed: 15-Jun-25, 20:42 GMTReleased: 16-Jun-25, 03:00 GMTRestricted - External main businesses, but at current pricing levels we consider that strength to be reflected in theshare price. Increase our M&G price target by 23% to 295p from 240p; upgrade to Overweight fromEqual Weight; Maintain Aviva price target of 580p; downgrade to Equal Weight fromOverweight:For M&G, we incorporate management'e expected flows from the Dai-ichi deal,and increase our long-term growth rate to 4%. For Aviva, we downgrade due to limited upsideremainingafterthe share's price performance YTD. M&G - The story in 6 charts Peer comparisons are listed in order of market capSource: Barclays Research, Company data Source: Barclays Research, Company data Source: Barclays Research, Company data Upgrade M&G on growth expectations We see M&G's alliance with Dai-ichi as a good strategic fit with long-term potential upside. Weexpect the deal to have a modest and measured positive impact on M&G's capital light assetmanagement operations, with the potential to expand the alliance to life products in time. Thisleaves room for additional expansion from M&G's strong capital position. Management hasrepeatedly stated that they do not consider share buy-backs, special dividends or major M&A tobe priorities in capital allocation. However, with a strong Solvency II ratio of 223% at FY24, weconsider the capitalbufferoverdone. We see upside risk to our expectations if managementinvests the excess capital in the buoyant bulk annuity market, with capacity for bolt-onacquisitions to add scale to their asset management franchise. Addition of a strategic partner On 30 May, M&G announced that Dai-ichi will invest JPY150bn (c.£800m) for a 15% shareholdingin M&G and become M&G's preferred asset management partner in Europe (