Five Global Financial Stocks To Buy Today As Banks Slide

Despite the recent declines in the value of European financial stocks, RBC Capital Markets believes in the current market conditions there are still many opportunities to make a profit.

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Since the collapse of Silicon Valley Bank and concerns about other banks led to the collapse of Silicon Valley Bank on March 9, the European insurance sector, for example, has fallen 11%.

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As a result of the run on SVB earlier this month, the bank fell partly due to the fact that a run on the bank led to negative sentiment rather than positive sentiment. These economic losses have also contributed to the downfall of Credit Suisse, and the subsequent takeover by rival UBS, as well as putting downward pressure on financial markets across Europe.

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Nevertheless, RBC analysts believe that insurers are fundamentally different from banks, which means that the circumstances that led to the collapse of SVB are not likely to happen to an insurer.

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In a note to clients on March 16, RBC analysts led by Gordon Aitken said that "bank runs are sometimes brought about by customers' doubts that a bank may be in trouble, which leads them to withdraw their money." They added that "runs on insurers are not as common."

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As a result, analysts said they saw the share price declines as a "buying opportunity," and that these five U.K. annuity writers are rated particularly attractive at current valuation levels given their share price drops:

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• Aviva

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• Just Group

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• Legal & General

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• M&G

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• Phoenix Group

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Despite enjoying substantial capital buffers resulting from their substantial capitalizations, Aviva, Just Group, Legal & General, M&G, and Phoenix Group are among the shares of London-listed companies that have seen substantial drops in their share prices despite facing few risks, according to one investment bank.

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The consensus price target of all analysts covering Just Group's stock, based on FactSet data, is also bullish, with a 60% upside potential to their current share price, which is currently at £0.79. For the stock, RBC expects a double-digit appreciation over the next 12 months from its current share price of £0.79 to £1.60 ($1.96), from its current share price of £0.79.

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Pensioners are able to purchase annuities from insurance companies that provide them with a regular income in retirement and the proceeds of the annuity can be invested in high-quality investments that will provide a long-term return.

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A report by RBC analysts also noted that insurers do not have the same problem when it comes to liquidity as banks do.

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Unlike most bank deposits, annuitant deposits are subject to withdrawal restrictions unless the annuitant prefers to withdraw the payment (according to the contract) within a specified time frame. Unable to withdraw from an annuitant's account is because of a legal requirement to not do so.

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It is true that insurance companies must only hold high-quality investments in order to comply with the law, but analysts at RBC acknowledge that should the underlying assets fail or need to be replaced, a small risk could arise.