FRANKFURT/PARIS (dpa-AFX) - Shares in insurance companies continued to decline on Friday. The European sector was the weakest in the Stoxx 600 index in early afternoon trading, down 1.3 percent, and has been lagging since the start of the year with a 2.6 percent drop, putting it at the bottom of the industry table.
Morgan Stanley pointed to the challenging industry environment, marked by a weaker renewal season for reinsurers. In the DAX, Hannover Re, Munich Re, and primary insurer Allianz all lost between 1.3 and 1.9 percent.
Morgan Stanley analysts downgraded Hannover Re and Aviva from "Overweight" to "Equal-weight" and lowered their price targets. The price target for Munich Re was also slightly reduced, while the "Underweight" rating remained unchanged. For Allianz, however, the experts raised the price target and maintained their "Equal-weight" recommendation. While Allianz offers high quality, this is already reflected in the share price. Aviva remains Morgan Stanley's preferred insurer stock in the UK, but the shares are considered fairly valued.
Overall, the analysts remain cautious on the reinsurance sector. They see Hannover Re as one of the best performers in the sector, thanks to disciplined management, a strong balance sheet, and a high capital buffer. Historically, Hannover Re has outperformed its competitors during weaker renewal cycles. The company is considered best positioned in an uncertain pricing environment, with consistent earnings growth and capital distributions./ajx/niw/mis
