Property-casualty insurance stocks remain a good bet for thelong haul, an investment bank said today.
|Morgan Stanley analyst William Wilt said his bank's net longposition on the p-c insurance group reflects the belief that thestocks are not expensive “and they still offer defensive attributesversus other financial stocks.”
|Shares of most non-life insurers have rallied nicely since theclose of the first quarter. “We like aspects of the stocks'fundamentals and thus we think they are core holdings to bemaintained,” he wrote.
|Nonetheless, following the recent rally he does not see anygreat short-term gains.
|“We expect robust second-quarter earnings, but we believe thisis already discounted in the stocks, while insurers' operatingprospects become gradually more dim against a backdrop of fallingprices,” he wrote.
|In reinsurance, Mr. Wilt said the bank is reducing its stake inboth IPCR and Axis.
|In personal lines, the analyst prefers Allstate over Safeco forthe former's scale, product sophistication, brand strength, andgrowth and margin prospects. “What's more, Allstate is cheaper thanSafeco on a price-earnings basis,” he said.
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