Property-casualty insurance stocks remain a good bet for the long haul, an investment bank said today.

Morgan Stanley analyst William Wilt said his bank's net long position on the p-c insurance group reflects the belief that the stocks are not expensive “and they still offer defensive attributes versus other financial stocks.”

Shares of most non-life insurers have rallied nicely since the close of the first quarter. “We like aspects of the stocks' fundamentals and thus we think they are core holdings to be maintained,” he wrote.

Nonetheless, following the recent rally he does not see any great short-term gains.

“We expect robust second-quarter earnings, but we believe this is already discounted in the stocks, while insurers' operating prospects become gradually more dim against a backdrop of falling prices,” he wrote.

In reinsurance, Mr. Wilt said the bank is reducing its stake in both IPCR and Axis.

In personal lines, the analyst prefers Allstate over Safeco for the former's scale, product sophistication, brand strength, and growth and margin prospects. “What's more, Allstate is cheaper than Safeco on a price-earnings basis,” he said.

Special Reports /

Morgan Stanley Sees P-C Stocks As Good Bet

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