European insurers' peak valuations are hard to justify, Exane says

BNP Paribas Exane says the possibly peaked valuations in the European insurance sector can be difficult to justify

European insurers have outperformed the broader market by more than 10% YTD, with price-to-earnings ratios trading close to 10-year highs, the brokerage says

Property and casualty margins have increased in the past decade and have reached their maximums based on pricing indicators and management commentary, it adds

Exane prefers stocks with potential "self-help" levers and those better prepared for a softer cycle, such as Hiscox HSX.L which recently announced a cost reduction plan

It downgrades Swiss Re SRENH.S, which it says has closed its discount to peers despite lower earnings and balance sheet buffers, to "underperform" from "neutral"

It cuts Tryg TRYG.CO and Swiss Life SLHN.S to "neutral" from "outperform" as it views them as overvalued in light of muted prospects