Goldman Sachs reassesses European insurers after 12-month rally

Goldman Sachs tempers its position on European insurers as a 12-month rally leaves them the second best performing sector on the STOXX 600 .STOXX index, trailing only their banking counterparts

GS sees good reasons for the high valuation, such as robust dividend yields and recent inflows into European equities, but turns more selective against an uncertain macro backdrop

It says recent market trends, such as pricing that remains ahead of inflation, point to further retail property & casualty (P&C) margin expansion

It thus prefers retail P&C to commercial P&C or P&C reinsurance providers where pricing outlook seems more mixed

GS calculates a bias for insurers it deems "PE Cheap", with positive ratings on five of the six names, including upgrades to "buy" for NN Group NN.AS and Admiral ADML.L

Its "PE Mid" group shows a more balanced view, with an upgrade of Hiscox HSX.L to "buy" and a downgrade to "neutral" for L&G LGEN.L

In the "PE Expensive" group, GS downgrades ASR ASRNL.AS to "neutral" and Zurich Insurance ZURN.S to "sell"