Broker snap: Emerging markets to rescue insurers

9th Nov 2009 13:17

Insurance giant Prudential was one of the major risers on Monday morning after a price target upgrade from Dutch broking group ING.ING has upped its target price for the Pru from 392p to 584p, but maintains its 'hold' rating for the shares.The broker is not sold on all insurers, however. 'The recent strong outperformance of insurers in our universe seems to us to be a relief rally that they have not suffered in the same way as the banks. This reaction is sensible, if superficial, in our view - and unlikely to be sustained,' ING says.'Products have not been properly repriced to take account of the new world of very low interest rates, in our view. This is killing margins just as certainly as lack of premium growth and poor investment returns,' the broker adds.The saving grace of Prudential is its exposure to emerging markets, though ING believes this is reflected in the current share price. 'Some of the world's developing markets are doing exactly what it says on the tin and growing. A number of names in our universe are building businesses in these markets, and we recommend focusing buying on these stocks. Companies that are pursuing growth in emerging markets are the buy-rated Generali, Allianz, Fortis and Aviva,' ING said.