Broker snap: Prudential, L&G and Aviva to outperform, says Credit Suisse

22nd Sep 2011 12:01

Credit Suisse has refreshed its views on the UK life insurance sector."Our base case from a macro perspective is that economic growth stalls, interest rates stay low for an extended period and equity markets remain volatile. While this implies a challenging macro backdrop, we are constructive on the UK insurance sector as we believe capital buffers are sufficient to negate the risk of fund raising under most realistic economic and market stress scenarios," Credit Suisse said.The broker stays positive with an outperform rating on Prudential, saying that it is a "structurally more attractive company given its geographic bias (overweight Asia, underweight Europe) and potential for it to become a medium term restructure play in conjunction with initiatives aimed at shifting the fulcrum of the group towards Asia."Aviva is upgraded to outperform, as the broker thinks it has been oversold on European concerns.The broker upgrades Legal & General to outperform, saying it "offers the most attractive mix of capital resilience, dividend growth and relative value.""However, given less appealing relative value metrics and the effect of equity gearing on profit momentum, we have adopted neutral ratings on Standard Life and Resolution and downgrade St. James's Place to underperform."For Admiral, the broker does not believe that the stock can expand on a forward earnings multiple of 13 due to "regulatory, reserving and growth concerns".BC