Broker snap: UBS labels Pru and Aviva as its top insurance picks

30th Oct 2012 17:15

Insurance stocks were surprisingly making gains today in spite of Hurricane Sandy hitting the east coast of America, as markets get ready for the UK insurance and life assurance nine-month results season, which kicks off tomorrow with statements due out from Standard Life, St James's Place and Phoenix. In its reporting season preview, UBS lifted target prices for most stocks across the sector today but said that its preferred life stocks remain Prudential and Aviva. "We expect limited sales growth (2% on average in the UK, 1% globally), with the Pru's 13% forecast sales growth an honourable exception. The non-life season looks likely to be equally uneventful after a quieter claims quarter," the broker said.As for Pru, UBS said that its 'buy' rating carries longer-term conviction, "given strong operational momentum, strategically attractive markets, scope for management to release significant sum of the parts value, and a lack of exposure to macro concerns."Meanwhile, Aviva is also expected to deliver "significant near-term outperformance" as along as macroeconomic concerns recede and it can also deliver on its disposal programme.Sector peer Resolution is also rated as a 'buy': the broker said that this is "based on valuation, and given improving governance, its own restructuring momentum, and underperformance year to date."BC