STOCKS NEWS EUROPE-Barclays cuts Hiscox, Munich Re due to lack of catalyst

Fri Nov 15, 2013 4:50am EST

Barclays downgrades Hiscox and Lancashire to "underweight". saying they offer little scope for further rerating, and cuts Munich Re to "equal weight" from "overweight" on valuation grounds and due to lack of catalysts.

"We believe the most highly rated, Hiscox and Lancashire, offer a negatively skewed risk/reward, with a risk of derating but little scope for further rerating," Barclays writes in a note, adding the prospect of the companies returning capital at the year-end is already priced in.

Barclays, however, keeps an "overweight" stance on Swiss Re saying the company has one of the strongest balance sheets in European insurance and adding it sees "the market under appreciating the level of excess capital that the company might be able to return over the next three years".

"We estimate the truly surplus capital at Swiss Re could be as high as $8 billion and expect a $1.6 billion special dividend at year end ... Munich Re also has excess capacity, but significantly lower levels and we see the market as fairly valuing the likely returns with little possibility of a positive surprise."

Barclays also retains its "overweight" rating on Catlin saying it is cheap compared to peers and the company has substantial opportunity to outperform its peers.

Hiscox falls 0.6 percent, Lancashire is down 0.1 percent, Munich Re drops 0.8 percent, Swiss Re falls 0.2 percent and Catlin is up 0.2 percent.

Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net

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