The STOXX Europe 600 insurance sector index gains 1.1 percent, the top sector performer and leading the overall market higher after Europe’s top two insurers, Allianz and AXA, post better-than-expected results.
AXA shares rise 3.6 percent, topping the leaderboard of France’s CAC 40 index and hitting a level not seen since May 2010, while Allianz climbs 1.3 percent to a two-month high, making it the best performing stock on Germany’s DAX.
“The rally in AXA shares won’t be as strong as Societe Generale’s yesterday, but the results are good, and better than what was expected. It also reflects a strong trend in the sector, with Allianz also coming out with solid results. We can expect forecast upgrades from analysts,” a Paris-based trader says.
The forecast-beating results sparked a rally in the sector, with Swiss Life up 2.2 percent and Zurich Insurance up 1.9 percent. The two companies still have to report second-quarter earnings.
The insurance sector has been one of the best-performing sectors over the past year, up 63 percent since a low hit in early June 2012, twice as much as the 30 percent rally in the broad STOXX Europe 600 over the same period.
Despite the outperformance, the sector trades at 9.9 times expected earnings in 2013, much lower than the price-to-earnings ratio of 13.6 for the STOXX Europe 600, and the third cheapest sector after autos and energy, according to Thomson Reuters data.
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