US investors show growing interest in reinsurers and UK Market amid stabilising macro risks: Berenberg
In a series of meetings held during a recent marketing trip, Berenberg found that US investors, predominantly from New York and Chicago, are increasingly drawn to reinsurers, with a growing interest in the UK market as macro risks stabilise.
The discussions shed light on investor preferences, highlighting companies such as Zurich, Swiss Life, Admiral, and ASR as their top choices due to various factors such as low volatility, high dividend growth, defensive earnings, and strong delivery of synergies.
Reinsurance remains the favoured segment for investors, driven by its appeal for shorter-term investments and the anticipation of robust results in 2023 and beyond.
Investors expressed confidence in the longevity of the pricing cycle and the expected influx of capital into the sector. The resilience of reinsurance stocks in delivering strong performances during recent years has contributed to their popularity among investors.
Composite insurers, notably Zurich, garnered significant interest despite recent weaker performance. Investors were willing to patiently await a recovery in the company’s share price, given the strength observed in the commercial insurance market.
Axa also attracted attention, while surprisingly, Allianz did not generate as much interest despite being a top pick according to Berenberg’s analysis.
Dutch insurers, particularly ASR, were a focal point during the discussions. ASR’s acquisition of Aegon’s Dutch units for €4.9 billion was viewed positively, suggesting the company secured an advantageous deal.
The UK motor insurance sector also drew attention due to its favorable pricing environment, experiencing a year-on-year increase of approximately 20%. However, investors maintained caution due to high inflation within the motor insurance industry overall.
Investors expressed interest in the UK life insurance sector, anticipating a potential recovery in performance during Q3 or Q4 of this year.
