Merrill Lynch is very positive on the insurance sector suggesting it will remain in favour with investors for some time yet. The brokers recommend that investors should keep an eye out for buying opportunities on weakness in the sector, while singling out Zurich as its key recommendation at the moment.
Merrill Lynch says there is significant upside in the shares. Its non-life operations should continue to improve as interest rate increases flow through, particularly in Britain. It predicts that Zurich is well placed to launch another major deal now that its merger with BAT is largely completed.
It also recommends AXA, CGNU, Old Mutual, Fortis and Prudential. AXA, which took over Guardian/PMPA, is in an attractive position in the life sector as well as highly regarded for its asset management operations. Merrill Lynch says the company is well placed to capture the strong growth in European life insurance.
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