Insurance: M2M, upgrading PRU to Overweight
We are upgrading PRU to Overweight (from Neutral) as we believe the stock will be a significant beneficiary of rising interest rates. While a rising US10Y yield will take time to materialise in earnings, we are increasingly confident that a sustained increase in the US10Y yield is underway. Our valuation and price target for PRU increases to $140 (from $110) as we focus on a mid-cycle operating ROE of 13.5%. We continue to rank AON as Overweight, believing that tax concerns are overplayed, synchronised global GDP growth will benefit revenues and the divestment benefits are yet to be fully earned through. We also maintain our Underweight recommendations on CB and TRV believing that recent optimism regarding a hardening of commercial insurance rates is misplaced and the stocks continue to look expensive.American International Group is a holding company. Through its subsidiaries, the company provides a range of property casualty insurance, life insurance, retirement solutions, and other financial services. The company's businesses include General Insurance, which provides insurance products and services for commercial and personal insurance customers; Life and Retirement, which brings together a portfolio of life insurance, retirement and institutional products provided through a multichannel distribution network; and Other Operations, which include Blackboard U.S. Holdings, Inc., a subsidiary focused on delivering commercial insurance solutions using digital technology, data analytics and automation.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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