Analysts at two leading investment banks have taken a more bearish stance on the European insurance industry and downgraded a number of its highest-profile players, newswire Reuters has reported.
Deutsche Bank said it had downgraded reinsurers Munich Re and Swiss Re to "market perform" from "buy".
Schroder Salomon Smith Barney also cut its rating on Swiss Re to "market outperform" from "buy" and its peer Zurich Financial Services to "neutral" from "buy".
Deutsche said it was unable to find any reason for investors to turn positive on the sector and reiterated its "underweight" stance.
"In our view, the derating has been deserved, with several factors pushing up the premium attached to the stocks... Growth expectations have also been trimmed, perhaps permanently" the bank said in a research note.
Deutsche said the downgrades on Swiss Re and Munich Re were based on a combination of newsflow considerations and the financial market backdrop.
Reuters added that initial reports from the all-important new year renewals suggested that reinsurers' hopes for both large price increases and business gains were likely to be disappointed in some sectors of the business.
It said the property-catastrophe market in particular had seen new companies based in Bermuda making an immediate impact, while the influx of billions of dollars in new capital since 11 September had made it difficult for many companies to grab more business in the renewals.
