Re/Insurers have been warned against ignoring the potential impact of climate change by Munich Re's chief meteorologist.
In a sector note Credit Suisse said the response of the insurance industry to the issue of climate change has been to adjust their models, reassess their exposures and make changes to the terms and conditions of the policies written.
In light of this, Credit Suisse said it rated Munich Re 'outperform' with a target price of €126 per share, adding that the company benefits from "a strong balance sheet and a diversified portfolio of business which was demonstrated by a strong performance in 2005 despite record losses".
In the Lloyd's market, Credit Suisse recommended Catlin - giving it an 'outperform' rating and a target price of 530p.
It said: "In common with the rest of the Lloyd's market, [Catlin] has a larger catastrophe exposure than Munich Re (one third of Catlin's total portfolio) but [it] will be seeing substantial pricing increases in 2006.
"We believe Catlin's advantages of lower acquisition costs
and a lower tax rate than the other Lloyd's stocks, make it the most attractive proposition amongst its peers."
Catlin is currently trading 1.15% down at 430p.
