Aviva is pick of the week

LEGAL & General crept higher this week ahead of Thursday's interim results.

The insurer was trading at around 115p as Credit Suisse First Boston (CSFB) said: "We expect stable new business margins and good new business sales growth helped by strong sales in the first quarter."

However, it reckons the stock is overvalued, repeating its underperform rating on the insurer with a 110p target price.

CSFB was more bullish on Aviva, selecting it as its preferred stock in the sector with an outperform ranking and 694p target.

"We believe a resilient property and casualty insurance result will support our view that the market is undervaluing this business. Aviva is likely to outperform its 100% combined ratio target over the next two years." The company is trading at around 630p.

Beazley also attracted attention as tracker funds picked up stock, hoping it would move into the FTSE 250 this week. Following the takeover of drinks group Allied Domecq, water company Kelda leapt up to replace it in the FTSE 100.

But construction company Morgan Sindell pipped Beazley to Kelda's vacant FTSE 250 spot. The insurer is now worth around 90p a share.

' Yvette Essen is stock market reporter and insurance correspondent for The Daily Telegraph