Stockwatch

The week's winners
ZFS up 5.4%
Allianz up 4.5%

The week's losers
Aon down 23%
Markel Corp down 8%

The great bring-and-buy sale is now on. Royal & SunAlliance's (R&SA) decision to put its overseas operations on the market was the week's highlight.

But Aon was the biggest loser, with analysts dragging its stock down on rumours that investments are pulling the broker further into the red. However, Pat Ryan's decision to put $500m (£319m) in stock offers shifted the share price up slightly (3.2%) - up to $17.18 as Stockwatch went to press.

In the week bluesure decided to cut its losses and take the run-off route, Morgan Stanley said non-life was performing better than life. But it said that it has worries about claims run-off in the non-life sector, especially business written between 1997 and 2000 in the US; namely asbestos - with R&SA and Chubb in the news again.

Morgan Stanley analysts estimate that US property and casualty reserves could be deficient by as much as $120bn (£76.8bn). Of this figure, $64bn (£41bn) of the shortfall is from specific lines of business. But analysts have added a further $55bn (£35bn) from undiscounted asbestos and environmental reserve shortfalls.

European insurers with the greatest exposure to US non-life markets are Converium, Hannover Re, Swiss Re and SCOR, according to Morgan Stanley.

But there is good news for underwriters.

The bank's snapshot of the non-life market is that combined ratios (excluding prior year run-offs) are dropping quickly.

An average insurer with a 102% combined ratio and an assumed gross investment return of 6%, should feasibly achieve returns of equity of 20%, Morgan Stanley predicts.