James Dean looks at Brit' performance

Prime minister Gordon Brown held an audience with top executives from the big British banks this week, where they called on him to help ease the credit crisis. The banks apparently want the government to exchange mortgage-backed securities for altogether more stable government bonds (as the Fed has done) – or even buy the mortgage-backed securities outright.

But at least banks in the US have been more proactive in stabilising their position, having forged ahead with rights issues in order to raise further capital from investors. In Britain, banks have not attempted to raise funds on the same scale – although perhaps this is because their situation is less precarious than their American counterparts.

One company that continues to impress analysts in these turbulent times is Brit. According to Numis, Brit’s exposure to the loss of the AMC-14 satellite is not as high as the $90m (£46m) rumoured. An analyst said: “Having spoken to the company we understand that Brit’s exposure is actually around $12m before reinsurance, which we do not consider to be a meaningful risk to earnings.” But Numis believes Brit will have incurred mark-to-market losses on investments of £281m in specialist funds, and says it will investigate this further.

Although Brit shares have recovered since the release of its results in March, they are trading at one times net tangible assets compared to a peer group average of 1.3 times. This, says Numis, is one reason for optimism. “We think that the potential for recovery in UK insurance premium rates justifies a smaller discount and could trigger a valuation upgrade within 6-12 months,” an analyst said. Numis reiterated an ‘add’ recommendation and target price of 285p. Brit shares were trading at 239p as Insurance Times went to press.

In the business outsourcing sphere, Xchanging stock should be preferred over Capita stock, according to Panmure Gordon. Mike Murphy, analyst at the stockbroker, said: “The group continues to benefit from continued outsourcing and, with high visibility on revenues and scope for margin improvement, we expect strong growth in 2008.” The strength of the Euro was a strong driver in Xchanging’s 17% revenue growth in the first quarter. Panmure reiterated a ‘buy’ recommendation but dropped its target price 24p to 312p. Xchanging shares were trading at 265.50p as Insurance Times went to press.s.