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July 8 (Reuters) - Lehman Brothers cut its price target on several leading insurers and reinsurers, citing challenging financial markets and a deteriorating outlook for the property and catastrophe reinsurance markets through 2010.
Second-quarter results for non-life insurers should reflect negative revenue growth, difficult earnings per share comparisons versus a year ago, underlying margin deterioration, and higher catastrophes, the brokerage wrote in a note to clients.
Most property and casualty insurers, except American International Group (AIG.N) and XL Capital (XL.N), have modest exposure to the credit crunch, strong balance sheets, excess capital and are unlikely to raise capital or cut their dividends, Lehman said.
Lehman noted that American International Group has the most exposure of the companies it covers to the credit crisis and could suffer more investment writedowns.
Property and casualty stocks could face pressure over the next two months, reflecting seasonal concerns about hurricane activity, but could present a potential buying opportunity in September as hurricane concerns ease, it added.
The following table lists the price target changes made by Lehman. Company name Price target Rating
Current Prior Allstate (ALL.N)
$49 $55 Equal weight Arch Capital (ACGL.O) $74 $80 Equal weight AIG (AIG.N)
$29 $45 Equal weight Aspen Insurance (AHL.N) $25 $30 Equal weight Everest Re (RE.N)
$99 $105 Overweight Flagstone Reinsurance FSR.N $13 $15 Equal weight Montpelier Re MRH.N $16 $18 Equal weight RenaissanceRe Holdings (RNR.N) $49 $57 Equal weight Travelers Cos (TRV.N) $55 $62 Overweight XL Capital (XL.N) $22 $35
Equal weight (Reporting by Sweta Singh in Bangalore; Editing by Bernard Orr) ((email@example.com ; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: firstname.lastname@example.org))