May 12, 2008 / 12:02 PM / in 11 years

UPDATE 1-RESEARCH ALERT-Goldman cuts Markel, upgrades Aspen

 (Changes source, adds details)
 May 12 (Reuters) - Goldman Sachs changed its ratings on several U.S. property and casualty insurers, and said investors will continue to avoid costly stocks in the face of weakening fundamentals and only buy those trading at a discount to the sector.
 The brokerage, which said valuation drives investment in the insurance space, downgraded Markel Corp (MKL.N) and Transatlantic Holdings Inc TRH.N to “sell” from “neutral” as it saw better opportunities within the reinsurance segment for higher-return, lower-valuation stocks.
 Goldman also cut HCC Insurance Holdings Inc (HCC.N) to “neutral” from “buy” on concerns over the company’s professional liability and exposure to the subprime fallout.
 However, the brokerage added Aspen Insurance Holdings Ltd (AHL.N) to its Americas investment buy list and upgraded the stock to “buy” from “neutral,” and said the market is severely undervaluing Aspen’s outlook for at least the next two years.
 Aspen’s valuation is more reflective of a pure-play property catastrophe writer instead of the solidly diversified, international reinsurer into which the company has evolved over the past two years, Goldman added.
 Goldman also raised Marsh & McLennan Cos (MMC.N) to “neutral” from “sell,” and said the company’s first-quarter earnings proved that brokerage margins may be improving and the slowing economy may not hurt consulting revenues as much as previously thought.
 The brokerage also changed its price targets on the following stocks: STOCK                       PRICE TARGET
                         NEW      OLD Aspen                 
  $30      $34 Marsh & McLennan            $30      $24 HCC Insurance               $28      $32 Markel                     $460     $563 Transatlantic               $70      $73 CNA Financial Corp (CNA.N)  $31      $30 Endurance Specialty         $40      $48 Holdings Ltd ENH.N Validus Holdings Ltd VR.N $25      $33  (Reporting by Aditi Samajpati in Bangalore; Editing by Pratish Narayanan)   

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