Life assurer and fund manager Standard Life PLC (LON:SL.) topped the FTSE 100 fallers list in early trading today weighed by a downgrade in rating from analysts at Deutsche Bank.
In a review of the European Insurers, the broker cut its stance on Standard Life to ‘hold’ from ‘buy’ and reduced its target price on the stock to 370p from 390p.
It highlighted concerns over fund outflows and margin pressures at the group.
In reaction, the shares dropped over 3%, or 12.3p to 348.2p in early morning trade.
Back in August, Standard Life had reported 'good progress' for the first half of the year in the face of volatile market conditions, with its assets under management growing 7%, to £328bln, up from £307.4bln at the end of December.
Has sector rally run its course?
In a note to clients, Deutsche Bank analysts said: “European insurers face a more positive outlook than for the last two years - with stronger balance sheets than 12 months ago and US reflation prospects both lifting bond yields and potentially extending the credit cycle.
“However, this doesn't necessarily imply that the sector can keep outperforming. On the analysis we've done, we think the recent share price rally has now outpaced the rise in bond yields.”
Aside from Standard Life, Deutsche Bank also reduced its rating for French insurer AXA to ‘hold’ from ‘buy’ as well, and reshuffled price targets across the sector.
It trimmed them for UK firm’s Prudential PLC (LON:PRU) and RSA Insurance Group PLC (LON:RSA), but raised them for Aviva PLC (LON:AV.) and Legal & General Group PLC ((LON:LGEN).