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RSA Insurance rises on JPMorgan upgrade

JPM Cazenove upgraded RSA to 'overweight' but its top UK pick in the sector is M&G

RSA Insurance Group -
The motor insurance segment is facing ongoing challenges

RSA Insurance Group PLC (LON:RSA) shares rose on Tuesday after it was upgraded by JPMorgan Cazenove as part of a note on the European insurance sector.

The sector’s outperformance in seven out of the past eight years has been driven by strong fundamentals and improving credit markets, the investment bank said. 

“While we still see bottom-up support from the 6% capital return, we are mindful that credit markets are already very benign, and low interest rates remain a headwind to earnings growth. 

“We therefore take a balanced view of the sector overall, with our preferred stocks mostly those that offer reliable cash flows and undemanding valuations.”

RSA was upgraded to ‘overweight’ from ‘neutral’ as it is sees as “a relative winner in UK non-life” because of the challenges elsewhere in UK motor insurance and the company offering scope for profitability and capital returns to improve.

It is not a “top pick” in the sector for Cazenove, however, with the only UK name in that regard being M&G PLC (LON:MNG).

Admiral Group PLC (LON:ADM) is one of the least liked, entirely as its shares are “too expensive”.


Quick facts: RSA Insurance Group

Price: 394.3 GBX

Market: LSE
Market Cap: £4.08 billion

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