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UBS upgrades Hannover Re stock to 'Neutral' amid resilience

EditorEmilio Ghigini
Published 2024/06/03, 10:28

On Monday, UBS adjusted its stance on Hannover Rueck SE (OTC:HVRRY) (HNR1:GR) (OTC: HVRRF), upgrading the stock from Sell to Neutral and increasing the price target to €234 from €219.

The revision reflects the firm's assessment that Hannover Re is well-positioned to navigate the upcoming active catastrophe season effectively.

Additionally, UBS anticipates that the company's already resilient liability reserves could see a further increase of approximately 10% in 2024.

The reassessment by UBS also takes into account the potential impact of upcoming Standard & Poor's model changes, which could indicate a more favorable capital distribution policy. These changes are expected to be announced with the company's second-quarter results.

Furthermore, UBS noted that Hannover Re's year-to-date performance has been underwhelming, with the stock now trading at a price-to-earnings ratio that aligns with its five-year average relative to the SXIP index.

UBS's decision to upgrade Hannover Re to Neutral is driven by a combination of factors, including earnings per share revisions and an analysis of the company's reserve prudence. The firm believes that the risks associated with the stock are now more balanced, which justifies the revised price target and rating.

The upgrade and new price target come at a time when investors are closely monitoring the insurance sector, particularly as it prepares for what is anticipated to be an active season for natural catastrophes.

Hannover Re's potential to strengthen its reserves further and the possibility of a positive shift in capital distribution strategy are key elements that influenced UBS's updated outlook on the stock.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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