We upgrade Allianz to OW for one key reason: We expect nonlife in
Continental Europe to continue to improve thanks to Solvency 2, low
inflation and weak growth. Solvency 2 is a positive because higher nonlife
margins will help composite European insurers with both life and nonlife
fund rising requirements for life capital under the directive. We raise our
price target to €175 from €145, rolling forward to Dec16. We also
downgrade AXA to N for one major reason: We believe that Allianz is
relatively more attractive in particular due to its greater exposure to
German nonlife. We retain our price target unchanged at €26.1, also
rolling forward to Dec16.
note attached