European insurers were among the best and worst-performing stocks this week, as disparate third-quarter earnings highlighted the difference a year makes.
While Hannover Reand Swiss Re swung back to growth after posting losses last year, Munich Re disappointed with a smaller than expected third quarter profit after maintaining its profitability in 2008.
On Friday, Hannover Re announced it was on track to report the second-highest full-year profit in its history after posting its first decline ever last year.
“Hannover Re and Swiss Re were rewarded by the strong turnaround. In comparison Munich Re is more boring, more conservative,” said Dieter Hein, a partner at Fairesearch.
Shares in Hannover Re climbed 5.4 per cent to €32.28. Swiss Re was the week’s biggest gainer, surging 13.8 per cent to SFr47.82.
Morgan Stanley upgraded Swiss Re from “equal-weight” to “overweight” and said it could resume dividends as soon as 2011. “Although there is still much work to do to re-engineer the business, progress in the past 12 months gives us optimism [Swiss Re] can surpass expectations and narrow the 22 per cent valuation gap with Munich Re,” the broker said.
The German reinsurer declined 2.2 per cent to €105.31, while Zurich Financial Services fell 4.9 per cent to SFr224.3, also on disappointing earnings.
In the wider markets, the FTSE Eurofirst 300 edged 0.2 per cent higher on Friday and was up 1.7 per cent for the week to 992.53. In Frankfurt the Xetra Dax advanced 1.4 per cent over the week to 5,488.25, while the CAC 40 climbed 2.8 per cent to 3,707.29.
Food retailers gained on talk of sector consolidation. Netherlands-based Ahold, a rumoured takeover target for Tesco, gained 4.6 per cent to €8.98, while Belgium’s Delhaize Group added 7.5 per cent to €49.65 after third-quarter net income rose a reported 28 per cent year on year.
Germany’s Metro climbed 8.4 per cent to €40.93, while in France Carrefour rose 5.8 per cent to €30.98.
Adecco, the temporary staffing agency, climbed 8.2 per cent to SFr49.78 after the Switzerland-based company reported a pick-up in demand for blue-collar workers in key markets.
BNP Paribas and Commerzbank dominated opposite ends of the banking sector after the two, respectively, reported better and worse-than-expected results.
BNP Paribas rose 7.2 per cent to €55.17, while Commerzbank was down 2.1 per cent to €6.95. The German lender pre-announced a third-quarter net loss of €1.05bn and said it would need to increase provisions for non-performing loans.
Wacker Chemie, the German chemicals group, advanced 10.3 per cent to €107.95 after third-quarter earnings beat expectations.
