Prudential is top pick among European insurers, says Barclays

Barclays reiterated an ‘overweight’ rating and target price of 1609p on Prudential, saying the insurer is a “strong high quality business and the double digit growth story is intact”.

The bank said European insurance stocks have fallen extensively but believes the recent selloff in Prudential is an opportunity to buy the “best in class insurer at an attractive valuation”.

“We view Prudential as the one true large-cap growth stock in European insurance, and the compound growth of its earnings is the tangible evidence,” Barclays said.

“Prudential is our Top Pick among European insurers.”

Barclays added that Prudential has grown operating earnings at 13% since 2004 compared to 4% at Aviva and 8% at Legal & General.

The bank noted that Prudential’s dividend increases have been “less eye-catching” than its peers but are set at a conservative level which won’t be cut in stress environments.

“Prudential has grown its dividend every year since 2004, while Aviva has cut twice and Legal once. Pru’s dividend has increased by 3.7x verus 2004, versus 1.5x at Aviva and 2.4x at Legal. The tortoise wins, particularly in uncertain times.”

Shares in Prudential rose 5.47% to 1,256p at 1040 BST.