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Investing.com - RBC Capital downgraded Hannover Rueck SE (ETR:HNR1) (OTC:HVRRF) from Outperform to Sector Perform on Tuesday, while reducing its price target to EUR275.00 from EUR295.00.
The downgrade comes despite RBC acknowledging Hannover’s superior return on equity and growth track record compared to industry peers.
RBC Capital highlighted the reinsurer’s disciplined cycle management, extensive use of third-party capital to manage catastrophe exposures, and cost advantages as key factors behind Hannover’s historical performance.
The firm noted that Hannover’s extensive property and casualty reserve build over time provides greater confidence that the company can maintain current margins longer than competitors.
Despite forecasting stronger growth in Hannover’s P&C business, RBC believes these positive factors are already reflected in the stock’s valuation premium, which "may widen in a downturn but is unlikely to generate material absolute performance."
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