Dai-ichi Leads Japan Insurers Lower on Barclays Target Cuts

  • Barclays's Ohno reduced Dai-Ici, T&D target prices by 10%
  • Ohno says insurance industry is `generally missing themes'

Shares of Japanese insurance companies declined after a Barclays Plc analyst lowered his target prices for top insurers, saying that he doesn’t see prospects for further appreciation after shares jumped this year.

Dai-ichi Life Insurance Co. fell the most in more than two months, declining 3.4 percent to 2,042 yen in Tokyo Wednesday, while T&D Holdings Inc. dropped to the lowest in more than a month, falling 2.6 percent to 1,681.5 yen. The Topix Insurance Index was down 1.7 percent, one of the two worst performers among the Topix index’s 33 industry groups.

“Many companies have already announced dividend hikes or share buybacks and we think share-price assessments largely factor in these initiatives,” Azuma Ohno, an analyst at Barclays, said in the report published Tuesday. “We think the insurance industry is generally missing themes.”

Ohno lowered his target prices for Dai-ichi Life and T&D by 10 percent, and reduced the target price for Tokio Marine Holdings Inc. by 9 percent. Ohno also cut the target price for Sompo Japan Nipponkoa Holdings Inc. by 8 percent, while prices for MS&AD Insurance Group Holdings Inc. and Sony Financial Holdings Inc. were lowered by 5 percent and 2 percent, respectively.

Sony Financial declined 3.5 percent to 2,212 yen and Sompo Japan fell 1.2 percent to 3,823 yen.

Ohno said that the addition of Japan Post Insurance Co. to the Topix on Dec. 30 may affect other insurers in the short term. While Ohno reiterated his negative rating for Japanese diversified financial companies, he maintained his equal weight ratings for the six insurers.

“We see the risk of the relative performance of existing listed insurance stocks weakening during this period,” said Ohno in the report. “However, we think their relative appeal might improve after the addition of Japan Post Insurance to the Topix.”

Before it's here, it's on the Bloomberg Terminal.