European insurance sector a buying opportunity

(Reuters) - ING said the European insurance sector offers a good buying opportunity as it is at a 20-year relative low and fears of equity gearing, corporate bond exposure and solvency are overdone.

"While caution is an admirable quality, we think it has gone too far," analyst Kevin Ryan said in a note to clients.

Non-life business remains profitable in a way that has not occurred in previous cycles, the analyst said, adding that he doesn't expect the profitability to collapse.

Ryan said his "buy" recommendations focus on companies with strong non-life businesses.

Unlike the banks, the insurance business model is not broken, he said.

The analyst maintained his "buy" rating on Zurich Financial Services (ZURN.VX) and Aviva (AV.L).

However, he cut Standard Life (SL.L) and Munich Re (MUVGn.DE) to "hold" from "buy."

Ryan said the downgrade of Standard Life reflected his conservative assumptions about the equity and bond markets and the impact these will have on the balance sheet.

On Munich Re, he said in the absence of an about-turn in investment markets, the company's fundamental valuation will remain under pressure and at current levels, the stock looks fairly valued.