Deutsche Bank Downgrades Transatlantic Holdings (TRH) to Hold; "Cheap," But So Are Its Peers

Deutsche Bank downgraded Transatlantic Holdings (NYSE: TRH) from Buy to Hold, price target lowered to $52.00.

Deutsche analyst says, "Transatlantic seems prepared to reject Berkshire Hathaway's (NYSE: BRK-A) $52 cash offer, and we have concluded that one of our key catalysts for owning the stock--the potential for acquisition--has declined considerably. While Validus continues to have an offer outstanding--with a current market value of under $47--we would expect that the company is likely to reject it. We expect any future offers run the risk of "low-balling" Transatlantic's expectations."

"Shares of Transatlantic trade at 0.69x projected 3Q11 book, but this is in line with global diversified legacy reinsurers like Everest Re (NYSE: RE)(Buy) (0.69x) and PartnerRe (NYSE: PRE)(Hold) (0.65x). With concerns that lower high-grade yields might lower the long-term profitability of casualty reinsurance and the concern that Japanese mutual insurer Zenkyoren may raise its loss estimate for the Tohoku earthquake in 4Q11, it does not seem likely to us that this reinsurance sub-segment is poised for near-term multiple expansion."

For more ratings news on Transatlantic Holdings click here and for the rating history of Transatlantic Holdings click here.

Shares of Transatlantic Holdings closed at $48.77 yesterday.

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