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JP Morgan repays Brit with downgrade

Brit Insurance Company appointed JP Morgan Cazenove to become its co-adviser and was rewarded with a downgrade two days later by the firm's parent company, JP Morgan.

The London-based insurer had its target price slashed from 350p to 179p by JP Morgan's analysts, while its recommendation was also lowered from "neutral" to "underweight".

The insurer's share price - which plummeted to a low of 148.5p last year on fears of credit-crunch related liabilities - remained relatively stable last week despite the bank's actions on the 22 January and closed the day almost unchanged at 205.75p on the London Stock Exchange.

Last week, JP Morgan took a number of significant actions on London market insurers which also included downgrading Hiscox plc and Beazley Group to "underweight", while also reducing its target price on the latter from a 164p to 108p. Beazley's share price fell almost 4 percent to 117p following the move.

More positively, the broker started its coverage on Lancashire Holdings with an "overweight" rating, while also raising Amlin Plc's target price from 296p to 370p. Both (re)insurers have a high exposure to short-tail, cat-exposed US lines that are enjoying significant 2009 rate increases.

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