UPDATE: Keefe, Bruyette & Woods Downgrades XL Group

On Wednesday, analysts at Keefe, Bruyette & Woods downgraded shares of XL Group plc XL from Outperform to Market Perform and lowered the price target from $40 to $37.

Meyer Shields outlined concerns about the deal with Catlin Group:

1) Shields is not “convinced that specialty insurance market leadership translates into improved underwriting results, other than modest expense synergies that take time to emerge.”
2) The price for the deal seems too rich.
3) The deal could be modestly accretive to XL’s future EPS.

“Even though we view both XL and Catlin positively, we think that this deal will change investors' focus from legitimately improving Insurance segment results and aggressive share repurchases to acquisition- and integration-related concerns.”

Shares of XL Group closed Wednesday at $33.66, down 3.86 percent.