Macquarie's Insurance Pair Trade

For those of you that love a good pair trade, take note of Macquarie's insurance note today. The equity research team at Macquarie, in a ode to the late Muhammad Ali, titled their note 'Sting like a bee. Buy ALL. Sell TRV.'The event that drove them to this recommendation was MarketSCout's May composite rates for commercial lines. While commercial lines continued their downtrend at -2% in May, personal lines rates continued to remain positive, up 1% in May. This continues a trend from the previous month, where April commercial lines were down -2% while personal lines were up 1% in the same month.With the continued inverse relationship between commercial and personal lines, Macquarie reiterated their outlook for many insurance companies. With commercial margins narrowing, they continue to have an Underperform rating and $92 price target on Travelers Companies (NASDAQ: TRV) while they believe there is continued upside in Allstate Corp. (NYSE: ALL) with an Outperform rating and $78 price target.