NEW YORK ( TheStreet) -- Property and Casualty insurer valuations are "broadly appropriate" for the sector, according to Goldman Sachs analysts, who lowered their sector recommendation to "Neutral" from "Attractive" in a note published Tuesday.

The analysts, led by Michael Nanizzi, note that the sector trades at book value and they estimate it will post a 10% return on equity (ROE) in 2013.

"Given that our baseline for valuation is roughly 10 times forward ROE, the group seems fairly valued at this point," the report states.

In downgrading the sector, Goldman dropped RenaissanceRe ( RNR - Get Report) to "Neutral" from "Attractive," while lowering W.R. Berkley ( WRB - Get Report) to "Sell" from "Neutral." The analysts reiterated their buy rating on Travelers ( TRV - Get Report), but removed the company from the "Conviction Buy" list.

Goldman's analysts haven't grown more bearish on all the P&C insurers. They upgraded XL Group ( XL) to "Neutral" from "Sell," and they continue to recommend AIG ( AIG - Get Report) and Everest Re Group ( RE). Validus Holdings ( VR), meanwhile, remains a "conviction" buy.

Regarding AIG, the analysts argue "aggressive pricing and underwriting actions" at its Chartis P&C division "will lift trough earnings and support an increasing focus on fundamental valuation." The recommendations of Validus and Everest Re are largely due to their still-low valuations.

-- Written by Dan Freed in New York.

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