Berenberg cuts price target on Hiscox

Berenberg cut the price target on shares of insurance provider Hiscox from 1,581p to 1,487p on Tuesday as it said the valuation is demanding given the mixed short-term picture, despite attractive longer-term prospects.

The bank said growth in the key US retail division is likely to slow due to exits of underperforming lines and potential disruption from a significant IT upgrade. It also expects a short-term loss ratio deterioration due to a higher attritional loss ratio in certain lines and a normalisation of reserve releases.

"While pricing is increasing, we believe it has lower proportional exposure than peers to the business lines with the most attractive pricing dynamics," Berenberg said.

It added that trading on a 2.2x 2020E price to book ratio, Hiscox’s valuation is demanding.

Berenberg said that despite the recent pullback in the shares and the fact that Hiscox avoided a third major loss event in three years, the risks are weighted to the downside for Hiscox.

The bank maintained its 'hold' rating on the shares.