Beazley's prospects look good, Berenberg says
Beazley’s growth prospects have improved and it is in a good position to capitalise on opportunities, Berenberg analysts said as they upgraded the Lloyd’s of London insurer to ‘buy’.
Beazley
670.00p
16:35 18/04/24
FTSE 250
19,450.67
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
Insurance (non-life)
3,629.13
17:14 18/04/24
At Beazley’s first-half results the company reported lower investment returns and strengthened its reserves. But excluding mark-to-market revaluations, investment returns improved and the reserves decision was a conservative move, Berenberg said.
First-half gross written premiums rose 15% as pricing improved in property and speciality lines. Property rates may come under pressure but speciality will continue to drive growth, the analysts, led by Emanuele Musio, said.
The analyst cut his estimate for 2018 pre-tax profit by 41% and increased his 2019 estimate by 3%. The negative impact on 2018 was due to reserve strengthening and revaluations.
Berenberg's rating on Beazley shares was upgraded to ‘buy’ from ‘hold’ and the target share price increased to 640p from 590p.
“The group is strategically and operationally well placed to reap the benefits of new market opportunities, while its anti-cyclical proposition will continue to support the stock’s performance,” Musio wrote. “The dividend will continue to be an attraction, although, given Beazley’s intention to beef up its reserves, we do not expect it to pay a special dividend in 2018.”