UBS downgrades Beazley to 'sell' after share price gains
UBS downgraded its stance on Beazley shares on Tuesday as it took a look at the European insurance sector.
Beazley was cut to ‘sell’ from ‘neutral’ after a 15% jump in the share price following results, but the price target was unchanged at 382p. UBS said the company’s exposure to at-risk lines and low capital flexibility concerns remain.
UBS said second-quarter/first-half results in the European insurance sector were "robust", beating estimates by 47% on average.
"But heightened July catastrophe losses/increased Covid mortality losses result in reinsurers FY21E EPS downgrades, mixed forward EPS changes," it said. "Given hurricane season timing, and with budgets already expected to be fully consumed by YE, timing is not right to be bullish the sub-sector."
The bank reiterated its preference for Munich and Hannover Re, given solvency and capital flexibility coupled with growth, as well as Hiscox and Lancashire. For Hiscox, it pointed to a retail recovery and more robust capital level and for Lancashire, a hardening market theme.
All four stocks are rated ‘buy’ at UBS.