Berenberg raises target price on Hiscox

Analysts at Berenberg slightly raised their target price on insurer Hiscox from 990.0p to 1,015.0p on Thursday, after clarity on Hurricane Ian losses and rising yields lifted shares.

Berenberg said Hiscox's third-quarter trading statement, released on Wednesday, was largely in line with its expectations, both in terms of gross premium growth on a group level and losses disclosed from Hurricane Ian at 6.3% year-on-year and $135.0m, respectively.

"The shares were up circa 5.9% on the day, however, which we believe reflects a) market expectations for a larger loss from Ian and b) much higher reinvestment yield of 4.8% (up from 3.4% in Q2), which will undoubtedly result [in] a substantial rise in consensus estimates for FY23-24E – we estimate by as much as 5-10%," said the analysts.

Berenberg adjusted its full-year 2022 earnings estimates on Hiscox to reflect the "slightly-higher-than-previously-anticipated' investment losses.

The German bank, which reiterated its 'hold' rating on the stock, also raised its outer-year 2023 and 2024 estimates by 4.8% and 9.2%, respectively, to reflect "much higher" bond yields.

Reporting by Iain Gilbert at Sharecast.com