Berenberg cuts Lancashire target, but keeps at 'buy'

The broker published a research note on Monday morning, saying it has cut its target price from 780p to 770p in light of the new accounting standards (International Financial Reporting Standard 17) following Lancashire's results last week.

Gross written premiums were up 26% at $1.18bn, while profit after tax jumped to $159m, from a loss of $31m the year before.

"Lancashire had a strong start to the year, as gross written premiums increased by c26% [...] and volumes grew ahead of the 17% risk-adjusted price increases as management continues to deploy capital amid the hard market," said Berenberg analyst Tryfonas Spyrou.

Spyrou also highlighted that Lancashire's discounted combined ratio (a widely followed measure in insurance calculated by dividing outflows by earned premiums) was "solid' at 79.2%, just slightly higher than the 77.1% recorded a year earlier.

The broker now expects an undiscounted combined ratio of 81.7% by the year-end, with profits coming in at $267m, rising to $320m next year.

The stock was down 1% at 575p by 1000 BST.