Berenberg raises target price on Hiscox

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