Lancashire is at best point in the reinsurance cycle since 2012, says Barclays
Barclays analysts upgraded their rating on Lancashire Holdings Ltd (LON:LRE) after the underwriter’s US$365m equity fundraising.
The recommendation was upped to ‘overweight’ from ‘equal weight’ and the price target was bumped up to 900p from 669p.
“Widely perceived to be a cyclical play, in our view Lancashire may be at the best point in the reinsurance rate cycle since 2012,” the analysts said, adding that the FTSE 250 group has “minimal” exposure to COVID-19 claims or industry reserving concerns.
With the new cash from the equity raise, the company should be able to put capital to use to grow its top line at better margins, the analysts said.
The bank issued new forecasts for Lancashire that assume written premiums reach the previous US$0.9bn peak in 2022, while the combined ratio drops to 74%, five percentage points below its previous forecast.
The price target offers 12% upside potential to the previous close price and implies a 2021 price/earnings ratio of 14.3 times, one standard deviation above the five-year average, which the analyst said was “well justified by the current point in the cycle”.
Story by ProactiveInvestors
Source: https://www.proactiveinvestors.com/companies/news/921691/lancashire-is-at-bestpoint-in-the-reinsurance-cycle-since-2012-says-barclays-921691.html
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