Beazley Plc (BEZ), a Lloyd’s of London insurer, rose to a record as it gained for a fifth day in six after analysts at Westhouse Securities and Canaccord Genuity recommended that investors buy the stock.
The shares advanced 1.1 percent to 187.4 pence at 11 a.m., the highest since Beazley began trading in 2002. The Dublin- based company has surged 32 percent in six months, making it the best performer among the nine companies in the FTSE 350 Nonlife Insurance Index, which returned 13 percent over the period.
“We expect Beazley to continue to deliver strong profits through 2012-2014,” Joanna Parsons, an analyst at Westhouse, said in a note to clients. The company is “especially well- positioned to benefit from the slowly improving U.S. rating climate.”
Insurers such as Beazley, Catlin Group Ltd. (CGL) and Novae Group Plc (NVA) have risen in the last two months as forecast losses from Hurricane Sandy are within their reserves. The disaster will cost insurers $20 billion to $25 billion, according to Risk Management Solutions, a catastrophe modelling firm.
Beazley said in December it expects to pay $90 million in claims related to the hurricane that flooded parts of New York, New Jersey and Connecticut in October. The firm expects to pay out 90 cents to 95 cents in claims for every $1 it took in premiums in 2012.
Hurricane Sandy was the only major natural disaster last year, helping insurers recover from 2011, when earthquakes in Japan and New Zealand, windstorms in the U.S. and flooding in Thailand cost the industry $105 billion, the most on record for a single year.
Beazley’s premiums will rise an estimated 6 percent this year, with the main benefit seen in 2014 pretax profit, said Parsons, who predicted the shares will rise to 220 pence in 12 months as she initiated coverage with a buy recommendation. That’s the highest price target among the 10 analysts covering the stock tracked by Bloomberg. The average target is 195 pence, implying a potential return of about 4 percent.
Beazley is Westhouse’s top pick among non-life insurers because of expected returns on equity and a prospective special dividend this year, Parsons said. She also recommended that investors add to holdings in Amlin Plc (AML) and Lancashire Holdings Ltd. (LRE)
Ben Cohen, an analyst at Canaccord, raised his rating on Beazley yesterday to buy from hold and increased his 12-month price target to 205 pence.
To contact the reporter on this story: Peter Woodifield in Edinburgh at firstname.lastname@example.org.
To contact the editor responsible for this story: Douglas Lytle at email@example.com