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Lancashire shares fall as 2017 results bear weight of natural disasters

Published: 06:40 15 Feb 2018 EST

Wildfire
City stockbroker Numis Securities upgraded its rating to ‘add’ from ‘hold’, citing recent share price weakness and the positive outlook

Lancashire Holdings Limited (LON:LRE) saw its shares fall nearly 5% today as the company reported a pre-tax loss of US$3.2mln for the last quarter of 2017, impacted by the California wildfires, with overall 2017 numbers blighted by a litany of other natural disasters during the year.

The FTSE-250 listed insurer reported a full-year 2017 pre-tax loss of US$72.9mln, from a US$150.4mln profit a year earlier, but said it believes the market has finally turned a corner and said it is seeing rate increases across most of its business lines.

READ: Lancashire estimates losses arising from recent hurricanes, earthquakes to be in US$106mln to US$212mln range

In reaction to the results, City stockbroker Numis Securities upgraded its rating to ‘add’ from ‘hold’, citing recent share price weakness and the positive outlook, maintaining its share price target at 775p.

In a note to clients, the Numis analysts said that although the quantum of January reinsurance rate increases was less than the most bullish expectations, they believe that the breadth of price increase/stability is turning out to be wider than anticipated.

They added: “This is consistent with what we would expect given Lancashire’s risk profile and the record catastrophes loss incidence in 2017, both in terms of quantum and frequency.”

The analysts concluded: “We think current market earnings forecasts for financial year 2018 are well supported.”

In late morning trading, Lancashire’s shares were down 4.2% at 626.5p.

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