Broker snap: Beazley constrained by catastrophes, says Peel Hunt

22nd Jul 2011 12:17

Peel Hunt maintains its hold rating on insurance firm Beazley, saying there is downward pressure on its forecasts based on the losses seen in the first half and the higher-than-expected expense ratio.The group reported catastrophe losses of $183m over the first half, contributing to a pre-tax loss of $24.2m and a combined ratio of 108%. The expense ratio is up 3% to 37%, owing to foreign exchange fluctuations and an increase in underwriting costs."We view Beazley's catastrophe losses as relatively high given its greater focus on specialty lines and based on this exposure we see it as less well-positioned to benefit from hardening catastrophe rates," said analyst Sarah Lewandowski."However discipline continues to be shown and the dividend is attractive yielding 6.5%. On this basis we rate the stock a hold," she said.The target price of 142p is kept.Shares rose 4.18% higher to trade at 132.20p at 12:20 on Friday afternoon.BC