The Money Bin

In the week to 1 May the FTSE All Share rose 1.2% vs. the Insurance Index at +0.5% and 0.9% for the Lloyd’s Index. The best performer was JLT (+2.5%); Beazley (-0.2%) was the worst performer. The Q1 reporting season has begun: newsflow has been mixed with a number of US insurers reporting improved PBT/rates, but also loss creep, higher Q1 losses and warnings from brokers about stalling rate rises ahead of the key Jun/Jul US renewals. The 2018 hurricane season starts 1 June with consensus for sli

The Money Bin

In the week to 24 April the FTSE All Share rose 2.6% vs. the Insurance Index at +1.8% and 0.0% for the Lloyd’s Index. The best performers were Helios* (+7.0%) and Beazley (+1.5%); Hiscox (-1.1%) was the worst performer. Following last week’s analysis of the issue of underinsurance with the 2017 cat losses, we look at the growing risk of a Californian earthquake – not necessarily in San Francisco but along the Hayward Fault. Latest analysis suggests an insured loss of cUS$30bn but an economic los

The Money Bin

In the week to 17 April the FTSE All Share fell -0.3% vs. the Insurance Index at +0.5% and +0.2% for the Lloyd’s Index. The best performer was Lancashire (+4.0%); Helios* (-2.3%) and JLT (-0.8%) were the worst performers. Swiss Re’s sigma analysis of the 2017 insured losses highlights the material protection gap. It estimates the total insured losses from the 2017 catastrophes at US$144bn vs. total economic losses of US$337bn, giving a cat risk protection gap of US$193bn (57%). Herein lies a pot

The Money Bin

In the week to 10 April the FTSE All Share rose 3.0% vs. the Insurance Index at +1.5% and +0.8% for the Lloyd’s Index. The best performer was Hiscox (+3.0%); Lancashire (-2.2%) was the worst performer. We look at the first forecasts for the 2018 hurricane season. These early estimates suggest a slightly elevated level of windstorm activity – and an increase in US landfall probability. Of course, it is the if/where of the latter that holds the greatest risk of insured loss and, in 2018, will be a

The Money Bin

In the week to 3 April the FTSE All Share rose 0.4% vs. the Insurance Index at +0.8% and +0.8% for the Lloyd’s Index. The best performer was Lancashire (+2.8%); JLT (-1.9%) was the worst performer. This week we review the 1 April renewals, where prices were as muted as we expected. Ongoing competition dampened rate movements where accounts were loss free. It was always going to be a big ask to get those not affected by the 2017 cats to pay up – and they didn’t. Interestingly, M&A is picking up,

The Money Bin

In the week to 27 March the FTSE All Share fell -1.0% vs. the Insurance Index at -1.8% and 0.2% for the Lloyd’s Index. The best performer was Beazley (+4.3%); Helios* (-3.1%) and Hiscox (-1.6%) were the worst performers. We remind investors of the growing cyber hacking threat to energy providers, especially in the US. Several speciality insurers are already teaming up with energy experts, eg Beazley and Energy Insurance Mutual, to look to provide customised cover for this risk but the insured ex

The Money Bin

In the week to 13 March the FTSE All Share rose 0.1% vs. the Insurance Index at +1.7% and +3.3% for the Lloyd’s Index. As M&A speculation rose among the Bermudian underwriters, the best performer was Hiscox (+6.4%); Lancashire (-1.3%) wasthe worst performer. We often talk of the band of global specialist (re)insurers that Beazley, Hiscox and Lancashire belong to. In the table below, we rank the key players by market cap (in USD), splitting out the major European players. What stands out is the P

The Money Bin

In the week to 6 March the FTSE All Share fell -1.6% vs. the Insurance Index at -2.7% and -0.3% for the Lloyd’s Index. The best performer was Lancashire (+3.3%); JLT (-6.4%) post its FY17 results, was the worst performer. This week we look at the data on actual US property/casualty rate changes in Q4 2017 and Jan 2018. This has a bearing on the outlook for (re)insurers and the drivers behind the latest M&A moves ie the AXA bid for XL Catlin at 1.5x NAV/2.0x TNAV and AIG’s acquisition of Validus

Non Life Insurance

2017 tested the global re/insurance market but we believe the quoted Lloyd’s insurers responded well. The results also highlighted the very different underwriting strategies, especially between Lancashire and Beazley/Hiscox. Lancashire’s underwriting loss, given the 2017 catastrophes, should not have surprised shareholders, nor the fact that Hiscox had an FX exposure. In this report we review the FY results in more detail.

The Money Bin

In the week to 27 February the FTSE All Share rose 0.5% vs. the Insurance Index at +1.9% and +1.3% for the Lloyd’s Index. The best performer was JLT (+5.6%); Helios* (-3.7%) and Beazley (-1.6%) were the worst performers. This week we review the FY2017 results from Beazley, Hiscox and Lancashire. Beazley reported the highest PBT and ROE (8.7%), helped by a strong investment yield. Lancashire’s loss was expected given its higher cat/reinsurance exposure and the 2017 losses. Hiscox was hit by FX lo

The Money Bin

In the week to 20 February the FTSE All Share rose 1.3% vs. the Insurance Index at +1.2% and -1.9% for the Lloyd’s Index. The best performer was JLT (+0.2%); Lancashire (-14.6%) was the worst performer, reflecting the (overdone in our view) share price fall post its FY17 results. This week we look at the wide range of combined ratios being reported for 2017. The variation reflects the portfolio split, (short/long/cat etc), as well as the quality of underwriting (cf Aspen closing its unit). NB a

Non Life Insurance

In this Cyber Bytes we look in more detail at two recent cyber reports from Beazley (fraud) and Hiscox (cyber readiness). Beazley flags the increased threat from fraudulent instruction scams, which quadrupled in 2017 for its clients. Hiscox’s more in-depth report found that c73% of organisations surveyed in Europe and the US were unprepared for cyber attacks. Not surprisingly, the smaller firms fared worse than larger firms. Ahead of GDPR coming into effect on 25 May 2018, only 33% of all respon

The Money Bin

In the week to 13 February the FTSE All Share rose 0.4% vs. the Insurance Index at +3.6% and +2.7% for the Lloyd’s Index. The best performer was Beazley post its FY17 results (+4.8%); JLT (-0.6%) was the worst performer. We review the recent Alpha (Lloyd’s) Market Analysis. It reports a wide range of rate rises for most short tail lines at January 2018 and suggests there is potentially more to (gradually) come despite a ‘disappointing’ reinsurance renewal. This supports our view of rates: we con

A strong FY result in a difficult year

Beazley’s FY17 PBT of US$168.0m was in line with our expectations and is a strong result given the 2017 cat losses, in our view. The 8.7% ROE is impressive, and represents a return several peers would be pleased to report even before the 2017 cats. Whilst much of the PBT was driven by a very strong investment return (2.9%), Beazley still delivered a small underwriting profit, boosted by a strong contribution (underwriting/reserve release) from Speciality Lines (now 55% of the book), underpinning

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

Bluefield Solar Income Fund – Fundamentals shine despite discount

The manger comments that, in common with the other trusts in the renewable energy sector, the last six months have continued what has been a challenging period for the Bluefield Solar Income Fund (BSIF). It adds that the trust’s ongoing fundamental performance has failed to reverse a steady slide in its share price which began back in May 2023. Despite this, it says the company has continued to deliver solid NAV growth and market-leading shareholder distributions thanks to a range of contractual

LSL Property Services (LSL LN) - Transformation & market recovery

2023 results are, as indicated in its February pre-close update, “slightly ahead of market expectations”. Current trading continues to improve, with 1Q24 underlying operating profit up yoy, “reflecting the benefits of the Group’s transformation programme completed in 2023 as well as improving market conditions.” With net cash of £35m at end 2023, the Board approved 7.4p final DPS and £7m buy back.

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

Henderson Far East Income - Repositioning to raise total returns

Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness t

LIBERUM: PensionBee: Strong start to the new financial year

International Public Partnerships - Consistently and responsibly delivering

International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th

LIBERUM: NewRiver: Q4 trading update: Continued operational momentum

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Witan

Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26