JP Morgan has estimated changes for Lloyd’s insurers ahead of their first-half 2024 results, expecting them to meet their 2024 guidance.
Top-line growth rates are estimated to mirror Q1 trends across companies, with overall pricing expected to remain stable or show minor changes.
We expect Lloyd’s insurers to be on track to achieve their full-year guidance with H1 2024 claims likely within normal expectations. While Q2 large loss trends were less favorable than Q1, we do not anticipate total H1 losses to exceed the assumed budgets
JP Morgan
JP Morgan forecasts Beazley to see 8% gross premium growth (versus high single-digit guidance), Hiscox to achieve 7% ICWP growth, and Lancashire to have 8% GWP growth.
Additionally, interim dividends of 13 cents are forecast for Hiscox and 10 cents for Lancashire, while Beazley maintains an annual dividend policy.
Investment income might benefit from higher bond yields in the first half of the year. Bond yields increased over 1H 2024 (up ~50bps for the US two-year as a proxy).
We expect for the impacts on investments and liabilities, which should slightly benefit investment income, although this is partly reflected in our post-Q1 update numbers.
JP Morgan analysts remain positive on the Lloyd’s sub-sector for 2024, highlighting high ROEs and strong potential for capital returns at attractive valuations.
Listed Lloyd’s of London insurers are expected to be the subject of takeover interest, analysts have said, following news that foreign rivals are circling Hiscox.
Bermuda-based Hiscox’s shares rose as much as 14% on Monday after Insurance Insider said Japan’s Sompo and Italy’s Generali were considering making bids for the FTSE 250 company.
Hiscox declined to comment when approached by City A.M. If the company were actively involved in takeover discussions, it would typically be required to report them.
Analysts have said a potential offer would come as no surprise, with London-listed specialist insurers continuing to trade at a heavy discount compared to pre-pandemic levels.
We continue to favor the Lloyd’s sub-sector for its high ROE outlook and strong capital return potential at attractive valuations, even after the insurance M&A deals speculation rally earlier this week
“We forecast an average 2024 ROE of ~20%, and at 1.4x average 2024E P/B, all three stocks still trade at a discount to their five-year averages. Beazley remains our top pick within the sector”, JP Morgan says.
