Broker snap: Catastrophe-free quarter for Lancashire

8th Nov 2010 12:07

Despite an "extraordinary" combined ratio in a catastrophe-free quarter, finnCap advises a 'hold' for Lancashire Holdings.The property insurance group has announced a combined ratio of 39% in the third quarter due to the absence of hurricanes and other catastrophes. "Lancashire's business plan makes it remote from losses, and even more so when such activity is limited", analyst Charles Coyne said."The company has bought back over 25% of its stock in four years, together with massive dividends to leave the stock yielding over 15% by dint of a $1.40 special dividend (from $1.25)", Coyne added. Net tangible assets (NTA) per share have grown year-on-year to $8.43, from $8.09 previously. The broker estimates NTA of 540p per share by the year end. With shares on an 8% premium to net assets, the target price stands at 600p, and a 'hold' rating is confirmed."Expect earnings upgrades of over 10% based on these numbers".