Broker snap: Forecasts downgraded at Lancashire

16th Mar 2011 13:07

RBS lowers its profit forecast for insurance underwriter Lancashire Holdings, but warns that figures remains under review ahead of further clarity on the Japanese earthquake.The insurance group announced yesterday that to date in the first quarter of 2011, net losses are estimated to be in the range of $45-55m. Of that, $15-25m relates to losses from the Australian floods and the New Zealand earthquake, while other losses include an energy loss in the North Sea and a loss on the terrorism book from the unrest in Egypt."Unsurprisingly, it has not commented on its potential net loss from Japan," says RBS. The broker nudges back its 2011 pre-tax profit estimate from $199m to $192.5m, but awaits further news on losses from the devastating earthquake that hit Japan on 11 March.However, given the losses on the international book since the Chilean earthquake in February 2010, the broker expects international reinsurance rates to start to harden, which should be positive for Lancashire.RBS keeps a 'hold' rating and target price of 600p.