Westhouse puts Beazley's rating under review on tough outlook

5th Feb 2015 09:27

Annual results from insurer Beazley were more or less in line with expectations, according to Westhouse Securities, though the broker has placed its 'neutral' rating under review after recent gains in the stock.Pre-tax profits fell 16% over the year to $261.9m, slightly short of the $264m consensus estimate and Westhouse's own $269.9m forecast.Nevertheless, Beazley also announced a full-year dividend of 9.3p per share and proposed a special dividend of 11.8p per share which "should please", according to Westhouse analyst Joanna Parsons.Parsons was optimistic about the growth in Beazley's US operations and the potential for future investment there. She was also encouraged by an improvement in the company's life, accident and health division."However, it is no surprise the group sees further competition in 2015," Parsons said.In its outlook statement, Beazley said that the market is experiencing "increase competitive pressure, which we expect to continue into 2015".Parsons said: "Our forecasts are broadly unchanged at this stage but on the current share price Beazley trades 1.8x 2015E net tangible assets and yields 3.3%."Our 'neutral' recommendation is therefore under review given the recent share price rally and the fact that the trading outlook is getting more challenging so profits across the sector will fall in 2015/16."The stock was down 1.9% at 295.4p by 10:03 on Thursday, after having risen as much as a quarter over the past six months.