Hiscox "neutral," fair value raised

04/08/04 - J.P. Morgan Securities

LONDON, April 8 (New Ratings) — Analysts at JP Morgan issue a “neutral” rating on Hiscox Plc (HSX.L). The fair value has been raised from 165p to 196p.

Shares of Hiscox, a British specialty insurance company, are currently trading at 178p.

According to JP Morgan’s research note published this morning, Hiscox reported its 2003 results significantly ahead of the consensus expectations. The analysts mention that the company expects to benefit considerably from the continued near-term positive momentum in the non-life insurance premium rates. Hiscox has expressed its intention to maintain a progressive dividend policy in the forthcoming years, JP Morgan says.

The analysts expect the company’s potential market share gains in the UK and Europe to lead to a diversified portfolio and reduced earnings volatility in the next few years. However, JP Morgan expresses its concern regarding the intensifying competition in Hiscox’s core small and medium enterprise market segment. The analysts expect the recent divesture of Chubb’s 19% shareholding in the company to remove Hiscox’s stock overhang risks and improve its liquidity position.

The EPS estimates for 2004 and 2005 are 23.5p and 23.9p, respectively. The P/E estimates for 2004 and 2005 are 7.6x and 7.5x, respectively.

JP Morgan issues a “neutral” rating on Hiscox Plc.