Source: Sharecast
Berenberg said the key message from Lancashire's recent earnings call was "more margin in underwriting, more margin in investment income in 2023".
Lancashire has "clearly had room" to further expand its property catastrophe footprint given its 300% Bermuda solvency capital requirement at January renewals, said Berenberg.
However, the analysts noted that management was "adamant" about not materially changing the shape, balance and improved business mix of the portfolio it has "painstakingly built" over the past few years.
The German bank highlighted that the broader business mix and growth in non-catastrophe exposed lines helped Lancashire absorb the impact of a $125.0bn natural catastrophe year and losses stemming from the Ukraine war.
"We believe Lancashire enters 2023 from a position a strength and the expected profitability of the business is now higher. We roll forward our estimates and raise our price target to 770p. The shares trade on 5.8x FY 2024E EPS and 1.23x FY 2023 P/B," said Berenberg, which reiterated its 'buy' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com