Source: Sharecast
RBC Capital said Hiscox's FY25 results showed the benefits from strong pricing in the London market and reinsurance, with improving momentum in retail.
"We had expected a very good result at Hiscox Re in particular. We note that despite a $293m reserve release versus $146m at FY24, up from 3.7% to 7.2% of opening net reserves y/y, the confidence level improved from the 83rd to 86th percentile, above the top-end of the 75-85% target range," said RBC.
Given "strong" starting solvency, RBC said it was not surprised that this combined to allow for an increase in buyback for 2026.
While its earnings per share forecasts were little changed, looking out to FY28 gives "a big step-up in forecast earnings", said RBC, as benefits of Hiscox's change programme were "much more fully realised".
The Canadian bank, which has an 'outperform' rating on the stock, said its increased target price reflects "a more positive view" of cross-cycle return on tangible equity, up from 15.5% to 17%, equating to a 2x FY26 price-to-net asset value ratio, but only 10x FY28 price-to-earnings.
Reporting by Iain Gilbert at Sharecast.com