After a near 9% drop in Beazley PLC's (LSE:BEZ) share price following its results, Citi pushed back, arguing the implications of the Lloyd's insurer’s $500 million investment in its new Bermudan platform have been misread.
While the FTSE 100 group had previously guided to a 10-15 point hit to solvency, the US bank says this had been interpreted (by Citi and others presumably) as front-end loaded, "suggesting a glide path" to $500 million solvency capital requirement (SCR) deployment over time.
"This is not the case", and the full $500 million is intended to capitalise the Bermudan start-up upfront, not as an incremental solvency drain, so capital deployed will only be the $150 million or so implied by the initial drag.
"We feel this could have been explained better and reinforces the argument that a $500 million buyback at FY '25 is still possible, and even likely."
With shares down heavily on what now appears to be misinterpretation, Citi expects a bounce as the dust settles.
Beazley shares rose 1.7% to 794p on Wednesday, having