Shares in a trio of London’s leading listed motor insurers were stranded on the hard shoulder after Barclays Capital cut its rating on two and repeated its negative stance on the other.
The investment bank believes that after stellar performances the trio - Hastings Group (LON:HSTG), esure (LON:ESUR) and Admiral (LON:ADM) - are fully valued.
Changes to the way personal injury payouts are calculated using the so-called Ogden rate had an unexpected positive impact on two of the companies, although this is now reflected in the stock prices, the bank believes.
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“We highlighted Hastings and esure as the prime beneficiaries with minimal impact to their back books but with the ability to take market share as pricing increases continued,” Barclays said in a note to clients.
“Hastings, esure and Admiral have rallied post the full-year earnings, and we now believe the stocks are up with events.”
Hastings and esure have been downgraded to ‘equal weight’ from ‘overweight’, while Admiral remains at ‘underweight’.
Direct Line (LON:DLG), which has lagged the sector recently, remains on an ‘equal weight’ rating.
The performance of the stocks has been eye-catching. Since January 2015 esure has returned 89%, including dividends and adjusting for the GoCompare spinout.
Admiral’s return in that time has been 73%, while the sector has advanced 23%.