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Hiscox: JP Morgan Cazenove lowers price target for specialist insurer

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JP Morgan Cazenove has reduced its price target  on FTSE 250 insurance group Hiscox (LON:HSX) on the back of reduced earnings estimates.

The research arm of the financial giant, has reduced the price target from 427 pence to 419 pence (current price: 400.70 pence) - while retaining a 'neutral' stance on the stock.

The firm offers specialist insurance and reinsurance for individuals and businesses. It aims to have a balanced portfolio of volatile international catastrophe business and more steady local and regional business.

Analysts at JP Morgan Cazenove expect the company to post a loss before tax of £79 million in the first half of this year when it releases results on 1 August - compared to a pre-tax profit of £97 in the same period in 2010.

The loss is mainly attributable to high natural catastrophe activity in the first half of this year, said the broker.

"We estimate total natural catastrophe losses of £214m for the first half of which Japan is £93m, New Zealand £60m, Australia £15m and US tornadoes £35m.

"We have assumed a nat cat budget of £51m for the second half of the year, said analyst Andreas de Grrot van Embden.

He added that JP Morgan Cazenove had reduced the profit before tax estimate for 2011 to £30 million from an already low previous figure of £74mln because of the US Tornado losses in the second qaurter of 2011 and reduction in earned premiums due to higher reinsurance ceded.

Quick facts: Hiscox

Price: 1247 GBX

AIM:HSX
Market: AIM
Market Cap: £3.6 billion
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