Esure’s issues are analysed by Berenberg
Esure, founded by Peter Wood (pictured), this month announced its Solvency 2 ratio had dropped from 155% at the year end of 2017 to 110% this year.
The annoucement has led to Berenberg giving its views.
Berenberg analyst Iain Pearce said: ”We view this very much as a company-specific issue. As we discussed in multiple notes, we believed esure’s growth and footprint expansion was fraught with risk, especially given its minimal reserving buffers.
“We do not believe that any of the companies in our coverage have acted in such an ill-disciplined manner. As such, we would not expect the companies in our coverage to face similar issues.”
From the wider market, Pearce said he expected competition to normalise following a very tough 2018 in UK motor.
”As regulatory changes work through into pricing, we would expect the competitive environment to normalise. This should appease investors’ concerns about the UK motor cycle and give them a clearer view on earnings trajectory.
”Overall, we expect the names which have been conservative throughout 2018 to be beneficiaries of the normalisation in competition,” he said.
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