Top UK Stocks to Watch Beazley shares jump on rosier outlook

Josh Warner
By :  ,  Former Market Analyst

Top UK Stocks to Watch: Beazley shares jump despite pandemic-induced loss

Top News: Beazley swings to loss on coronavirus-related insurance claims

Beazley said it swung to a pretax loss of $50.4 million in 2020 from a $267.7 million profit the year before as businesses filed more insurance claims related to the coronavirus pandemic, but shares jumped as it said it expected to return to profit this year.

The company, which provides insurance to the marine and property sectors and offers the like of life insurance, said its combined ratio – a measure of profitability – slipped to 109% in the year from 100% in 2019. Below 100% implies it is making an underwriting profit, while a score over 100% means it is making losses.

The ratio was ‘heavily impacted by the volume of COVID-19 related claims in this unprecedented year,’ Beazley said. One area that ended up being a particular drag was Beazley’s exposure to the events market, with many customers claiming for cancelled events.

It said it booked $340 million in first-party losses related to coronavirus in the year as it took swift action when the pandemic erupted.

‘We took action when we saw that COVID-19 was likely to impact the economy, and this strategy, allied with our underwriting action over the previous year in anticipation of a future recession, will mitigate the impact in our longer tail liability classes, where claims are expected to materialise from 2021 onwards,’ Beazley said.

Gross premiums in the year rose 19% to $3.56 billion from $3.00 billion in 2019, while net premiums rose 17% to $2.91 billion from $2.50 billion. Its net assets declined 7% to 219.1 pence per share from 235.0p.

Beazley said it would not pay a dividend after a tough year, having paid 12.3p out to shareholders in 2019. Beazley said it was committed to a progressive dividend strategy and that this would be reinstalled in 2021.

The company said it expects to ‘grow profitably’ in 2021 and that its combined ratio should be in the ‘low-90s’.

‘In responding to this crisis, insurance has been one of the levers to help with economic and social recovery alongside government, community action and individual acts of care. We have paid claims quickly and efficiently and adapted to deliver insurance solutions that protect customers as they navigate the challenges of operating between the virtual and real worlds,’ chief executive Andrew Horton.

‘However we are still in the midst of the pandemic and its full impact will not be felt for some time. The unprecedented challenge has taught us valuable lessons, from how we operate to the need to review the stress testing of our realistic disaster scenarios,’ he added.

Beazley share price: technical analysis

Beazley shares have been trending lower since mid-November hitting a low at the start of February of 300. Today’s jump over 10% higher has seen Beazley recoup losses from January.

The share price has spiked back over the descending trendline dating back to mid-November. The price has also pushed over its 50 and 100 sma on the daily chart and the RSI has also spiked into bullish territory and points northwards but still has some distance to overbought territory.

However, the price has so far failed to break above 370 a key level for the bulls which could see more the push higher gain momentum towards 380 and 390 the November high.

On the flip side immediate support can be seen at 350 the 50 sma before 340 the descending trendline and 330 resistance turned support from 4th February.

FTSE 100 news

Below is a guide to the top news from the FTSE 100 today.

Ofgem announces energy price cap will rise in April

Energy regulator Ofgem has said it will allow the energy price cap to rise by £96 to account for an increase in wholesale energy prices.

Ofgem said this will take the price cap to ‘pre-pandemic levels’ of up to £1,138 a year. The new cap will come into play from the start of April. The price cap is designed to ensure customers that fail to switch suppliers get a fair price for their energy and its reviewed twice a year to reflect the changes in power prices paid by suppliers.

‘When wholesale prices fell sharply last year in the wake of the first lockdown, the level of the price cap fell by £84 in October to its lowest level yet for the current winter period,’ Ofgem said. ‘Demand for energy has since recovered which has pushed wholesale prices back up to more normal levels.’

This will impact 11 million people on default tariffs. The price cap that applies to a further 4 million people on prepayment meters will rise by £87 to £1,156.

This will apply to all UK energy suppliers such as Centrica and SSE, both of which were trading higher this morning.

AstraZeneca ‘disappointed’ by latest Imfinzi trial results

AstraZeneca said its phase III trial investigating whether Imfinzi could be used to treat head and neck cancer did not meet its primary endpoint.

The drug did not improve overall survival compared to existing treatment regimens involving chemotherapy and cetuximab in patients with recurrent or metastatic head and neck squamous cell carcinoma whose tumours expressed high levels of PD-L1. It also said the combination of Imfinzi and tremelimumab did not improve survival rates in ‘all-comer’ patients.

‘Metastatic head and neck cancer is a complex and challenging disease with a poor prognosis. While we are disappointed by these results, insights from the KESTREL Phase III trial will advance our understanding and application of immunotherapy across our clinical development programme. We will continue to build on the established benefits of Imfinzi in early lung cancer and small cell lung cancer, to bring immunotherapy treatment options to all patients who may benefit,’ said Dave Fredrickson, the executive vice president of AstraZeneca’s oncology business.

AstraZeneca shares were trading flat in early trade at 7368.0.

FTSE 250 news

Below is a guide to the top news from the FTSE 250 today.

Syncona says Achilles Therapeutics considering funding options, including IPO

Healthcare company Syncona said one of the companies in its investment portfolio, Achilles Therapeutics, is considering raising capital and that an initial public offering in the US is one option on the table.

‘The timing and the terms of any such offering have not yet been determined and are subject to market conditions and other factors. There is no assurance that any such additional capital raising will be completed,’ Syncona said.

Syncona has investments in a number of businesses within the gene therapy, cell therapy, small molecule and biologics sectors. Achilles is a clinical stage biopharma company developing novel cancer immunotherapies.

Syncona shares were up 1% in early trade at 256.3.

Other UK stock news

Below is a guide to the top news from the rest of the UK market today.

Silence Therapeutics raises $45 million

Silence Therapeutics said it has raised $45 million by issuing American Depositary Shares (ADSs) to new and existing investors.

The ADSs, which equal three ordinary shares, were priced at $22.50 each and have been issued to ‘new and existing institutional and accredited investors’. This will result in just over 6 million new shares being issued, equal to about 6.8% of its enlarged issued share capital.

‘This financing marks an important step in our journey to increase awareness of Silence and position our company as a global RNAi leader,’ said president and chief executive Mark Rothera.

‘We expect to build on this momentum throughout 2021, starting with the first clinical data from our mRNAi GOLD Platform due out the first half of this year, followed by patient data from our two wholly owned programs - SLN360 for cardiovascular disease due to high lipoprotein(a) and SLN124 for patients with iron loading anemias. Silence is a company that is poised for growth and I look forward to a very exciting 2021 and beyond,’ he added.

Silence Therapeutics shares were up 1.7% in early trade at 587.0.

SolGold to conduct new PFS on Alpala to include Cascabel targets

SolGold said it has decided to complete a revised pre-feasibility study on the Alpala project in Ecuador.

The revised PFS is being completed so that other targets within the nearby Cascabel concession can be included.

‘The objective of a revised study encompassing all of the Cascabel targets is to reduce the risk of a very large initial capex on a large underground development and deliver a study which demonstrates a lower technical risk through better defined upsides in resources, operating costs and recoveries and augments production with early stage open cuttable resources,’ said chief executive Nick Mather.  

‘Continued strength in global copper and gold markets will further endorse the strategy of making the Cascabel project lower risk, quicker to build and bring to production if a development decision is made and with reduced upfront capital exposure. We believe the extra time to be spent on the revised study is well founded and will lay the basis for the next phase of the evolution of SolGold. This endorses SolGold's strategy for the future,’ he added.

The revised study will mean extra work. The new study will not be available until ‘late 2021’. SolGold said it will provide the company with more options when it comes to developing the asset.

SolGold shares were down 15.6% in early trade at 22.75.

Savannah Energy says Accugas unit secures gas sales agreement

Savannah Energy said its Accugas subsidiary has signed a new seven-year gas sales agreement with Mulak Energy.

The deal will see Accugas supply gas from Savannah’s majority-owned Uquo field in Nigeria for an initial two-year period on an interruptible basis and then five years under a firm contract. The interruptible period means Mulak can enforce a maximum daily limit on how much gas is delivered of 2.5 million standard cubic feet per day.

Notably, the average sales price should benefit from the deal as Mulak is an industrial customer, Savannah said, allowing it to improve margins without any rise in costs.

Mulak is part of Egyptian conglomerate Mansour Group.

‘We are delighted to announce this new gas sales agreement with Mulak Energy and the Mansour Group. This recognises, Accugas' status as the most reliable supplier of natural gas in Nigeria. Our first Gas-to-CNG agreement is hugely exciting as it represents Savannah's entry into the compressed natural gas market, which we see as offering strong growth potential for our business over the course of the next decade,’ said Savannah chief executive Andrew Knott.

Savannah Energy shares were up 6.5% in early trade at 17.25.

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