RSA share price underperforms as HSBC trims valuation

Analysts nevertheless remain bullish on blue-chip insurer

RSA share price underperforms as HSBC trims valuation

Shares in RSA Insurance (LON:RSA) have fallen into negative territory in today’s session, underperforming the broader market, as analysts at HSBC lowered their valuation on the stock. The broker, however, maintained its bullish stance on the blue-chip insurer.

As of 14:28 GMT, RSA’s share price had lost 0.41 percent to 604.00p, as compared with a 0.01-percent dip in the benchmark FTSE 100 index. The group’s shares have added more than 12 percent to their value over the past year, and are up by just under three percent in the year-to-date.

HSBC bullish on RSA but lowers valuation

HSBC lowered its price target on RSA from 736p to 612p today, while maintaining its ‘buy’ rating on the shares, citing improving trends.

“Claims inflation currently remains above price inflation although group has seen some signs of stabilisation in the third quarter,” the broker pointed out, as quoted by Proactive Investors. The analysts lowered its 2017 operating earnings estimates by eight percent to reflect claims from recent hurricanes in the Americas and large losses. 

HSBC further pointed out that RSA and FTSE 100 peers Admiral (LON:ADM), Aviva (LON:AV) and Direct Line (LON:DLG) are faced with a challenging UK home insurance market and regulatory headwinds in motor insurance.

Other analysts on RSA Insurance

JPMorgan Chase & Co reiterated its ‘overweight’ rating on RSA earlier this month, while Shore Capital continues to see the blue-chip insurer as a ‘sell’. According to MarketBeat, RSA currently has a consensus ‘hold’ rating and an average price target of 648p.

RSA updated investors on its third-quarter performance last week, revealing that its performance had been hit by the recent hurricanes in the US and the Caribbean. The company, however, nevertheless posted a rise in premium income for the year-to-date.

As of 14:59 GMT, Thursday, 23 November, RSA Insurance Group plc share price is 604.00p.

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