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FTSE rises as insurers rally on Irma downgrade

FTSE 100 rises while Lloyd's insurers top FTSE 250 on hopes impact of hurricane Irma will be less bad then feared.

 
FTSE rises as insurers rally on Irma downgrade

The FTSE 100 has risen, while shares in insurers rallied on hopes the impact of hurricane Irma would be less bad than feared.

The UK blue-chip index rose 54 points, or 0.7%, to 7,431, recovering nearly all of the ground lost last week.

But the big movers were to be found outside the FTSE 100. Lloyd's insurers topped the FTSE 250 on hopes the impact of hurricane Irma, which has now hit south west Florida, would be less bad than feared.

Irma has been downgraded to a category one storm, down from category four yesterday when it hit the Florida Keys.

'The impact is far less than the worst-case scenario predictions, with insurance companies topping the performance tables today,' said Rebecca O'Keeffe, head of investment at Interactive Investor.

Lancashire (LRE) was the biggest FTSE 250 rises, up 7.6% at 657.5p, having fallen 12% over the previous two weeks amid fears over the impact of first hurricane Harvey, then Irma.

It was closely followed by rival Beazley (BEZ), up 5.7% at 476.6p, while Hiscox (HSX) rose 3% to £12.61.

Peel Hunt analyst Andreas van Embden, who holds an 'add' rating on Lancashire, said the stock was the most attractive, given its current valuation.

'Despite the recent pullback, Beazley and Hiscox still trade as if 2017 will be another benign hurricane year and we continue to see the risk-regard as unattractive,' he said.

'In Lancashire's case there will be the inevitable losses; however, the company's underwriting and capital strategy has been geared to respond to these types of situations, subject to the extent of major losses they take on the chin themselves.

'Lancashire is the most interesting stock to focus on during these types of events with earnings at cyclical lows following a derisking strategy and poised to bounce back significantly in a dislocated market, as capital is put to work again and exposures are increased.'

Shares in the Catco Reinsurance Opportunities (CAT ) investment company, which provides protection to reinsurers, rose 3.2% to $1.13, although remain heavily down over the last two weeks amid fears over the impact of claims.

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