UPDATE: UBS Downgrades Blue Capital Reinsurance (BCRH) to Sell
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(Updated - November 23, 2016 10:50 AM EST)
UBS downgraded Blue Capital Reinsurance (NYSE: BCRH) from Buy to Sell with a price target of $17.00 (from $18.00). Analyst Brian Meredith said rising yields make it less attractive.
"With yields rising since the U.S. election, we believe that BCRH will become less attractive as an alternative yield play. BCRH's annual payout of 90% of earnings via dividends has resulted in a double-digit dividend yield the last two years, making it attractive in a low interest rate environment despite the volatility inherent in its business. We expect a more limited special dividend in 1Q17, lowering the 2017 total estimated dividend to $1.13 and the yield to 5.9%, given loss activity in 2016. BCRH sees minimal impact on its returns from higher yields, making other yield-focused assets more attractive," said Meredith.
Shares of Blue Capital Reinsurance closed at $19.10 yesterday.
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