Hiscox set to drop out of FTSE 100 while easyJet could rise to take its place

The pre-General Election reshuffle could also see Centrica and Kingfisher fall out of the top index.

Article updated: 4 November 2019 12:00pm Author: Helal Miah

Article updated 4 December 2019

  • Insurance and reinsurance specialist becomes victim of natural disasters and increase in litigation claims
  • Modest recovery in shares in September means easyJet most likely to taxi its way into top league
  • October’s rally sees Sainsbury’s and Morrisons get out of the relegation zone, while Centrica and Kingfisher teeter on the edge

Unlike the last FTSE reshuffle where founding member of the FTSE100 M&S found themselves booted out of the top club, this time around the shake-up is likely to be a more low-key affair.

Relegation Promotion
Certain Hiscox
Possible Centrica, Kingfisher easyJet

Reinsurance specialist Hiscox currently occupies the lowest ranking in the FTSE100, at 112th place, meaning it is almost guaranteed to fall out after the market closes today. It has become a victim of a number of natural disasters, such as Hurricane Dorian and typhoon Faxi and Hagibis, as well as the culture in the United States where juries are becoming more generous in how much they award in litigation claims. Insurers like Hiscox have to set aside more funds because of this “Social Inflation” phenomenon. The share price has reached levels not seen since 2017 despite written premiums rising by 7% in the latest trading period which is expected to reach a new record for the full year.

A likely candidate to replace Hiscox is easyJet who along with their travel sector peers, have not had the best of times lately and were relegated only a little while back. Brexit, consumer confidence, Sterling’s weakness, volatile oil prices and the unseasonal weather patterns have all been blamed as contributory factors, but the shares have staged a modest recovery since September – about the time when Thomas Cook collapsed and went into liquidation. Rival travel groups were expected to pick up customers, lifting their share prices. But, during October we also saw these companies and any other exposed to the UK market, doing well as the Prime Minister’s deal with the EU reduced the likelihood of a No-Deal Brexit. The latest set of full year results were also fairly good as profits did not slump as much as feared and passenger numbers hit new records.

The recent counter offer from Naspers (Prosus) for Just Eat has revived the takeaway chain’s share price after the shares suffered from slower growth and competition in the on-line food delivery space despite the earlier all share merger proposals from Dutch peer Takeaway.com. However, Just Eat’s time in the top league could once again be short-lived if a takeover does take place or the bidders walk away.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.