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Buckingham Research Group starts coverage on 3 P&C insurers

Buckingham Research Group analyst Amit Kumar has initiated coverage on Hanover Insurance Group Inc., Selective Insurance Group Inc. and Cincinnati Financial Corp..

Kumar started Hanover at a "buy" rating and said the company has a "cleaner" business following the sale of its primary non-U.S. business. He also said the company has widely been viewed as a potential takeout prospect. His price target on the stock is $138.

Kumar's expected 2019 EPS for Hanover is $6.05 at worst case, $8.20 at base case and $10.58 at best case.

Selective was started at "neutral" and given a price target of $62. According to Kumar, the company compares "favorably" to Cincinnati Financial and Hanover in terms of return on equity. He lauded the company's targeted approach to gain market share, consistent guidance and capital management. It also may be a takeout target which is reflective in its price-to-book valuation of 2.2x, Kumar said.

The analyst expects Selective's 2019 EPS to be $2.99 at worst case, $4.00 at base case and $4.63 at best case.

Kumar initiated coverage of Cincinnati Financial at "neutral" and gave it a price target of $80. He said that while the company trades at a discount to Selective and Hanover, he sees "limited upside" for the stock at current levels. Kumar did, however, note that Cincinnati Financial is a "top dividend payer" in the P&C space.

He anticipates Cincinnati Financial's 2019 EPS to be $3.73 at worst case, $3.50 at base case and $4.41 at best case.