Hiscox sees disaster losses above £200m
LLOYD’S insurer Hiscox dismayed investors yesterday as it admitted its catastrophe losses for the first half of this year would be in excess of £200m.
Hiscox’s shares closed 1.6 per cent lower after it said it would hold close to $150m (£94m) in reserves, at the top end of its estimated range, against claims from the Japanese earthquake in March.
“As there continues to be considerable uncertainty around the Japanese earthquake we have reserved at the upper end of our modelled range,” it said in a statement. It had forecast losses in the range of $60m-$100m.
The Bermuda-based insurer and reinsurer also estimated it would pay a net £35m in US tornado claims in the first half. The tornado season has caused an estimated $15-$25bn in insured losses so far.
But chief executive Bronek Masojada said disciplined underwriting had “allowed us to keep our powder dry”, leaving Hiscox ready to take advantage of reinsurance rate increases of ten per cent for US hurricane cover.
Its first-half reserves held against catastrophes are now double the level seen in the first half of 2010, when it held £100m, and further tornadoes could hit until about August.
Collins Stewart analyst Ben Cohen said the losses were “a bad quarter” and warned that Hiscox could see an £80m loss in its first-half results and even a small full-year 2012 loss. RBS analyst Joanna Parsons also expected a first-half loss.
The third earthquake to hit Christchurch in New Zealand is not expected to materially affect Hiscox.