Monday 04 November 2019 10:27 am | Updated: Monday 04 November 2019 12:56 pm

Insurer Hiscox sets aside $165m for catastrophe claims

GREAT ABACO, BAHAMAS – SEPTEMBER 04: An aerial view of damage caused by Hurricane Dorian is seen in Marsh Harbour on Great Abaco Island on September 4, 2019 in Great Abaco, Bahamas. A massive rescue effort is underway after Hurricane Dorian spent more than a day inching over the Bahamas, killing at least seven as entire communities were flattened, roads washed out and hospitals and airports swamped by several feet of water, according to published reports. (Photo by Scott Olson/Getty Images)

A trio of natural disasters has caused Hiscox to set aside $165m (£127m) for claims, exceeding the insurer’s catastrophe budget for the second half of the year.

The FTSE 100 specialist insurer said this morning that it has reserved a net $165m based on insured market losses for hurricane Dorian and typhoons Hagibis and Faxai.

“The third quarter has been an active period for claims, with the market experiencing significant catastrophe losses from storms in the US, the Caribbean and Japan,” said chief executive Bronek Masojada.

The blue-chip company also said that fees and profit commissions are expected to be approximately $25m lower at the year-end.

Shares in the company have dipped 2.3 per cent in morning trading.

In its trading statement this morning, the firm posted a 7.3 per cent rise in gross written premiums for the first nine months of 2019, rising to $3.21bn.

The insurer, which underwrites risks from kidnapping to historic artworks, said that it was exposed to the recent wildfires in California, but at this stage the size of any potential loss is not yet clear.

In the summer the insurance group warned that the spate of disasters would hit profits, sending shares down five per cent.

“The scale of deterioration has been significant, with industry loss estimates having increased materially since these events,” the firm noted in July.

Brokers at Shore Capital said this morning: “Hiscox is an excellent business and is the only UK listed Lloyd’s insurer with exposure to US retail growth.”

They added: “The recent share price weakness presents a near term upside of 11 per cent to our fair value of 1,630p per share, however this does not fully reflect the losses seen in quarter-three and the higher level of combined ratio indicated for the retail business and therefore we are not making any change to our “Hold” recommendation at this time.”