Hiscox cuts Bermuda premiums as disasters drive loss
Bermuda-based re/insurer Hiscox posted a loss of £87 million, or $143 million, in the first half of the year, after record claims from natural disasters in the US and Japan.
At the company's Bermuda-based operating unit, where Hiscox underwrites reinsurance catastrophe and healthcare business, gross premiums written fell by 9.3 percent as Hiscox said it “walked away from weaker rates earlier in the year”.
Losses including the earthquake and tsunami in Japan in March and the US tornadoes in the second quarter catastrophes have caused rates to rise and there are signs of capacity constraints in some affected areas. Hiscox said this indicated a promising outlook for the Bermuda unit in the second half of the year.
The small healthcare book is growing slowly and profitably, the statement added.
“It has been an exceptionally challenging first half,” chairman Robert Hiscox said in the statement. “2011 is reported to be the most expensive catastrophe year to the insurance industry on record after just six months, worse than the full 12 months of 2005, the previous highest on record.”
The six-month loss of £87 million compared to a loss of £6.4 million during the same period in 2010.
Gross premiums written fell by nearly £40 million to £235 million. The combined ratio indicating the percentage of premium dollars spent on claims and expenses rose to 160.1 percent from 114 percent in the first half of 2010.
“We have suffered extraordinary losses during the period, but that which does not destroy you makes you stronger, and we are definitely stronger,” Mr Hiscox added.
“We need tough times in the catastrophe reinsurance arena to keep the faint-hearted at bay and to stop foolish competition from some commodity players. We have preached discipline for years and have proved that discipline by cutting back the reinsurance account recently.
“Our reinsurance protection is virtually entirely intact, we are now facing much better rates and the underwriters are seizing the opportunities.”
Net income: A loss of £87 million compared to a loss of £6.4 million in the first half of 2010
Gross premiums written: £234.9 million compared to £273.1 million in 2010
Combined ratio: 160.1 percent compared to 114 percent in 2010