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Hiscox reserves $125m for storm losses

Power of nature: Hurricane Michael caused devastation on the south Florida coast and was one of the catatrophes for which Hiscox set aside $125 million

Hiscox Ltd, the Bermudian-based insurer and reinsurer, has set aside $125 million to cover losses from major storms.

The company’s trading statement, published today, also highlighted double-digit growth in gross premiums written across all segments of the business.

Hiscox said $125 million had been reserved to cover claims and reduced profit commissions resulting from hurricanes Florence and Michael, which made landfall on the US East Coast, and typhoons Jebi and Trammi, which impacted Japan.

Since a benign first half for losses, Hiscox said it had seen a more active environment for claims, including a $13 million marine loss.

Hiscox added: “Hiscox USA has experienced a higher frequency of D&O claims, and Hiscox UK & Ireland has seen an uptick in subsidence claims following a particularly dry summer, as well as a continuation of escape of water claims.”

Gross premiums written through September 30 totalled $3.04 billion, up 14.3 per cent from the $2.66 billion written in the corresponding period in 2017.

Hiscox’s head office is based at Wessex House, on Reid Street, which is also home to its Hiscox Re & ILS division.

Hiscox Re & ILS wrote gross premiums of $782.4 million, up by 10.9 per cent on the $705.4 million recorded in the first nine months of 2017.

The report did not include details of net income.

Bronek Masojada, Hiscox’s chief executive officer, said: “We have had strong growth, but as the market remains challenging, we will remain disciplined, and I expect our growth to moderate over the balance of the year.

“It has been an active third quarter for claims across the group, both from large losses and catastrophes, and I am pleased with how we have responded.”

The company’s growing retail insurance division generated $1.6 billion in gross premiums, up 16.8 per cent from last year. Its London Market operation wrote $664.1 million of premiums, up 12.5 per cent from 2017.

“Hiscox Retail continues to benefit from investment in the brand, and we were pleased to welcome our one millionth retail customer,” Mr Masojada said.

Hiscox also commented on its preparations, and their cost, for Britain’s impending exit from the European Union and said its new Luxembourg-based subsidiary was fully operational and expected to start writing business from January 1, 2019.

“Our plans have always assumed a worst-case scenario ‘hard Brexit’ and we are prepared, irrespective of the outcome of the government’s negotiations,” the report states.

“The financial impact of reorganising the business in preparation for Brexit is $15 million across the group in 2018, and we will inject incremental capital of approximately €40 million in the new entity.”