Hiscox swings to loss in 'costliest year ever'

1st Aug 2011 13:34

Bermuda-based specialist insurance and reinsurance group Hiscox swung to a loss in the first half of 2011 "reflecting the costliest year ever for the industry."During the six months ended 30 June, the firm reported a pre-tax loss of £85.6m, down from a profit of £97.2m in the same period the year before, as the period "[threw] an unprecedented variety of losses at us," said chairman Robert Hiscox. Earnings per share fell from a profit of 20.9p to a loss of 22.8p."2011 is reported to be the most expensive catastrophe year to the insurance industry on record after just six months, worse than the full twelve months of 2005, the previous highest on record," he said.The "variety of losses" included the earthquakes in New Zealand and Japan, floods in Australia, the worst tornadoes on record in the US. "We have also suffered from some large attritional losses across the Group, including moving oil platforms, repatriation from the unrest in North Africa, fine art losses and some recessionary related claims in the UK."Meanwhile, gross written premiums fell from £904.3m to £847.5m. The group combined ratio (which is calculated by dividing incurred losses and expenses by earned premiums) rose from 93.6% to 116.9%, which reflects lower income and the high level of catastrophe losses. [Combined ratio: a reading below 100% indicates profitability, while a ratio above 100% suggests that pay-outs are higher than earnings premiums]Nevertheless, the UK division - which sells products such as household, motor and commercial insurances - had a record year, with pre-tax profits jumping from £15.6m to £25.2m. Gross written premiums grew to £182.9m, from £168.1m, while the combined ratio fell from 91.8% to 87.9%.Hiscox was able to raise its dividend from 5p to 5.1p."We have suffered extraordinary losses during the period, but that which does not destroy you makes you stronger, and we are definitely stronger," the chairman said.BC