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Friday 13 December 2019

Hiscox’s profits dive following ‘historic year’ for natural disasters

Pre-tax profits crashed 91% to £30.8 million for the year ending in December.

Hiscox offices, as the insurer grapples with a
Hiscox offices, as the insurer grapples with a "historic year" for natural disasters (PA)

By Ben Woods, Press Association Chief City Correspondent

Insurer Hiscox has seen profits plunge as a “historic year” for natural disasters left the industry grappling with an eye-watering bill.

Pre-tax profits crashed 91% to £30.8 million for the year ending in December, as the group’s performance was blighted by US and Caribbean hurricanes, earthquakes in Mexico, and California wildfires.

The specialist insurer was hit by the need to set aside 225 million US dollars (£160.2 million) to cover losses from the disasters, which cost the wider industry 140 billion dollars (£100 billion).

Gross written premiums rose 6% to £2.5 billion, with total income climbing from £1.8 billion to £2 billion over the period.

Chief executive Bronek Masojada said: “Our long-held strategy of balance has served us well this year.

FTSE 100 photos

“The strong growth and profits in retail countered the volatility felt in our big-ticket businesses which were impacted by an historic year for natural catastrophes.

“We have made significant investments in infrastructure and brand, both of which will continue.

“Market pricing has improved and as a consequence we have growth ambitions for every part of our business.”

Stripping out the exchange rate impact, pre-tax profits dropped by £108.5 million to £93.6 million over the period.

FTSE 100 photos

The FTSE 250 group said gross written premiums in the UK and Ireland business enjoyed double-digit growth, rising 12% to £556.3 million.

It came as the European arm of the business secured record profits as all countries boosted the underwriting performance of the business.

Chairman Robert Childs said: “The 140 billion dollars of catastrophe losses across the sector led to capital destruction and reserve deficits, and as a result the market is turning.

“This is not an immediate process; it comes about through each difficult conversation, each new quotation and each renewal.

“We have been waiting for this, and the good teams we have built and innovative products we have developed mean we are well-placed to serve the needs of more customers.”

Shares in the group were down more than 4% in morning trading on the London Stock Exchange.

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