Hiscox profits plunge but “too early to estimate” coronavirus impact


Profits at Hiscox Ltd (LON:HSX) plunged more than expected last year due to the impact of hurricanes and typhoons, and the insurer said it was “too early to estimate” the impact of the coronavirus.

The group, which dropped out of the FTSE 100 in December, said its main areas of potential exposure from Covid-19 would be cover for cancelled events, travel and personal accidents, with only small claims received so far and a possible pandemic “only covered in a very small part of the portfolio”.

READ: Hiscox clarifies meaning of ‘medium term’ after share price plummets

For 2019, gross written premium rose 8% to just over US$4bn but profit before tax tumbled 60% to US$53.1mln from US$135.6mln the year before.

Hiscox’s combined ratio – a measure of how shrewdly the company is choosing who and what to underwrite (a lower figure is better) – leapt to 105.7% from 94.9%.

On the plus side, the retail business, now a $2.2bn-premium business, saw profits increase 22% to $178.4mln as the combined ratio there was 98.7%, in line with guidance.

The full year dividend was lifted 3.5% to 29.6 cents per share.

Hiscox’s shares rose 5% to 1,287p on Monday morning.

Analysts at UBS said the results were “a bit weaker, but we’re talking small numbers here”.

Those at Peel Hunt noted that PBT was below the consensus forecast of $66mln, with an underwriting loss driven by a significant decline in reserve releases to 1% of premiums that was triggered by rising claims inflation in US casualty lines, affecting the Retail business in particular.

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