Hiscox estimates $150 million net claims from Harvey
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[September 18, 2017]
By Noor Zainab Hussain
(Reuters) - Lloyd's of London underwriter
Hiscox Ltd estimated it would face net claims of about $150 million from
Hurricane Harvey and said it has yet to determine losses from Hurricane
Insurers and reinsurers are counting the cost of Harvey, which lashed
Texas in the last week of August causing flooding that put it on the
scale of Hurricane Sandy in 2012.
Hiscox said it had two main areas of exposure to the hurricane -
reinsurance and insurance lines, including flood cover for homeowners
"This (claims) is within the group's modelled range of claims for an
event of this nature, and reinsurance protections for the group remain
substantially intact," Hiscox said in a statement. It said its claims'
estimate was based on an industry forecast that Harvey would lead to a
total insured market loss of $25 billion.
Hiscox shares fell 3.1 percent to 1212 pence by 0913 GMT, the second
biggest loser on the Stoxx Europe 600 Price Index <.STOXX>, as analysts
expected the company would face bigger losses from Hurricane Irma than
Germany's Munich Re <MUVGn.DE> last week warned it could miss its profit
target this year, the first major reinsurer to flag a hit to earnings
from damage caused by hurricanes Harvey and Irma.
Shore Capital analyst Eamonn Flanagan noted that the loss from Harvey
equated to about 6 percent of Hiscox's net tangible asset value as at
the June end.
Hiscox said it would announce an estimate of net claims arising from
Hurricane Irma, once the impact of that storm has become clearer.
Chief Executive Bronek Masojada said the storms meant insurance rates
were on an uptrend.
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Jesus Rodriguez rescues Gloria Garcia after rain from Hurricane
Harvey flooded Pearland, in the outskirts of Houston, Texas, U.S.
August 27, 2017. REUTERS/Adrees Latif/File Photo
"After a long period of price reductions, insurance rates in the affected areas
and in specific sectors such as large property are likely to increase. In the
wider global insurance market for large risks, we expect rates to stabilise and
begin to increase," Masojada said.
Irma, one of the most powerful Atlantic Ocean storms on record, ravaged several
islands in the northern Caribbean, killing at least 60 people, before barrelling
into Florida's Gulf Coast, causing further destruction.
"With Irma expected to be a larger event, our initial view is this is slightly
more negative than we had anticipated. We expect Hiscox to trade down today and
expect uncertainty to persist around Beazley <BEZG.L> and Lancashire <LRE.L> who
are yet to publish their own estimates," Keefe, Bruyette & Woods analyst Rufus
Hone, said, referring to other Lloyd's of London insurers.
Hone added that while the this year would likely be a net loss overall for
Hiscox, it would not have "much of an impact" on the insurer's expansion plans
or put the dividend under threat.
Risk modelling firms RMS estimates insured losses from Harvey of $25-$35
billion, while AIR Worldwide forecast total insured losses in the United States
for Irma of $25-35 billion.
(Reporting by Noor Zainab Hussain in Bengaluru Editing by Anjuli Davies and
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