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Hiscox set to drop out of FTSE 100

2nd December 2019 - Author: Charlie Wood

Specialist re/insurer Hiscox is set to drop from the FTSE 100 this week as ongoing claims arising from hurricane Dorian and typhoons Hagibis and Faxai continue to dent profitability.

Hiscox logoThe insurer last month set aside $165 million to cover the aforementioned storms and have seen its share price fall 12% since the beginning of September.

This change in share price saw Hiscox’s market capitalisation fall to £3.93 billion, the 113th largest on the London Stock Exchange.

Earlier this month Hiscox announced its decision to cease writing casualty reinsurance business, due to ongoing, challenging market conditions.

Concerns over pricing and reserving issues meant the company no longer considers this business to be sustainable.

“An increase in claims in the US together with major weather events, such as the Japanese Typhoon, have blown a hole in insurer Hiscox’s bottom line,” Commented Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“Unfortunately getting back on track looks set to take longer than some might have hoped, with combined operating ratios not set to return to their previous range until 2022.

“The good news is premiums have continued to grow, but that’s unlikely to offset the headwind from increased claims in the short term.”

Indeed, Hiscox reported growth across its entire business in 2019, with gross written premiums rising 7.3% in constant currency to almost $3.213 billion.

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