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Hiscox strengthens Jebi & Michael reserves

12th July 2019 - Author: Luke Gallin

Global insurer and reinsurer Hiscox Ltd. has announced an expected impact of $40 million in the first-half of 2019 as a result of further strengthening its reserves for Typhoon Jebi and Hurricane Michael. The firm expects to record profit before tax of between $150 million and $170 million for the period.

Hiscox logoIn a recent trading statement, Hiscox notes significant, continued deterioration from 2018 catastrophe events, warning that it expects an approximately $40 million net hit from the strengthening of its reserves for prior year claims from Jebi and Michael, and also the risk excess book.

The absence of prior year reserve releases from Hurricane Harvey, Irma, and Maria, which amounted to $25 million in the first-half of 2018, means Hiscox expects reserve releases in H12019 to be materially lower than last year.

The H12019 profit before tax range includes an estimated investment return of $150 million for the period, which Hiscox says is a result of further market improvements in Q2.

By segment, and the firm is seeing good rate momentum in most lines of business and says that conditions are improving in Hiscox London Market. For Hiscox Re & ILS, opportunities are in the retrocession market on the back of improved rates following the removal of capacity.

Hiscox Retail is expected to record a combined ratio of between 90% – 95% at the half year, and as noted in the first-quarter, growth in the Retail segment is expected to trend towards the mid-point of the normal 5% – 15% target range in the second-half.

Additionally, Hiscox says that it expects to make a further tax provision of up to $60 million for the half-year period, which will be shown as a prior year adjustment and will not impact the current year results.

Following the announcement from Hiscox, it could be that re/insurers’ second-quarter 2019 and half-year results have a focus on further loss creep from 2018 catastrophe events.

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