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Hiscox undecided on capital raise, expects hardening reinsurance markets

29th April 2020 - Author: Luke Gallin

Insurer and reinsurer Hiscox has said that it believes the Group has enough capital to meet the expected liabilities from the COVID-19 coronavirus pandemic, and, is confident the uncertainty being caused will lead to rate hardening across US wholesale and reinsurance markets.

Hiscox logoThe announcement from the specialist re/insurer comes after speculation in the press claiming that Hiscox might need to raise capital in order to respond to the pandemic.

In response, the firm has said, “The COVID-19 pandemic has resulted in unprecedented global economic uncertainty. The Hiscox Board believes the Group has sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic.”

At the same time, Hiscox has said that it expects the resultant uncertainty arising from the pandemic and consequent capital constraint to drive rate hardening across both US wholesale and reinsurance markets.

“Whilst Hiscox’s capital, liquidity and funding positions remain robust, Hiscox is evaluating possible sources of capital to respond in an appropriate way to these market dynamics, which could include raising new equity,” the firm explained today.

The re/insurer adds that currently, it has not decided whether or not to pursue a capital raise or with regards to the timing or size of any such raise.

So, while the press has suggested that Hiscox might need to raise capital in order to meet its liabilities from the pandemic, the comments from the firm suggest that any capital raise would be in order to take advantage of any rate hardening and opportunities it sees from the fallout, as opposed to the need for additional funding.

In early April, Hiscox withdraw its financial targets for 2020 amid the pandemic, and just last week, the re/insurer said that it expects to pay up to $175 million in COVID-19 payouts.

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