Hiscox Ltd (LON:HSX) swung to a loss in the first half of 2020 because of coronavirus (COVID-19)-related claims but the Lloyds of London insurer said it was well placed to take advantage of growth opportunities ahead.
The FTSE 250-listed firm has reserved US$232mln across the group for claims related to COVID-19, up from the US$150mln previously announced for event cancellations, media and entertainment and other segments including travel.
A pre-tax loss of US$138.9mln was reported for the six months to June 30, 2020, a sharp swing from a profit of US$168mln a year earlier. Gross premiums written during the half-year reduced by 4% to US$2.2bn in the period, but the company said the underlying picture is more nuanced.
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Despite the challenging conditions of the pandemic, the retail business saw four of its five units delivering growth and a combined US$100mln-plus of profits, if excluding net claims relating to COVID-19.
After the lockdown hit new business written in April and May, Hiscox said trading improved in June, with non-COVID-19 claims in line with expectations.
In Hiscox London Market, the company said the pandemic has “added further impetus to an already hardening market in big-ticket lines”, with underwriters capturing a 13% increase in rates.
In reinsurance, the group said it has remained cautious, “keeping our powder dry as we expect improvements in pricing, terms and conditions to continue”.
“Portfolio action in both businesses is beginning to have an impact, but will take time to show through in the P&L,” Hiscox chairman Robert Childs said in the results statement.
After last year’s final dividend and this year’s interim payout were both withdrawn in April, the board said it is “committed to return to paying a dividend as soon as possible, and will re-evaluate the position at the year-end”.