Storm risk at Beazley and Hiscox
Big losses for insurers in store from Hurricane Florence and Typhoon Jebi
Storm-related losses at non-life insurer Lancashire Holdings (LRE) have a negative read-across for rivals Beazley (BEZ) and Hiscox (HSX). Shares in Lancashire lost 10% of their value after the company warned of hefty third-quarter losses due to weather-related and marine losses (8 Oct).
Even with re-insurance recoveries, losses from storm damage are seen at between $25m and $45m while losses in its marine portfolio are expected to reach $30m.
Before these losses Lancashire would have returned a profit last quarter but it also cautions that actual losses may vary from its estimates as the final settlement of all claims will take a considerable time.
Market estimates of total insured losses from Hurricane Florence, which hit the east coast of America last month, are seen anywhere between $3bn and $5bn.
Losses from Typhoon Jebi, the strongest storm to hit Japan in 25 years, are estimated at up to $5.5bn.
Beazley is also likely to reveal a hit when it next gives guidance on 8 November although it should be more modest according to analysts at investment bank Berenberg.
Hiscox, which updates on trading on 6 November, is more diversified away from catastrophe insurance and its earnings are larger so a similar hit to Lancashire would have less of an impact. (IC)