Storm risk at Bea­z­ley and His­cox

Big losses for in­sur­ers in store from Hur­ri­cane Florence and Ty­phoon Jebi

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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)

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