Specialist insurer Hiscox profits in nosedive amid climate catastrophes

● Hurricanes, wildfires and Mexican earthquake wreak financial damage

Profits at Lloyds of London specialist insurance group Hiscox have dived in the bow wave from a “historic year” for natural disasters, it was revealed yesterday.

Hiscox announced to the City that pre-tax profits slumped more than 90 per cent to £30.8 million in 2017 – hit by American and Caribbean hurricanes, the Californian wildfires and the earthquake in Mexico.

The company said its bottom line was impacted by the $225m (£160.2m) financial provision to cover losses from the disasters, which cost the wider insurance industry some $140 billion (£100bn).

Hiscox’s disappointing year came despite gross written premiums climbing 6 per cent to £2.5bn, with total income rising to £2bn last year from £1.8bn in the previ- ous 12 months. Bronek Masojada, group chief executive, commented: “Mother Nature throws hurricanes in line with her own expectations.

“That’s why people buy insurance, and that why Hiscox has built a diverse and resilient portfolio.”

Masojada added: “The strong growth and profits in retail countered the volatility felt in our big-ticket businesses, which were impacted by a historic year for natural catastrophes.”

The boss said Hiscox had responded by making “significant investments in infrastructure and brand”, adding that “market pricing has improved and as a consequence we have growth ambitions for every part of our business”.

Excluding any exchange rate impact from the post-brexit weakness of sterling, pretax profits fell to £93.6m from £108.5m in 2017.

Hiscox, a member of the FTSE 250 mid-market stock market index, said gross written premiums in the UK and Ireland business lifted 12 per cent to £556.3m. It came as the European arm of the business secured record profits as all countries boosted the underwriting performance of the business.

Robert Childs, chairman of Hiscox, commented: “The $140bn dollars of catastrophe losses across the sector led to capital destruction and reserve deficits, and as a result the market is turning.

“This is not an immediate process; it comes about through each difficult conversation, each new quotation and each renewal.

“We have been waiting for this, and the good teams we have built and innovative products we have developed mean we are well-placed to serve the needs of more customers.”

Shares in Hiscox dipped slightly following the results.