The general level of insurance claims relating to Covid-19 disruption has been difficult to quantify as the crisis unfolds. But in a May update, Hiscox (HSX) said that it anticipated to pay net claims totalling up to $150m (£115m) between March and September on cancelled events and travel arrangements.
That liability figure has since swollen to $232m, with the set-aside propelling the Lloyd's of London insurer to an earnings loss for the first six months of 2020. Reserve releases amounted to $63m through the period, against $26m in the first half of 2019.
If you ignore the elephant in the room, then underlying profit from the retail business exceeded $100m, with four out of five of its business units increasing gross premiums – the outlier being Hiscox UK, which recorded a modest 2 per cent decline at constant currencies. The virus and subsequent lockdown constricted new business over April and May, though underwriting activity improved from June onwards. Non-Covid-19 claims remain in line with expectations, but uncertainty remains over the financial impact of Covid-19 on Hiscox’s reinsurance operations.
Consensus estimates give a combined ratio (net underwriting profitability) of 108 per cent, falling to 93.9 per cent in 2021.
HISCOX (HSX) | ||||
ORD PRICE: | 746p | MARKET VALUE: | £ 2.58bn | |
TOUCH: | 744-746p | 12-MONTH HIGH: | 1,674p | LOW: 635p |
DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
NET ASSET VALUE: | 702¢ | COMBINED RATIO: | 116% |
Half-year to 30 June | Gross Premiums ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2019 | 2.34 | 168 | 51.2 | 13.75 |
2020 | 2.24 | -139 | -50.2 | nil |
% change | -4 | - | - | - |
Ex-div: | - | |||
Payment: | - | |||
£1 = $1.30. |