Hefty payouts for sports events and holidays canceled due to the coronovirus crisis helped send insurer Hiscox deep into the red on Monday and pummeled its shares to their lowest in more than two months.
The company, which operates on the Lloyd’s of London insurance market, set aside an increased $232 million for claims stemming from the crisis, including for cancellations of major events and travel, up from a previous estimate of up to $175 million.
Hiscox did not name the canceled events but Lloyd’s insurers typically play a large role in insuring major events like Wimbledon and the Olympics.
“It’s been a testing six months,” Chief Executive Bronek Masojada told Reuters, adding that some claims were related to insurance backing travel company refunds in Britain. “Some of these companies have gone bust and we are picking up the tab.”
Hiscox shares were down 5.9% at 735 pence by 0847 GMT, among the biggest losers in the FTSE mid-cap index. They fell as low as 729.6p, their lowest since late May.
The company, which also underwrites a range of risks including for fine art, classic cars, kidnap and ransom, reported a pretax loss of $138.9 million for the six months ended June 30, versus a profit of $168 million a year earlier.
Gross written premiums slipped 4.4% to $2.24 billion, while its combined ratio – a key measure of profitability – weakened to 114.6% from 98.8%. A level above 100% indicates an underwriting loss.
Rivals Beazley and Lancashire also swung to first-half losses, with insurers facing one of their biggest claims years due to the pandemic.
Panmure analysts said the results were mixed but highlighted Hiscox has seen a strong rise in premium rates, reiterating a “buy” rating, while Peel Hunt repeated a “hold” view and noted provisions were “still well below the potential losses that could arise from business interruption claims in UK Retail.”
Hiscox said it would not pay an interim dividend, as previously announced.
Hiscox is one of eight insurers in a case brought by the Financial Conduct Authority over disputed business interruption insurance policy wordings. The court hearing finished last week and a judgment is expected in mid-September.
Masojada said that if insurers appealed the verdict, they would likely do so collectively.
(Reporting by Muvija M in Bengaluru and Carolyn Cohn in London; editing by Ramakrishnan M. and David Holmes)
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