The U.K.-based Lloyd’s and specialty insurer Hiscox Plc issued a statement indicating that its preliminary loss estimates from Hurricane Rita are around $70 million. Hiscox also said that, based on current industry overall loss estimates of around $45 billion it has increased its estimates of losses from Hurricane Katrina to $110 million from $100 million.
“We continue to work at quantifying more accurately the losses from Hurricanes Katrina and Rita,” said the bulletin. “Very few loss advices have been received to date, so current estimates remain uncertain.”
Hiscox indicated that the “size of this loss reflects retentions which Syndicate 33 has before the reinsurance programme is effective. The loss should not materially impact the programmes so there is a good measure of reinsurance left for the rest of the year.” However the company said that based on these loss estimates its pre-tax profit for the year ending December 31, 2005 would be reduced by 25 million pounds ($44 million).
The bulletin also noted: “This update is being given before the end of the Hurricane season and our full year result will depend on further hurricane activity and other potential claims in the remainder of the year. Following Hurricanes Katrina and Rita, Hiscox Global Markets, the international business trading through Lloyd’s, is seeing good rate rises in many of its core classes of business. In particular the energy and reinsurance accounts have the potential for substantial increases.”
As a result Hiscox said it has decided to increase the 2006 premium limit for its Lloyd’s Syndicate 33 from 775 million pounds ($1.37 billion) to 833 million pounds ($1.47 billion) “subject to Lloyd’s approval.” The decision reverses Hiscox earlier plan to reduce its 2006 premium limit for Syndicate 33 to 650 million pounds ($1.15 billion).
Chairman Robert Hiscox commented: “The strong first half of the year has been followed by a second half of well documented hurricane losses. Feast generally follows famine in the insurance world and we believe that rates will increase substantially in the reinsurance, marine and energy areas, and will remain firm in other areas. Our experienced teams intend to take full advantage.”
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