Catastrophes send Hiscox’s profit reeling

LLOYD’S insurer Hiscox yesterday attributed a 34 per cent fall in its 2010 pre-tax profit to devastating earthquakes in Chile and New Zealand.

Full-year profit slid to £211.4m from £320.6m in 2009 as disaster claims rose to £165m in the year.

“Mother Nature has well and truly tested us this year,” chairman Robert Hiscox said.

But profits almost doubled in its UK and European businesses, which focus on small commercial enterprises and retail products, to £39.6m from £20.6m in 2009.

Chief executive Bronek Masojada told City A.M.: “Despite paying out £165m I think the catastrophe loss is fine as long as the business is written at the right price. I’m not complaining,” he said.

Gross premiums stayed static at £1.43bn as the firm reduced premium income in areas such as US property and the London market.

Masojada said he expects five to 15 per cent growth in the UK and Europe this year, while catastrophe and reinsurance rates also remain healthy.

Hiscox expects its losses from the earthquake that hit Christchurch in New Zealand last week to be “of similar or greater magnitude” to the £37m loss it took from the quake last September. The Chilean earthquake in February, which had a magnitude of 8.8, also hit the business hard.

Its combined ratio stayed under 90 per cent, though it rose to 89.3 per cent from 86 per cent in 2009.