LLOYD’S insurer Hiscox has slipped to a £85.6m first-half pre-tax loss but said it was “a reasonable result in the circumstances” due to huge catastrophe losses.
Hiscox, which insurers US property, oil rigs and political risks among others, said it was holding £210m in reserves against claims relating to disasters in the first half such as earthquakes, tornadoes and floods.
Hiscox chairman Robert Hiscox said the past six months had been “tumultuous” but the rest of the year and beyond should see the industry become more profitable.
“Rates are rising in the affected areas and a further loss in the second half of the year should accelerate that rise. History tells us that feast always follows famine in the insurance business,” he said.
The loss was down from a £97.2m profit in the first half of last year as its combined ratio, a measure of premiums to claims, soared from 93.6 per cent to 117 per cent.
But the insurer said it had raised its dividend two per cent, in line with its progressive dividend policy, and said its UK retail operation had performed well, helping to protect it from the worst of the catastrophe-related volatility.
“The strategy of building retail businesses to soften the blows of such a period is vindicated by a sterling result from our UK regional business,” Hiscox said.
It cut its level of gross written premium in the first half, to £847.5m from more than £900m in the first half of 2010, as it shied away from unprofitable business.