Hiscox hit by a £100m loss in Chile chaos

INSURER Hiscox has estimated it will record a net loss of £100m as a result of last month’s Chilean earthquake and Xynthia wind storm.

The Bermuda based company said the losses fell within its budget and that it had sufficient reinsurance cover should other similar disasters occur.

Chief executive Bronek Masojada said the company felt positive about its profits after coming into the year with a strong balance sheet.

Hiscox was exposed to both catastrophes through its global and regional reinsurance business despite not having any specific Chilean underwriting programmes or any direct insurance exposure.

The company expects the losses will result in the firming of some reinsurance rates.

The insurance market has estimated losses for the devastating South American earthquake of between $2bn (£1.32bn) and $10bn.

The 8.8-magnitude earthquake has been earmarked as one of the most powerful earthquakes in history and killed hundreds of people.

Likewise, estimated losses connected to the Xynthia storm, which hit continental Europe late in February and killed more than 50 people, would fall between $2bn and $4bn, it said.

Similar estimations were reported by rival Swiss Re, which guessed the Chilean earthquake would cost the insurance industry $7bn.

The global reinsurer said it is likely to become one of the most expensive events for the global insurance industry.

Hiscox’s UK and European arms cover insurance for businesses and high-net worth individuals.

Half-year pre-tax profits for 2009 were up 29.5 per cent to £141.4m.