IFICANT catastrophes during the first half of the financial year, including the Chilean earthquake and the BP Gulf of Mexico oil spill, have sent profits on a downward spiral at insurers Hiscox and Amlin.
Bermuda-based Hiscox saw first half year pre-tax profits slide to £97.2m from £141.4m after the insurer took a £100m hit from the Xynthia windstorm in Europe, the Chilean earthquake and last year’s cold winter in the UK, which significantly impacted the insurance industry as a whole.
Hiscox is also exposed to the BP oil spill, but estimates that the Gulf clean up is likely to cost it less than £10m in claims.
“Hiscox is defensively placed for these market conditions with a robust book of reinsurance balanced by growing specialist business,” said Hiscox chairman, Robert Hiscox.
Combined ratio, which measures an insurer’s profitability, at the Lloyd’s of London group rose to 94.8 per cent from 78.6 per cent. A combined ratio larger than 100 per cent indicates an insurer is paying out more than it is receiving.
Meanwhile, rival Amlin was hit by $190m (£122.3m) in catastrophe claims for the period ending 30 June, marking a significant increase from the same period in 2009 when the group only saw $57m in claims.
The rise in losses caused profits to fall to £107.6m from £177.1m.
Amlin chief executive Charles Phillips said: “These results, after significant first half catastrophe losses, again demonstrate the robustness of our business model.”
The group’s combined ratio rose to 88 per cent from last year’s 73 per cent, while its underwriting contribution fell from £135.3m to £100.1m.
However, Amlin has seen its gross written premium climb by 54 per cent to £1.4bn, mainly driven by its acquisition of Amlin Corporate Insurance. Hiscox reported a slight decrease in written premiums from £906m to £904.3m.
Both insurers posted an increase in dividend payouts to shareholders, with Hiscox boosting its payment by 11 per cent to 5p and Amlin hiking its dividend by 10.8 per cent to 7.2p.
Hiscox said: “When the market turns and interest rates rise we will have another surge of growth.”