Hiscox is in danger of dropping out of the FTSE 100 later this week following a spate of weather catastrophes that have dented the insurer’s balance sheet.
The blue-chip insurance giant looks set to lose its membership on Wednesday, with Easyjet expected to fill its spot on the back of lower costs and higher capacity.
Hiscox recently said it would set aside $165m to cover probable insurance claims from the destruction caused by three devastating storms.
In the FTSE 250, Card Factory and Riverstone Energy face demotions, while both C&C Group and Helios Towers are forecasted to join the mid-market index.
“Hiscox may have the FTSE 100’s longest-serving chief executive, as Bronek Masojada has held the post for almost 20 years, but the Lloyd’s of London insurer looks set for a brief initial stay in the index as the latest quarterly reshuffle looms next week,” according to Russ Mould, AJ Bell investment director.
He added: “The specialist underwriter of catastrophe, property and marine insurance only joined the UK’s elite equity benchmark a year ago but its £3.7bn market capitalisation means it looks set for an automatic exit, to be replaced by easyJet, which is set to return to the FTSE 100 after an absence of just six months.”
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Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: ““An increase in claims in the US together with major weather events, such as the Japanese Typhoon, have blown a hole in insurer Hiscox’s bottom line.
“Unfortunately getting back on track looks set to take longer than some might have hoped, with combined operating ratios not set to return to their previous range until 2022.
“The good news is premiums have continued to grow, but that’s unlikely to offset the headwind from increased claims in the short term.”