Hiscox Predict Catastrophe Rate Increases
Bermuda-based Hiscox, the second-largest Lloyd’s of London insurer by market value, said first-quarter sales fell eight percent amid a “tough” market — but anticipated a rate increase of up to 10 percent in US catastrophe reinsurance business for 2011.
In a statement issued today [May 9], Hiscox said gross written premiums declined to $743.4 million in the year to March 31.
“We continue to underwrite for profit over volume in these tough market conditions,” CEO Bronek Masojada said.
Hiscox said its first quarter began with rate reductions in reinsurance lines but the recent catastrophes have changed the market.
“Reinsurance rates are now back to 2010 levels with increases in some areas, especially in the Asia Pacific,” said the speciality insurer. “We expect increases to become widespread during the June/July renewal period with potential average rate rises of around 10 percent in US catastrophe business, as the market is also impacted by the new Risk Management Solutions [hurricane] model.”
Hiscox’s bottom line, like those of other re/insurers, was hurt by Japan’s earthquake and tsunami, the New Zealand temblor and extensive flooding in Australia. The Japanese natural disasters alone will cost the global industry between $21 billion and $34 billion according to Risk Management Solutions.
Hiscox said its claims estimate for the New Zealand earthquake remain unchanged at 60 million pounds. Its claims estimate for the Japanese earthquake was also unchanged at between $60 million and $150 million.
