UK Insurer Hiscox Reports 2020 Loss on Cost of COVID Claims, Biz Interruption Ruling
Britain’s Hiscox swung to a big loss for 2020 and continued to withhold its dividend, following a spike in business insurance claims from the COVID-19 pandemic, sending its shares down about 10%.
The company, which lost a high-profile court case this year over policy wordings related to the pandemic, said it had reserved $475 million for pandemic-linked claims.
Event cancellation and abandonment is expected to account for the biggest share of claims, followed by business interruption (BI), Hiscox added.
In its court case, Hiscox and other insurers had sought to argue many BI policies did not cover disruption after government measures to curb the virus.
“Hiscox has undoubtedly suffered some brand damage this year,” the British company said.
Hiscox, which raised its estimate for BI claims by $48 million to nearly $190 million after the verdict, said it was now paying covered claims as quickly as possible.
While insurers have begun making interim payments or settlement offers to companies upended by the global health crisis after the case, concerns have been raised about low payouts, with one business offered as little as 13 pounds by Hiscox.
For 2020, Hiscox posted a pre-tax loss of $268.5 million versus a profit of $53.1 million a year earlier, adding it would have made a profit of $207 million without the pandemic.
The company said it planned to reshape its broker channel book by exiting liability business for customers with revenues over $100 million, while also altering its cyber book to respond to adverse ransomware trends.
It added that the proposed changes would lead to a one-time $200 million reduction in Hiscox Retail premiums.
Hiscox said it was committed to reduce and eliminate by 2030 its exposure to coal-fired power plants and coal mines, as well as cutting its exposure to companies involved in producing landmines.
(Reporting by Muvija M in Bengaluru and Carolyn Cohn in London; editing by Rashmi Aich and Edmund Blair)