Lloyd's insurer seeks opportunities from financial chaos
Hiscox is to increase the capacity of Syndicate 33 and is set to launch another syndicate to take advantage of opportunities arising from the recent financial chaos.
The insurer said it would raise the capacity of Syndicate 33 to £750m. It had planned to decrease the capacity to £550m.
It has also applied to Lloyd's to start a new wholly owned Syndicate 3624 which will have a capacity of £60 million.
Hiscox said the recent turmoil in the financial markets had provided opportunities given its strong balance sheet.
The company added: "We paid off all outstanding debt earlier in the year and our total invested assets at 30 June 2008 were £1.9 billion, on which the investment return for the nine months ending 30 September 2008 was -0.1%.
"The recent weakness of sterling against the US dollar has led to material currency gains for the Group increasing our profits and net asset value per share. Gains on the capital of our Bermudian and Guernsey insurance companies (at 30 June 2008 a total of $830m) will be accounted through our balance sheet. Gains on other dollar assets and income will be treated as trading profits and will be accounted through the profit and loss account."
Hiscox estimated the claims incurred from Hurricanes Gustav and Ike would be $25 million and $150 million, respectively (both figures are net of reinsurance and reinstatement premiums). These estimates are based on industry losses of $2.75 billion for Gustav and $17.5 billion for Ike.
Currency gains currently outweighed any effect from the hurricanes on its forecast underwriting profit and should overall have a positive impact, the company said.
