Hiscox sees Hurricane Harvey claims at $150m

Insurer Hiscox said on Monday that it expects to see claims of around $150m as a result of Hurricane Harvey.

It said this was within the group's modelled range for an event of this nature and added that reinsurance protections remain "substantially intact". The company is exposed through its reinsurance business and through insurance lines, including flood cover for homeowners and businesses.

Hiscox said it had made the estimate based on the assumption of an insurance market loss, excluding the government backed National Flood Insurance Program, of around $25bn.

Chief executive officer Bronek Masojada said: "Insurance exists to help individuals and companies recover from the devastation caused by events like this, and our priority is to pay claims quickly so that they can do that. At the same time, Harvey has also highlighted the lack of flood cover for large parts of the US market.

"2017 will be an expensive year for natural catastrophes but the industry can cope. Insurance remains a cyclical business and after a long period of price reductions, insurance rates in the affected areas and in specific sectors such as large property are likely to increase. In the wider global insurance market for large risks, we expect rates to stabilise and begin to increase."

The insurer said it will announce an estimate of net claims from Hurricane Irma once the impact of that storm becomes clearer.

RBC Capital Markets said the market of loss of $25bn used by Hiscox is at the conservative end of industry loss estimates, excluding NFIP, noting that Risk Management Solutions recently said total insured losses are likely to be between $25bn and $35bn with $7bn to $10bn of this being passed on to the NFIP. This implies a total insured loss range of $15-28bn for the private market, RBC said.

"Flood claims are complicated, and we expect that Hiscox will have taken a conservative view to setting its initial loss pick. However, over time, we would expect this initial estimate to be more likely to develop favourably than unfavourably," it said.

It added that Hurricane Irma is likely to be a less complex loss than Harvey.

"Based on 0.3% market share assumption for Irma, we include a $120m loss expectation for Irma in our estimates on top of the $150m announced for Harvey."

At 1030 BST, the shares were down 3% to 1,214p.