March 2, 2020 / 8:07 AM / a month ago

Insurer Hiscox's premiums jump, sees small coronavirus-related claims

(Reuters) - Shares in insurer Hiscox (HSX.L) surged on Monday after it reported a rise in annual premiums though pretax profit plunged, and said its exposure to event cancellations due to the coronavirus outbreak was manageable.

Global insurers face a heavy bill if the outbreak leads to the cancellation of the Summer Olympics in Tokyo, with estimates of the cost of insuring it running into billions of dollars.

Hiscox, which last month said that it did not have a significant exposure to major events in China, said it was too early to estimate the impact of the virus, but added it had received small claims relating to the outbreak to date.

It said the main areas of potential exposure for Hiscox are event cancellation, travel and personal accident cover.

The company has had a few small claims in travel so far but nothing too material, Chief Executive Bronek Masojada told Reuters after the company released its annual results.

“There have been some conferences and so on cancelled as a result of coronavirus but we have not had any exposure to the events which have been cancelled thus far,” Masojada said.

“We have exposure in the future, but it is all quite manageable for us, we are not too worried about the impact from a pure loss perspective.”

Hiscox, part of the oldest insurance market in the world, also said that the pandemic is only covered in a very small part of its portfolio.

Its share price jumped 8% to top gainers on the FTSE 250 midcap index .FTMC and was set for its best day in over a decade, after the company reported a 7% rise in gross written premiums to $4.03 billion for the year ended Dec. 31.

The coronavirus, which was identified in China late last year, has quickly spread to dozens of countries, claiming about 3,000 lives and disrupting global business supply chains.

Britain has so far confirmed 36 cases of the virus, which has killed almost 3,000 people worldwide.

Hiscox posted an expected drop in 2019 pretax profit to $53.1 million from $135.6 million as it paid out hefty claims due to damages from hurricane Dorian and typhoons Hagibis and Faxai.

The company, which underwrites a range of risks including fine art, classic cars, kidnap and ransom, said combined ratio jumped to 105.7% from 94.9%. A ratio above 100% indicates an insurer is receiving less in premiums than it pays out in claims.

But the company reported an investment return of $223 million for 2019, much higher than the $38.1 million it posted a year earlier, thanks to higher interest rates.

“There is speculation that they (central banks) will reduce interest rates again but we feel very protected… at the moment, I am not worried about the credit position of the portfolio,” Masojada said.

Reporting by Muvija M in Bengaluru; Editing by Saumyadeb Chakrabarty and Emelia Sithole-Matarise

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