Business insurance providers Amlin and Hiscox, both of which are among the largest insurers of Lloyd’s of London, recently reported that their profits have suffered due to high losses associated with worldwide catastrophes.
While both companies did report losses, each did say independently that, due to their diversified business holdings in the global marketplace, their resiliency is helping both commercial insurance providers cope with the issues.
Amlin reported that it was dealing with £11.2 million in costs related to integration of the purchase of Fortis from its Dutch owners last year in addition to an exchange loss of £17.2 million, where were above and beyond the insurance claims filed by victims of the Chilean earthquake that took place earlier in the year.
Hiscox saw similar losses when its professional indemnity insurance claims rose as a result of its US-based Global Technology company, due to the rising incidence of IT providers being sued by customers dissatisfied by the failure of their newly installed computer systems.
None of the insurers for Lloyd’s of London face an easy 2010 second half; the environment in regards to investment opportunities remains bleak, since their bread-and-butter, the fixed-income market, has consistently been yielding low. Additionally the hurricane season in the US is predicted to be a quite severe one this year.
Hiscox’s chairman, Robert Hoscix, recently stated that many market premiums were actually softening despite these less-than-ideal conditions, saying that risks in big ticket areas are actually turning out to be more competitive than not, despite the low returns on investment and the particularly high financial losses over the first half of 2010.
Amlin’s chief executive, Charles Philips, also remained optimistic in a recent statement. Despite the absolute worst year for the insurance industry in regards to catastrophic event losses in the first six months of any given year, underwriting profits for his group were only lagging behind by £34 million in the first half; but for the terrible events such as the Chilean earthquake, the last six months had been relatively peaceful, he said.
Mr Philips was quick to note that if the extra losses caused by catastrophe claims were stripped from his company’s ledgers, the profits from underwriting would have indeed been higher, showcasing Amlin’s robustness in regards to their business model.