Hiscox caps likely war losses at $40m on ‘significant’ reinsurance

Hiscox could escape the war in Ukraine for as little as $40 million, net of reinsurance, already written into loss reserves in the first quarter, officials claimed.

Reported losses to date are “minimal” and the $40 million ticket is “our best estimate, our view as the situation stands,” chief underwriting officer Joanne Musselle (pictured) told the company’s Q1 investor call. The “vast majority” of the sum sits on the IBNR account.

“The book is reinsured and we believe our loss estimate is robust,” interim CFO Liz Breeze added for participating investors and analysts. “We use significant reinsurance and our net exposure is modest.”

Reinsurance is said to include both quota share and excess of loss to reduce net exposure.

Losses will arrive chiefly through the political violence, war and terror portfolio written in London and, to a lesser extent, through the Re & ILS division. Those policies typically cover damage and business interruption to multi-nationals with physical assets in Ukraine. Marine also kicks in a “modest” exposure.

Aviation is included in the count, but considered fractional, Musselle noted under questioning.  Hiscox exited primary aviation coverage in 2018, although the reinsurance book holds “modest” levels of whole account coverage including “some cases” with aviation hull.

Hiscox London Market exited the political risk / trade credit business in 2017 with no residual exposure.

Cyber threats have yet to reveal themselves amongst indirect consequences of the war.  “We see actually no unusual claims activity in Q1,” Musselle said. “But the situation is still heightened for cyber.”

Sanctions are expected to take less than $20 million from the top line in FY2022 after having taken $4.4 million in Q1.

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