SUPERSTORM Sandy won’t put insurers’ finances under severe strain, and may allow them to push through a profit-boosting rise in prices next year, Hiscox, the biggest London-listed reinsurer, said yesterday.
Sandy killed at least 113 and caused severe damage across a swathe of the north-eastern United States including New York last week. According to early estimates, insurers face a claims bill of up to $20bn, potentially making Sandy the US’s fourth-costliest natural catastrophe ever.
But the industry should be able to cope, as the storm falls well within the range of catastrophe scenarios insurers use to test their balance sheets, Hiscox chief executive Bronek Masojada said: “It’s within the zone of what we model for this sort of thing, which is why it’s going to be manageable for us and for the rest of the industry as well,” Masojada said.
Insurers are well equipped to absorb claims from Sandy because a relative absence of big natural disasters over the first ten months of the year has left them with abundant cash reserves. “We see the UK stocks making good profits this year despite Sandy,” said Numis Securities analyst Nick Johnson.
Hiscox is the first of five London-listed insurers and reinsurers operating in the Lloyd’s of London market to give a trading update since Sandy struck on October 30.