Rival insurers shake off hit from US hurricanes

The devastation caused by recent hurricanes and storms in the United States, Canada and Europe is expected to inflict losses of as much as $315 million on two leading players in the Lloyd’s of London insurance market.
Beazley said on Wednesday that its assessment of its exposure was continuing. It believed, though, that the hit it would suffer, net of reinsurance, from claims arising from damage in the US caused by hurricanes Helene in September and Milton last month would total between $125 million and $175 million.
Lancashire, another Lloyd’s insurer, told investors that it expected net losses of between $110 million and $140 million from Helene and Milton, as well as from Hurricane Debby in the US in August, a severe hailstorm that battered Calgary in Canada the same month and from Storm Boris, which caused widespread flooding across central Europe in September.
It said that the third quarter had been an “active” period for natural catastrophes and that “loss information after these types of events can take some time to emerge”.
Scientists have warned that climate change is increasing the frequency of extreme weather events. Insuring against natural catastrophe risks is a staple for Lloyd’s, which is the world’s largest and oldest insurance market.
Lloyd’s is made up of independent insurers such as Beazley and Lancashire, which provide cover for everything from cyberattacks to the threat to shipping from piracy. The wider market, which can trace its roots to the 17th century, has also provided more idiosyncratic cover ranging from the legs of Marlene Dietrich, the German actress and singer who rose to fame in the 1930s, to the hands of Keith Richards, the Rolling Stones guitarist.
Beazley, which was founded 38 years ago and is based in London, is valued at £4.9 billion and is a member of the FTSE 100 index. It said that despite the claims it faces from hurricanes Helene and Milton, it still expected to report a combined ratio of about 80 per cent this year, cheering investors who pushed its shares up by 8p, or 1 per cent, to close at 778p. This ratio is a key measure of an insurer’s underwriting performance, with any reading below 100 per cent indicating a profit and anything above a loss.
Shareholders were also buoyed by hints that Beazley may increase the amount of cash it hands back investors. It said that it expected “slightly lower growth” next year and that “capital which cannot be profitably deployed will be returned to shareholders”.
Similarly, the prospect of bumper cash returns sent Lancashire stock up by 41p, or 6.5 per cent, to 670p, valuing it at £1.6 billion, after the insurer said it would hand back $180 million through a special dividend of 75 cents a share.
Like Beazley, the Bermuda-based Lancashire does not expect its catastrophe losses to affect its full-year combined ratio, which it guided would land in the “higher end” of its previously forecast range of the mid-80s. Alex Maloney, chief executive, said the FTSE 250 business was in “excellent shape as we approach the final months of 2024”.
Gross premiums written at Lancashire were up 9 per cent year-on-year to $1.7 billion in the nine months to the end of September. At Beazley insurance written premiums increased 7 per cent to $4.6 billion in the same period.
Adrian Cox, Beazley chief executive, told The Times that it had little exposure to the flooding that had devastated Valencia in Spain in the past week.
Beazley also reported that the severity of ransomware claims in the cybermarket was worsening, with the cost of attacks on businesses rising as incidents became more disruptive.