(Reuters) – The British insurance company Hiscox reported a huge loss for 2020 after a jump in claims from companies disrupted by the COVID-19 pandemic and also faces "trademark damage" from a legal dispute over policy formulations for pandemic-linked claims.
Hiscox shares fell 13% to the bottom of the British mid-cap index 0923 GMT.
The company lost a high-profile lawsuit in January due to policy formulation and has set aside $ 475 million for pandemic-linked claims.
Suspension and abandonment of events are expected to account for the largest share of claims, followed by business interruptions, the company said.
In the court case, Hiscox and other insurers had argued that many business interruption policies did not cover disruptions. caused by government measures to fight the virus.
"Hiscox has undoubtedly suffered some trademark damage this year," the company said.
The insurer, which raised its estimate for business interruption claims by $ 48 million to almost $ 1
CEO Bronek Masojada told Reuters that Hiscox had paid claims "running into millions" so far.
Regret & # 39; "Anxiety"
"We clearly deplore the uncertainty and anxiety that the dispute has caused our customers," the company said, adding that it addressed issues related to the clarity of policy formulation.
"Policy alignment must be limited to ensure that it There is not a long tail of wordings that serve a very small number of customers.
For 2020, Hiscox reported a pre-tax loss of $ 268.5 million compared to a profit of $ 53.1 million the year before. The company said it would have made a profit of $ 207 million without the pandemic.
The company, which did not pay a final dividend for 2019 or 2020, said it had decided not to pay a final dividend for the year.
"Overall, we believe the recovery on Hiscox will take a little longer," JP Morgan analysts wrote in a note while maintaining their "neutral" rating on the stock.
Hiscox said it planned to reshape its broker channel book by leaving responsibility for clients with revenues over $ 100 million, while changing its cyber book to respond to unfavorable ransomware trends.
It said the changes would lead to a one-time reduction of $ 200 million in Hiscox retail premiums.
Hiscox also said it was committed to reducing and eliminating its exposure to coal-fired power plants and coal mines by 2030 and reducing its exposure to companies involved in producing landmines.
More insurance and risk management news about the coronavirus crisis here.