Hiscox mulls capital raise
Hiscox is considering raising capital to take advantage of hardening rates in the wake of the Covid-19.
The announcement comes as the company faces potential legal action from hundreds of policyholders who dispute Hiscox’s denial of their coronavirus-related business interruption claims.
The Bermudian-based reinsurer responded today to what it described as press speculation about a potential capital raise.
“The Hiscox board believes the group has sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic,” the company said in a statement.
Hiscox added that it expects the resultant uncertainty arising from the pandemic and consequent capital contraction to result in rates hardening across US wholesale and reinsurance markets.
“While Hiscox’s capital, liquidity and funding positions remain robust, Hiscox is evaluating possible sources of capital to respond in an appropriate way to these market dynamics, which could include raising new equity,” Hiscox said.
“No decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise.”
Analysts from UBS put out a note saying: “We view the timing of this news flow as negative given uncertainty on business interruption remains.”
Last week, Hiscox said it expected to pay net claims of up to $175 million related to the pandemic and is actively settling claims for event cancellation, media and entertainment and travel. However, it insisted the core policy wordings of its business interruption policies do not allow for coverage related to Britain’s Covid-19 lockdown.
More than 300 policyholders have joined the Hiscox Action Group, which has hired a lawyer.
In a statement yesterday, Simon Ager, of the Pinnacle Centre, a member of the steering group, said: “Hiscox’s behaviour has been disgraceful. The policy wording is clear and unambiguous, and the insurance has clearly been triggered.
“In refusing to pay out in a shoddy attempt to preserve its own balance sheet, Hiscox is putting the future of hundreds of British businesses at risk.”
He added that the group was working with London-based Harbour Litigation Funding.
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