Hiscox’s sales rose to 504.1 million pounds ($751 million) in the first quarter, up 3.6 percent on the same period a year earlier, the Hamilton, Bermuda-based firm said in a statement today. Beazley’s revenue climbed 19 percent to $438.2 million in the period, the Dublin-based insurer said in a statement.
Demand for reinsurance, or insurance for insurers, is increasing as the companies add more high-risk catastrophe related underwriting, particularly in the Gulf of Mexico. Lloyd’s insurers have been hurt this quarter by greater-than- expected claims after February’s earthquake in Chile, European Windstorm Xynthia and an explosion at the Deepwater Horizon oil rig in the Gulf of Mexico last month.
“The capital reserves needed to write catastrophe-exposed business are extremely penal, which has helped raise demand for reinsurance,” said Mark Williamson, a London-based analyst at KBC Peel Hunt Ltd. “We’ve also had a number of incidents this year that have helped to maintain underwriting discipline in the catastrophe market.”
Hiscox estimated in March that claims from the Chilean earthquake and Windstorm Xynthia would be about 100 million pounds. Beazley said it will pay out between $55 million and $75 million for the earthquake.
Losses related to Deepwater Horizon will be less than 10 million pounds for Hiscox and about $6 million for Beazley, the companies said today. Overall losses for the insurance industry will be about $2 billion, Hiscox said.
Lloyd’s of London insurers may have used up more than half of their annual budget for natural catastrophes paying claims for the Chilean earthquake and Windstorm Xynthia, according to Christopher Hitchings, a London-based analyst at Keefe, Bruyette & Woods.