LONDON (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.
BUSINESS INTERRUPTED. The pandemic may be the least of Hiscox’s problems. The 3 billion pound insurer, which has set aside $475 million for lockdown-driven business interruption insurance claims, said on Wednesday that its retail business is misfiring and will not return to profitability until 2023, a year later than previously forecast. It also reported a pre-tax loss of $267 million. The news wiped 12% off Hiscox’s share price.
Glitches in its core business may be difficult to resolve. Hiscox’s unit in the United States has been hurt by a wave of liability claims against companies and directors. To avoid any further hits, Chief Executive Bronek Masojada is pulling back from offering this cover to large corporations, a move that is likely to dent future growth. He’s also pushing ahead into the new, less developed cybersecurity market. Despite Wednesday’s fall, Hiscox is still valued at 15 times forward earnings, above the 12 times average of UK peers, according to Refinitiv data. That premium valuation looks increasingly hard to justify. (By Aimee Donnellan)
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