Dividends Increase Despite Natural Disaster claims

There is no doubt that the first six month of 2010 were challenging for the insurance industry. Hit by serials of natural disasters, such as the volcanic ash and the BP oil spill in the Gulf of Mexico, insurance companies paid huge amounts in claims.

Interim reports published by insurers Hiscox and Amlin show how they have been hit hard by Mother Nature.

Claims from the Chilean earthquake and Windstorm Xynthia had a combined cost to Hiscox of £100 million, similar to Amlin’s losses of $167.7mln(£108 mln) for the Chilean earthquake alone and $2 mln for the Windstorm Xynthia.

Unfortunately, these were not the only disastrous events as a freezing British winter had affected Hiscox’s retail business and resulted in household and motor rates increases.

The insurance industry is yet to comprehend the scale of the BP Oil disaster as claims continue, but the event may actually trigger demand for insurance policies.

Despite all the losses, both companies didn’t do badly after all and declared a reduced, but nevertheless profit. Hiscox announced a pre-tax interim profit of £97.2 million, which is £44.2 mln less in comparison to the results of 2009 and Amlin £107.6 million, which is £69.5 million less than the same time last year.

Investors should be pleased with the increased interim dividend, which was increased by Amlin by  10.8% to 7.2p per share and Hiscox increasing theirs by 11% to 5p a share.

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