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High spirits in spite of low profits


High spirits in spite of low profits

2011 saw a huge loss for the risk sector with insurers paying out over $350billion to help those in need.  Natural catastrophes meant that 2011 was the costliest year yet for insurers with disasters including floods and mudslides in Brazil, earthquakes and a subsequent tsunami in Japan, and floods in Thailand which have seriously impacted 2012 (you can read our overview of 2011 events here).

As you might imagine, such a large payout has meant a decrease in profit for many insurers.  Hiscox has seen a 92% fall in profits (£17.3 million profit in 2011, compared with a previous figure of £211.4m), but all is not lost.  The leading specialist insurer, who have recently put aside £13million for the sinking of the Costa Concordia, remain upbeat and view any profit at all as a good result.  

Chairman Robert Hiscox said, "We have been well and truly tested by Mother Nature and a small profit is a good result in the circumstances.  By any measurement , it was a phenomenally catastrophic year with definitely more economic damage caused by natural catastrophes than ever before, including the second half of the year - the major international loss from the Bangkok floods."

Hiscox are not alone. German reinsurer Munich Re made a profit of €710m in 2011, down 70% on the €2.4bn profit it made in 2010.  Munich Re estimates its claims costs were €1.5bn each for the earthquakes in Japan and New Zealand. Munich Re chief financial officer Jörg Schneider said in a statement, "Given the huge strains these placed on results, it is a notable achievement that we still posted a profit of €0.71bn."

This year, in spite of last year's losses, we can be confident that the risk sector is both reliable and stable, allowing us to get on with our lives.


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