29 April 2020Insurance

Hiscox mulls capital raise amid COVID-19 crisis and legal threat

Hiscox has clarified "speculations" regarding a potential capital raise. The announcement comes at a time when the re/insurer is already making headlines for  non-payment of COVID-19 related payouts and facing the  threat of legal action from a group of angry policyholders.

The Bermuda-headquartered re/insurer confirmed Wednesday, April 29 that it is "evaluating possible sources of capital", but insisted that no decision has been made yet.

Hiscox claims that the company has "sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic".

"Hiscox expects the resultant uncertainty arising from the pandemic and consequent capital contraction to result in rates hardening across US wholesale and reinsurance markets. Whilst 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," the company said in a statement.

It added that "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".

The re/insurer recently said that it is withdrawing its 2020 financial guidance in light of the "extraordinary challenges" presented by the pandemic.

Meanwhile, a campaign group representing over 200 policyholders has announced that it is planning a legal action against the re/insurer over unpaid COVID-19 related business interruption (BI) compensation claims, calling it a "disgraceful" attempt to preserve its own balance sheet.

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