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MarketScreener Homepage  >  Equities  >  Xetra  >  Hannover Rück SE    HNR1   DE0008402215

HANNOVER RÜCK SE

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Insurers are trying to escape COVID-19 liability, watchdog tells UK Supreme Court

11/18/2020 | 02:54am EST
FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in Manchester

LONDON (Reuters) - Insurers are trying to escape liability for pandemic-related business losses with counter-intuitive arguments that go against the essential purpose of insurance, Britain's markets watchdog told the UK Supreme Court on Tuesday.

A lawyer for the Financial Conduct Authority (FCA), which brought a test case against insurers on behalf of policyholders, said insurers had reached an "extraordinary conclusion" that business losses were largely uncovered during the coronavirus pandemic because of the widespread havoc it has caused.

"(Insurers) are saying: 'We insure perils but not ones that are going to cost us a huge amount of money. We never contemplated that'. Well, that isn't an answer," Colin Edelman, the FCA's lawyer, told the second day of a four-day appeal, watched by thousands of businesses brought to their knees during the pandemic.

Small businesses from holiday cottage firms to restaurants and night clubs had to shut down or restrict trading after government-ordered lockdowns and say they face ruin after insurers rejected claims for business interruption cover.

The case revolves around whether 21 policy wordings, affecting potentially 700 types of policies, 60 insurers, 370,000 policyholders and billions of pounds in claims, should cover disruption caused by responses to the virus.

The wordings cover business interruption when insured premises cannot be accessed because of public authority restrictions, in the event of a notifiable disease within a specified radius and hybrid wordings.

Tuesday's hearing focused on how insurance law clauses, such as a so-called "but for" test, disease, composite peril, prevention of access and trends, should be applied in the case.

A lower court in September found largely in favour of the FCA and the Hiscox Action Group, a policyholder action group that represents hundreds of policyholders that has joined the lawsuit, when judges ruled some insurers were wrong to reject claims.

But the FCA, the action group and six insurers -- Arch, Argenta, Hiscox, MS Amlin, RSA and QBE -- are all challenging elements of the ruling they lost.

Insurers, which have said they are paying valid claims, argue that most disease or "prevention of access" clauses in insurance policies do not cover the pandemic and that any pay-outs should reflect the wider economic downturn caused by coronavirus.

"An expansionist approach to the construction of insurance clauses is ... not an appropriate or principled solution," John Lockey, a lawyer representing Arch, told the hearing.

Jonathan Gaisman, a lawyer for Hiscox, said prevention of access clauses were designed only for closure by a public authority in situations specific to a business premises, such as the presence of rats or mice, food poisoning or drainage problems, as well as certain diseases.

"Lockdown in the case of a worldwide pandemic is totally different," he said.

(Reporting by Kirstin Ridley and Carolyn Cohn. Editing by Jane Merriman)

By Kirstin Ridley and Carolyn Cohn


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ARCH CAPITAL GROUP LTD. -3.08% 33.31 Delayed Quote.-7.65%
HANNOVER RÜCK SE -2.06% 132.8 Delayed Quote.1.92%
HISCOX LTD -1.86% 974.4 Delayed Quote.-2.33%
QBE INSURANCE GROUP LIMITED 0.12% 8.45 End-of-day quote.-0.94%
RSA INSURANCE GROUP PLC -0.03% 676.8 Delayed Quote.-0.09%
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Financials
Sales 2020 24 439 M 29 740 M 29 740 M
Net income 2020 844 M 1 028 M 1 028 M
Net Debt 2020 3 200 M 3 894 M 3 894 M
P/E ratio 2020 18,9x
Yield 2020 3,49%
Capitalization 16 015 M 19 495 M 19 489 M
EV / Sales 2020 0,79x
EV / Sales 2021 0,67x
Nbr of Employees 3 083
Free-Float 49,8%
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Mean consensus HOLD
Number of Analysts 21
Average target price 151,54 €
Last Close Price 132,80 €
Spread / Highest target 40,8%
Spread / Average Target 14,1%
Spread / Lowest Target -25,5%
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Managers and Directors
NameTitle
Jean-Jacques Henchoz Chief Executive Officer
Torsten Leue Chairman-Supervisory Board
Clemens Jungsthöfel Chief Financial Officer
Herbert K. Haas Member-Supervisory Board
Erhard Walter Schipporeit Member-Supervisory Board
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