Shares in insurance giant Hiscox have slumped after it warned that natural disasters have hit profits in the sector.
Shares in the company fell 5% in early trading on Friday after it said catastrophes such as Hurricane Michael in Florida and Typhoon Jebi in Japan last year helped to deteriorate the global insurance market.
It said the impact of these disasters has turned out to be worse than insurers initially predicted, with loss estimates widening more recently.
Hiscox has therefore increased its reserves to deal with claims relating to natural disasters by 40 million US dollars (£31.9 million).
The company said pre-tax profits for the first half of the year would be between 150 million US dollars (£119 million) and 170 million US dollars (£135 million), but said 150 million US dollars (£119 million) of that will come from investment returns rather than underwriting profits.
It is on target to match the higher end of analysts’ estimates and potentially match the 163 million US dollars (£130 million) pre-tax profit it reported for the first half of 2018.
Hiscox, which is part of Lloyds of London, also forecast 60 million US dollars (347.8 million) more in tax provisions for the period, but said this would not affect its full-year figures.
In a trading update, the company said: “The insurance market has seen continued deterioration from 2018 catastrophe events, including Typhoon Jebi in Japan and Hurricane Michael in Florida.
“The scale of deterioration has been significant, with industry loss estimates having increased materially since these events.”
Shares were down 5% to 1,657p on Friday morning.