Amid record profits, Hiscox, the Bermudian-headquartered global specialist insurer, has estimated a net loss of about $170 million from the wildfires of the greater Los Angeles area, which it says has caused an estimated industry loss of $40 billion.

AccuWeather has estimated the total economic loss from the 2025 Southern California wildfires at between $250 billion and $275 billion.

In the review of its full year to December 31, Hiscox also reported on the effect of Bermuda’s corporate income tax.

Of the CIT, the company stated: “The group recognised a deferred tax asset of $155 million which would mitigate the cash tax impact over ten years.

“On 15 January, 2025, the [Organisation for Economic Co-operation and Development] published guidance, advising that 80 per cent of the DTA granted under the [Bermuda corporate income tax] will not be recognised for calculating global minimum tax.

“As a result, the group is likely to be obligated to pay additional tax of up to 80 per cent of the DTA, spread over eight years, from 2027.

“Under current International Financial Reporting Standards requirements, the Bermuda DTA must be maintained while it provides a tax benefit in Bermuda, but no offsetting deferred tax liability can be recognised in anticipation of future GMT payable [instead this will be booked as current tax on an arising basis].

“The introduction of [Bermuda’s] CIT and GMT is expected to increase the group’s effective tax rate to a range of 15 per cent to 20 per cent.”

For the year, Hiscox recorded a pre-tax profit of $685.4 million, up 9.5 per cent year-on-year, and [return on equity] of 19.8 per cent (2023: 21.8 per cent).

With respect to the wildfires, the company said: “The start of 2025 saw several wildfires impact the greater Los Angeles area, causing a tragic loss of life and widespread destruction.

“We extend our sympathies to our customers and to all of those impacted by these events.

“The group estimates a net loss from the wildfires of around $170 million, at an industry loss of $40 billion.

“This event is largely a reinsurance loss, with $150 million expected to be recognised in Hiscox Re & ILS, and $10 million in each of Hiscox London Market and Hiscox Retail.

“Our estimate, which will be booked in the first quarter of 2025, includes reinstatement premiums and does not make any allowance for subrogation.”

With regard to the year in review, Aki Hussain, group chief executive, Hiscox Ltd, said: “The group has delivered another set of excellent results and a second consecutive year of record profits.

“Our retail business continues to build broad-based growth and earnings momentum, and our big-ticket portfolio has again delivered an outstanding performance, leading to a strong return on equity in an active loss year.

“This earnings momentum underpins substantial capital generation, creating the flexibility to pursue multiple growth opportunities and return 10 per cent of equity to shareholders through a combination of a 20 per cent step-up in the final dividend per share and a $175 million share buyback.”