Hiscox Limited releases group 9-month results

Posted 07/11/2021 – Quick takes

Hiscox Limited released its group 9-month results (to 30th September 2021) on 2nd November. Group gross written premiums rose 6.1% to US$3,462.9m on the back of strong rate momentum across all business segments. . Hiscox London Market continues to benefit from aggregate rate increases across the portfolio, with gross written premiums up 7.2%. Net written premiums grew 46.0% in Hiscox Re & ILS, with the group anticipating an improved rate outlook for January 2022 after elevated natural catastrophe losses in 3Q21. Hiscox Retail gross written premiums were up 5.9% (1.4% in constant currency), with the Retail ‘go-forward’ portfolio growing by 5.7% on a constant currency basis, following planned reductions in parts of the US broker distribution channel. The combined ratio in Retail continues to progress in-line with expectations. The group reported an Investment result of US$62.7 million (a 1.2% annualised return), with mark-to-market losses on the group’s bond portfolio (due to rising interest rate expectations) largely offset by interest income received during 3Q21. The group has US$110m (net) reserved for Hurricane Ida based upon an insured market loss of US$35bn plus a US$40m (net) reserved for the European floods based upon an insured market loss of $9bn. The loss ratio beyond natural catastrophes is said to be “favourable.” The Group’s net Covid-19 loss estimate remains unchanged at US$475m for 2020 and US$17m for 2021. Bronek Masojada, the out-going group CEO, said: “Hiscox London Market and Re & ILS are performing strongly and we continue to benefit from excellent growth in our Retail digital business. Our capital position is robust. As I make my last quarterly trading statement as CEO of Hiscox it is pleasing to see the business in such good shape.”

Alpha comment

The third-quarter underwriting performance was unsurprisingly impacted by Hurricane Ida, particularly in the upstream energy account and property business. However, the non-catastrophe experience of the London Market division has continued to be favourable with the London Market result consequentially remaining strong. Although the FY21 COR, excluding COVID and the impact of loss portfolio transfers, was maintained at 97-98% for the group, it would appear that any upwards pressure on this number is coming from the Retail division and not London Market. Certainly, a positive attritional loss trend can be attributed to improved rates, tighter T&Cs and continued re-underwriting remediation, driven by London Market (and to some extent Hiscox Re & ILS). As such, Alpha welcomes these 9m21 results as evidence that Hiscox London Market is continuing to move in the right direction as far as its capital providers are concerned.

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