Forecasts & Results
Hiscox group results improve for 2021, despite elevated natural catastrophe losses
Posted 02/03/2022 – Quick takes
Hiscox plc has this morning released its 2021 financial year group results. Gross written premiums (GWP) for the group increased by 5.9% to US$4,269.2m (vs. FY20: US$4,033.1m), driven by continued positive rate momentum across all three divisions and particularly strong customer growth in the Retail division. Net written premiums (NWP) increased by 17.0% as more risk was retained by the group against a backdrop of improving rate conditions.
The group’s FY21 underwriting profit of US$215.6m (vs. FY20: loss of US$(370.6)m) is the highest it has reported in five years.
GWP for Hiscox London Market (which includes syndicate 33) were up 5.6% and produced a FY21 profit before tax of US$104.8m (vs. FY20: $155.2 million). As with the broader group, net premiums written grew (+9.5% vs. FY20) as more business was retained.
The London market FY21 combined ratio of 89.1% reflects the results of underwriting remediation undertaken to reduce the volatility of returns. Hiscox’s digital product, HiscoxPlus, wrote more than US$100m of GWP.
Hiscox Re & ILS GWP was +8.7% vs. FY20 and NWP was +42.3% vs. FY20. The division also produced an FY21 profit of US$98.5m (vs. an FY21 loss of US$(35.1)m). Prior year reserve releases and an improvement in the performance of the non-catastrophe book meant that the division was able to report an FY21 combined ratio of 68.0%, despite significant natural catastrophe losses globally.
Hiscox Retail FY21 GWP grew 5.0% to US$2.3bn (vs. FY20: US$2.2bn) and was +6.8% vs. FY20 in constant currency terms. There has been a particular focus on the digital channel for distributing its retail products:
The group’s investment return of US$51.2m (vs. FY20 US$197.5m) reflects unrealised losses on the bond portfolio given rising interest expectations.
Aki Hussain, the group CEO of Hiscox since January 2022, said: “I am pleased with the strong results the Group has delivered despite elevated natural catastrophe losses, reflecting successful execution of our strategy, and the management actions we have undertaken to improve the performance and quality of our portfolios.”
Alpha comment
Once again Hiscox London Markets has produced a solid underwriting result for FY21, which bodes well for the ongoing performance of syndicate 33. The dramatic improvement in the Hiscox Re & ILS division is also encouraging, against a backdrop of high natural catastrophe losses, which will benefit both syndicate 33 and SPA 6104. Given the continuing positive rate outlook, for 2022 and beyond, the more balanced and better rated books – particularly in the London Market division – should allow Hiscox to deliver considerably improved underwriting returns to its private capital providers on the open years.
