Forecasts & Results

Hiscox Syndicate 33 and SPA 6104: 2019 Results, Updated 2020 Forecasts and Initial 2021 Forecasts

Posted 04.03.2022 – Quick takes

Hiscox Ltd has released the following results for the 2019 year of account, updated forecasts for the 2020 year of account and initial forecasts for the 2021 year of account for Syndicate 33 and SPA 6104.

Syndicate 33
The 2019 result of -1.5% of capacity is a marginal improvement on the midpoint of the previous forecast range, which was set between -7.0% and +3.0% (midpoint -2.0%) of capacity.

The 2020 forecast range has worsened to between -8.2% and +1.7% (midpoint -3.25%) of capacity, the previous forecast range between -8.0% and +2.0% (midpoint -3.0%) of capacity.

The initial forecast for 2021 is a range of between -2.6% and +7.4% (midpoint +2.4%) of capacity.

SPA 6104
The 2019 result of +1.9% of capacity is a significant improvement on the better end of the previous forecast range, which was set between -20.5% and -10.5% (midpoint -15.5%) of capacity.

The 2020 forecast range has improved to between -12.4% and -2.4% (midpoint -7.4%), the previous forecast range was between -20% and -10% (midpoint -15%) of capacity.

The initial forecast for 2021 is a range of between -22% and -12% (midpoint -17%) of capacity.

Alpha comment

The result for 2019 of a small loss compares with a forecast loss of -8.5% at the 18 months stage, which has improved quarter on quarter since. The final result includes prior year releases of £50m, far more than we saw released on the close of the previous two years, in line with the Hiscox Plc reporting of releases from substantial held reserves for major losses. The forecast for the 2020 year of account has marginally deteriorated this quarter, but the year may still be able to produce a reasonable result if it develops in a similar way to 2019. With a much-improved rating environment and an improved portfolio mix, the early forecast of a small midpoint profit for 2021 should hopefully be the floor that is achievable for this year of account.

The initial forecast for SPA 6104 for 2019 was a loss of -90%. This has proved to be so over-estimated and made Alpha lose faith in the management of this sidecar and withdraw our capital support. The ultimate result, a small profit, shows quite how exposed the SPA was to the Japanese losses of Faxai and Hagibis which have ultimately proved to be less than originally feared. The SPA also benefitted from large prior year releases from reserves of major losses held on older years. Which such a swing from an initial forecast to an ultimate result, it gives us little idea of what to expect the 2020 and 2021 years will ultimately close at.

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