Forecasts & Results

Hiscox Ltd releases 1Q23 trading statement

Posted 04/05/2023 – Quick takes

Hiscox Limited (the listed plc) has released its trading statement for the 3 months ending 31st March 2023.

  • Insurance contract written premiums increased by 7.4% in constant currency to $1,420.2 million (2022: $1,363.7 million), underpinned by an attractive rate environment across all business segments.
  • Hiscox Retail insurance contract written premiums increased 6.5% in constant currency to $681.3 million (2022: $670.2 million), driven by continued strong growth in Europe and solid performance in the UK and US.
  • US DPD, as expected, showed accelerating momentum in the direct business, while overall growth temporarily moderated, in line with previous guidance, to 6.8%, as their partnership business embeds on the new technology. Momentum is expected to build through the year towards the middle of the 5% to 15% range, as previously communicated
  • Hiscox London Market returned to good growth, notably in major property, marine and terrorism, with insurance contract written premiums up 8.6% to $320.8 million (2022: $295.3 million). Given the attractive and improving market environment they have retained more risk resulting in net insurance contract written premiums growth of 21.6%.
  • Hiscox Re & ILS achieved excellent growth with net insurance contract written premiums up 37.6%, as they deployed additional organically generated capital to take advantage of the market hardened materially in the lead up to the January 2023 renewal season. Insurance contract written premiums grew 5.0% to $418.million (2022: $398.2 million), lower than net growth, mainly due to the market-wide subdued ILS capital appetite, as they saw net outflows of $148.4 million in the quarter.
  • Investment result was $98.1 million (2022: loss of $119.4 million), as they start to see improved investment returns on their bond portfolio with the bond reinvestment yield at 5.1% on 31 March 2023
  • Group claims performance is in line with their expectations.
  • The Group remains well capitalised, enabling us to continue to deploy capital into the highly attractive (re)insurance market(s).


The rate environment remains favourable across all Hiscox businesses, with particularly attractive rates in reinsurance which in turn supports rate strengthening in primary property insurance. Hiscox Re & ILS benefitted from an average risk-adjusted rate increase of 41% in the first quarter. Since 2017, this business has achieved cumulative risk-adjusted rate increases of 116%. The reinsurance marketplace is undergoing a seismic shift, triggered by a combination of factors including continued capacity reduction in traditional and ILS markets, an inflationary environment and recent heightened catastrophe losses. At the January renewals, their reinsurance business benefitted from the best market conditions in over a decade. They achieved risk-adjusted rate increases of 45% in property and 26% in specialty, with rate improvement in all lines of business. The favourable market conditions have created the opportunity to refine the profile of business they are writing, through moving up the layers in towers at the same time as increasing net limits, and reducing exposure to aggregate covers where experience has been highly attritional. For the April 1 Japanese renewals rate increases were approximately 20%, having already undergone material re-rating following wind loss activity in 2018 and 2019. Their existing market share coming into this renewal season was in line with their targets, as a result the positive rate environment in Japan was used primarily as an opportunity to move up the reinsurance programmes, further away from attritional layers, rather than increasing  exposure, and consequently they have seen minimal premium growth, but continued growth in expected profitability.  They remain optimistic about the reinsurance rate environment and expect the hard market conditions to persist throughout the remainder of 2023, and into 2024.Hiscox London Market benefitted from an average risk-adjusted rate increase of 10%, as the hard reinsurance market is driving improving rate momentum in property (household up 25%; major property up 23%) and in specialty (terrorism up 14%). Overall, since 2017, the London Market portfolio has achieved cumulative rate increases of 86%. In 2023, casualty rates are softening with D&O rate declining 11%, driven by increased capacity and reduced IPO activity. This business class however, remains attractively priced, having achieved cumulative rate increases of over 180% since the end of 2017. In D&O they are seeing a significant rate differentiation between primary and excess of loss, with the rate competition intensifying as you go higher up the programmes. Their D&O underwriting strategy is to write profitable business by focusing on primary and lower layers of excess of loss, where risk-adjusted rates remain attractive. As communicated in March they expect premiums written to decline in the casualty division given pricing dynamics, although more than offset by growth in Property and Marine Energy.

Hiscox Retail, their less cyclical business, benefitted from an average rate increase of 7% in the first quarter. This was led by Hiscox USA where on average rates were up 9%, with strong momentum in cyber, allied health as well as DPD general liability. Hiscox UK saw rate increases of 8% on average, with double digit growth in cyber, commercial property and household. Hiscox Europe achieved an average rate increase of 5%.

Aki Hussain, Chief Executive Officer, Hiscox Ltd, commented: “We are seeing positive momentum across the Group. For our Retail businesses, growth momentum in the UK and US is accelerating in line with expectations, and Europe continues to deliver strong double digit increases. Hiscox London Market and Hiscox Re & ILS continue to thrive in very favourable market conditions, growing top line and materially increasing net retained premium, as we deploy our own capital to make the most of the opportunity. This combined with a much improved investment result, means the outlook for the half year is positive.”

Alpha comment

Hiscox is benefitting from the markedly improved (and ahead of expectations) rating conditions across almost all line of business, with Hiscox London Market and Hiscox Re & ILS benefitting the most, the areas which are represented in syndicate 33 and SPA 6104. This has encouraged Hiscox to increase their net exposure, which is their normal tactic in a strong market. Hiscox London Market has had favourable claims experience in the first quarter of 2023, with no material claims in the period despite several large losses within the industry, particularly in the energy sector. The reinsurance market saw an active first quarter in terms of large loss activity, but Hiscox reports that natural catastrophe losses were in line with expectations and budget. Reserves from all risks in the Ukraine and Russia remains unchanged at $48m net of reinsurance, with happily no direct exposure to aviation. We consider this to be a very encouraging first quarter trading statement from Hiscox.

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