Forecasts & Results
Hiscox Ltd releases 2Q23 trading statement
Posted 09/08/2023 – Quick takes
Hiscox plc has released a trading statement for H1 2023 ending 30th June 2023. These figures are reported under IFRS 17, the new reporting standard so may look a little different from usual.
Main highlights from the statement:
- Insurance contract written premiums (ICWP) increased by 6.3% in constant currency to $2,723.3m (H1 2022: $2,617.2m), lower than net ICWP, as expected at this point in the cycle.
- Insurance service result (or underwriting profits) increased by 57.9% to $221.4m (H1 2022: $140.2m) from a combination of disciplined growth and margin expansion in a favourable underwriting environment.
- Retail ICWP of $1,271.0m (H1 2022: $1,237.7m) increased by 5.5% in constant currency, underpinned by strong growth in Europe and improving momentum in the UK and US DPD. US DPD ICWP grew 7.8%, with growth accelerating from 6.8% in the first quarter to 8.9% in the second. Continue to expect US DPD growth towards the middle of the 5% to 15% range in 2023. Overall retail growth temporarily tempered by deliberate actions not to prioritise growth at the expense of quality of earnings – full year headline retail growth to be in line with the half year trend.
- Retail combined ratio of 93.8% (H1 2022: 94.4%) on an undiscounted basis. 90% – 95% IFRS 4 range equivalent to 89% – 94% under IFRS 17 on an undiscounted basis.
- Hiscox London Market had a strong first half, with net ICWP increasing by 14.2% to $443.4m (H1 2022: $388.2m), driven by attractive rates in property, as well as new business growth in upstream energy and marine. An undiscounted combined ratio of 83.7% (H1 2022: 87.9%), demonstrates our focus on profitable growth.
- Hiscox Re & ILS has continued to benefit from the hard market conditions, deploying incremental capital to grow exposure and improve the quality of the book. Net ICWP increased by 17.9% to $345.1m (H1 2022: $292.8m), underpinned by strong double-digit growth in the North American natural catastrophe, retrocession and marine books. An undiscounted combined ratio of 81.2% (H1 2022: 92.8%), 11.6 percentage point improvement on prior period reflects quality of growth being achieved.
- Profit before tax increased by $239.4m to $264.8m (H1 2022: $25.4m).
- Total net reserves for loss events in H1 2023 are in line with our expectations and large losses are within budget.
- The Group remains conservatively reserved with a confidence level of 77% (FY 2022: 78%), within our target range of 75% to 85%.
- Strong capital position, with an estimated Bermuda Solvency Capital Requirement (BSCR) of 199%, in line with the full year 2022 result, despite having deployed capital into the favourable market conditions which continue to persist.
- Positive investment result of $121.8m (H1 2022: loss of $214.1m).
- High quality portfolio positions Hiscox well to deliver high quality growth and earnings.
Aki Hussain, Chief Executive Officer, Hiscox Ltd, commented:
“Our business has delivered growth in revenues and profits in every business unit, as our proactive and disciplined underwriting and favourable market conditions come together. Our portfolio of businesses, our people and innovation to meet the changing needs of our customers position us well to continue delivering high-quality growth and earnings.”
Alpha comment
These are encouraging numbers from Hiscox and show continued growth from the first quarter trading statement, with Hiscox London Market and Hiscox Re & ILS benefitting from strong rating conditions, the divisions which are represented in syndicate 33 and SPA 6104. Combined ratios are showing improvements due to these improved rates and the low level of loss activity in the first half of the year. The investments are also performing well which should contribute to our ultimate result as members for the 2021 year of account. The improving group figures are reflected in the quarterly syndicate figures, which show continuing improvement year on year.
