Forecasts & Results

Hiscox plc has released its group result for the 2023 financial year

Posted 05/03/2024 – Forecasts & Results

Group headline figures

  2023 2022
Insurance contract written premium $4,598.2m $4,355.4m
Net insurance contract written premium $3,555.8m $3,225.5m
Insurance service result $492.3m $360.9m
Net investment return $384.4m -$187.3m
Positive prior year development $122.8m $209.4m
Profit before tax $625.9m $275.6m
Group combined ratio (undiscounted) 89.8% 91.1%

 

Group highlights

  • Insurance contract written premium increased by 5.6% to $4,598.2m (2022: $4,269.2m) on a constant currency basis
  • Record profit before tax of $625.9m (2022: $275.6m), driven by a record net investment return of $384.4m (2022: loss of $187.3m) and an insurance service result of $492.3m which is a 36.4% improvement on 2022 (2022: $360.9m)
  • Group undiscounted combined ratio improvement of 1.3 points to 89.8% (2022: 91.1%)
  • Group Return On Equity (ROE) of 21.8%

 

Aki Hussain, Group Chief Executive Officer, Hiscox Ltd, commented:

“Our business has delivered excellent results, with record profits of $625.9 million underpinned by a 36% improvement in the underwriting result and a record investment income. The Group combined ratio below 90% and ROE of 21.8% have led to very strong capital generation, which we are deploying for further growth in all parts of the business in addition to a special return to shareholders of $150 million.”

 

Hiscox London Market figures

  2023 2022
Insurance contract written premium $1,243.4m $1,114.7m
Net insurance contract written premium $908.5m $789.2m
Insurance service result $176.0m $123.3m
Profit before tax $251.4m $101.0m
Undiscounted combined ratio 83.8% 86.7%

 

Hiscox London Market highlights

  • Insurance contract written premium increased by 11.5% to $1,243.4m (2022: $1,114.7m)
  • Rates increased by +7%, with cumulative rate increases of +70% since 2018
    • Rate increases within the property division continued to lead the way with +26% in property binders, +21% in major property and terrorism +15%
    • These increases were offset by double digit rate reductions in cyber and D&O, however the rate reductions follow significant rate increases in previous years
  • Undiscounted combined ratio improvement of 2.9points to 83.8% (2022: 86.7%) which is the fourth year in a row with combined ratio in the 80s

 

Hiscox Re & ILS figures

  2023 2022
Insurance contract written premium $986.3m $967.6m
Net insurance contract written premium $449.6m $365.0m
Insurance service result $136.1m $55.1m
Profit before tax $221.4m $46.9m
Undiscounted combined ratio 69.8% 85.6%

 

Hiscox Re & ILS highlights

  • Net insurance contract written premium grew by 23.2% to $449.6m (2022: $365.0m)
  • Rates increased by +31%, with cumulative rate increases of +90% since 2018
  • Undiscounted combined ratio improved by 15.8points to 69.8% (2022: 85.6%)

 

Reserves

  • Positive prior year releases were $122.8m (2022: $209.4m)
  • The confidence level of the group’s net reserves has increased by 6points to 83% (H1 2023: 77%)
  • Hiscox has bought a number of Loss Portfolio Transfers (LPTs) in recent years. The LPTs protect 31% of the groups gross reserves and 42% of casualty gross reserves for 2019 and prior years

Alpha comment

This is a very strong set of results reported by Hiscox with record profit and record investment return for 2023 with an undiscounted combined ratio improving to 89.8%. Alpha’s involvement is mostly via the Hiscox London Market division through syndicate 33 which has reported improvements on the combined ratio, profitability and insurance service result. Rate increases of +7% for 2023 within the division is encouraging and signifies the continuous rate improvement within the market.  Hiscox Re & ILS, where we have involvement partly in syndicate 33 and via SPA 6104, has reported a far lower combined ratio, despite an active loss year with a number of weather events, none of which were of significant challenge. Rate increases of +31% for 2023 were welcome. Group reserve releases were $122.8m which were less than 2022, however this was not unexpected, with much of the market reporting shortfalls on their reserves for long tail classes. Hiscox has taken a sensible approach by purchasing LPTs for its casualty portfolio which will help to manage any deterioration. Furthermore, it is very promising to see that the reserve confidence level has increased to 83%.

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