Insights
Hiscox 3Q24 trading statement
Posted 07/11/2024 – Insights
Hiscox plc has released its results for 3Q24 ending 30th September 2024
Main highlights
- Insurance contract written premium increased by 3.0% to $3,873m (Q3 2023: $3,759m)
- Total investment return of 4.3% (Q3 2023: 2.8%)
- Natural catastrophe losses and overall claims experience for the first nine months within expectations
- Net loss reserve of $75m for Hurricane Milton in the fourth quarter
Aki Hussain, Chief Executive Officer, commented:
“The Group continues to deliver a solid performance, with our combined focus on building growth and earnings momentum. Our priorities of achieving high quality growth in all markets in our Retail business, and selectively deploying capital into attractive big-ticket lines, are unchanged and we continue to make significant progress against the Group’s strategy to deliver sustainable, less volatile returns while growing the business.”
Hiscox London Market highlights
- Insurance contract written premium decreased by -2.9% to $932m (Q3 2023: $960m) in line with previous indications. Hiscox lapsed some large binders at the start of the year but are also managing the market cycle by redeploying capital into property and crisis management classes that are more attractive than cyber and Director & Officers’ (D&O). Hiscox has also decided to stop underwriting space which was a very small part of the whole premium income
- Average rate increases year to date of +3% with cumulative rate increase of +75% since 2018
- Hiscox’s new AI underwriting solution partnership with Google Cloud is now fully implemented and has helped to quote 70% of in-scope terrorism risks
Hiscox Re & ILS highlights
- Insurance contract written premium increased by 4.3% to $1,018m (Q3 2023: $976m) with the majority of growth in January when market conditions were most attractive
- Rate movements year to date are flat with cumulative rate increases of +90% since 2018
- Hiscox continues to see strong demand from cedants, which is being met by supply
- Positive outlook for the January 2025 renewals following Hurricanes Helene and Milton
Claims
- An active quarter for major losses, including Hurricanes Beryl, Debby, Francine and Helene, floods in Europe and wildfires in Canada
- Since the third quarter, Hurricane Milton net loss estimate for Hiscox is $75m based on an industry insured loss of $40bn, split equally between Hiscox London Market and Hiscox Re & ILS
- Despite these events, major losses for the full year remain within catastrophe loss expectations
Hiscox also reported that surplus capital will be returned to shareholders following the Board’s decision at year end.
Alpha comment
These are a good set of results published by the group which includes Hiscox London Market and Hiscox Re & ILS where Alpha members participate via syndicate 33 and SPA 6104. The London Market division continues to be focused on profitability rather than chasing growth. This is evidenced by the withdrawal from space, which has been a challenging market for some time, a cautious underwriting approach to cyber and D&O and lapsing underperforming binders, all of which seem sensible strategies. It is also very promising that the AI implementation was successful and the innovative solution is allowing Hiscox’s terrorism underwriters to focus on underwriting rather than administrative processes. Despite rates being flat within the Re & ILS division, the cumulative rate increases of +90% since 2018 show how much the market has improved in recent years. It is also very encouraging to see that recent major loss activity, particularly Hurricanes Helene and Milton, is within major loss expectations for the year and could drive further rate increases in the January 2025 renewals. Like Beazley there is mention about possible release of surplus capital.
