TIDMHSX
RNS Number : 5232E
Hiscox Ltd
09 May 2017
Interim Management Statement
Hamilton, Bermuda (9 May 2017) - Hiscox Ltd (LSE:HSX), the
international specialist insurer, today issues its Interim
Management Statement for the first three months of the year to 31
March 2017.
Gross written premiums grew by 17.3% to GBP751.2 million (2016:
GBP640.5 million) driven by a strong performance from Hiscox
Retail. As forecast, Hiscox London Market income is down in
constant currency.
Bronek Masojada, Group CEO, commented: "We have had a strong
start to the year thanks to our long-term investment in Hiscox
Retail, particularly in the small business sector. Hiscox London
Market continues to face challenging conditions. Hiscox Re and ILS
are finding opportunities. We remain disciplined and are carefully
navigating our way forward."
Gross Written Premiums for the period:
Gross Written Gross Written Growth in Growth
Premiums Premiums constant in Sterling
to 31 March 2017 to 31 March 2016 currency
US$/EURm GBPm US$/EURm GBPm % %
------------------------------ ---------- ---------- ---------- ---------- ---------- -------------
Hiscox Retail
* Hiscox UK and Ireland GBP375.4 GBP289.3 18.6% 29.7%
GBP125.8 GBP110.5 13.4% 13.9%
* Hiscox Europe EUR99.0 GBP84.6 EUR88.2 GBP66.3 12.2% 27.6%
$36.9 GBP29.9 US$32.0 GBP22.5 15.3% 33.1%
* Hiscox Special Risks
US$164.0 GBP132.2 US$122.8 GBP85.4 33.5% 54.7%
GBP2.9 GBP4.6 (46.4%) (38.3%)
* Hiscox USA
* DirectAsia
------------------------------ ---------- ---------- ---------- ---------- ---------- -------------
Hiscox London
Market GBP157.7 GBP157.1 (8.6%) 0.4%
------------------------------ ---------- ---------- ---------- ---------- ---------- -------------
Hiscox Re US$269.3 GBP218.1 US$279.2 GBP194.1 (3.5%) 12.4%
------------------------------ ---------- ---------- ---------- ---------- ---------- -------------
Total GBP751.2 GBP640.5 5.0% 17.3%
------------------------------ ---------- ---------- ---------- ---------- ---------- -------------
Rates
In 2017 so far, there has been no improvement in the rating
environment in big-ticket business, where a continuation of a lack
of major loss events, excess capital and strong competition
continues to put pressure on rates. This is most severe in the
London Market where we are seeing double-digit declines in the
marine, energy and US large property accounts, however rates remain
under pressure in almost all lines.
At the important January renewals, Hiscox Re and ILS experienced
single-digit rate decreases across the board. Downward pressure was
stronger in the international book, while declines in US property
reinsurance rates have slowed. In specialty and casualty
reinsurance rates are relatively flat.
In our retail businesses, where we are investing for growth,
rates are broadly flat.
Investments
The investment result to 31 March 2017 was 0.7% on a
non-annualised basis. The positive market sentiment engendered by
the election of President Trump continued into the first quarter of
2017 rewarding those in particular with an appetite for risk. Our
bond portfolios produced acceptable returns mainly due to their
allocation to credit whilst our risk assets benefited from the
strength of equity markets and made a useful contribution to
investment income. Invested assets totalled GBP4.5 billion at the
end of March, with asset allocation remaining largely unchanged
from the end of last year.
Claims
The first quarter has been another benign period for claims,
particularly for Hiscox Re and ILS. The Group reserved GBP9 million
net for claims impacted by the reduction in the Ogden discount
rate.
Hiscox Retail
Hiscox UK and Ireland
Hiscox UK and Ireland increased gross written premiums by 13.4%
in constant currency to GBP125.8 million (2016: GBP110.5 million).
This growth was driven by all regions and all distribution
channels.
In our broker channel the professions and specialty commercial
business performed particularly well helped by an expanded appetite
for larger risks. New business growth was also strong with new
partners attracted to our specialist products and strong brand.
The direct-to-consumer business is benefiting from our on-going
investment in IT infrastructure, with the ability to tailor pricing
more intelligently, in combination with a broadening of appetite,
delivering good growth. We have initiated a similar systems
transformation in the broker channel which will further improve
productivity and service for our customers in the UK and
Ireland.
Hiscox Europe
Hiscox Europe performed well, growing gross written premiums by
12.2% in constant currency to EUR99.0 million (2016: EUR88.2
million). This was driven by very strong performance in Germany and
Spain. Hiscox France is also back in growth after a challenging
2016.
Cyber insurance in Germany and Benelux, specialty commercial in
France, management liability in Spain and our direct and
partnerships divisions have all experienced solid growth in the
first quarter.
Hiscox Special Risks
Hiscox Special Risks grew by 15.3% in constant currency to $36.9
million (2016: $32.0 million). The creation of a global Special
Risks division in 2015 is paying off as product innovation, sales
focus and service has returned this division to growth despite the
competitive environment.
During the quarter Hiscox Special Risks launched a
security-based offering for corporate and private clients which has
been well received by the market. The Security Incident Response
product includes cover for criminal threats, workplace violence,
corporate espionage and cyber extortion, reflecting the changing
profile of risks faced by our clients.
Hiscox USA
Hiscox USA continues on a strong trajectory, growing gross
written premiums by 33.5% in constant currency to $164.0 million
(2016: $122.8million).
Our broker channel business and direct and partnerships division
have both performed well, with key contributors being professions,
cyber and our newly-established general liability line.
Good momentum in our partnerships with third party distributors
and new marketing campaigns have delivered impressive, above budget
growth in our direct business.
DirectAsia
DirectAsia reduced gross written premiums by 46.4% in constant
currency to GBP2.9 million (2016: GBP4.6 million) in line with
management expectations. Most of this reduction can be attributed
to the sale of the Hong Kong business in the second quarter of
2016. Our Thai business operates as an agency therefore is not
reflected in these figures.
Despite the extremely competitive environment in Singapore the
team is attracting new business through investment in the
brand.
Hiscox London Market
Gross written premiums in our London Market business were
GBP157.7 million (2016: GBP157.1 million). In line with previous
guidance, the business reduced by 8.6% in constant currency.
As we have said before, the current trading environment is
reminiscent of the London Market of the 1990's, which calls for a
very disciplined approach. We are shrinking across most lines where
margins are evaporating and pulling back significantly in aviation,
extended warranty and big-ticket property lines. As previously
announced, during the quarter we exited the political risks class
as the growing length of cover, now regularly over five years, and
greater role of credit has moved this class outside of our risk
appetite.
Hiscox MGA has had a good start to the year with strong renewals
in the yacht account and the addition of our space business which
transferred into the MGA during the quarter. Space is a
longstanding business for Hiscox and by offering material line
sizes, on behalf of Hiscox and others, we can remain important in
this challenging market.
Hiscox Re and ILS
Gross written premiums decreased in constant currency by 3.5% to
US$269.3 million (2016: US$279.2 million). Net written premiums
decreased by 19.8%. Hiscox Re and ILS grew US catastrophe
reinsurance but reduced in retro and casualty business where rates
are under more pressure.
Hiscox Re has benefited from good underwriting and a low loss
environment. Our strategy of linking innovative products to diverse
forms of capital remains a key source of opportunity.
In January, Hiscox ILS launched a fully collateralized ILS fund
and has transacted several deals already. The Hiscox ILS funds have
reached $1.3 billion AUM.
EU subsidiary
Today we announce that we will establish a new European
subsidiary in Luxembourg in response to Brexit. All Hiscox retail
business in Europe will be written through this new EU subsidiary.
Our existing European business, which comprises over 350 people
across seven of the EU 27 countries, will continue to operate
without interruption. In Luxembourg a team covering core functions
such as compliance, risk and internal audit will be recruited to
complement our existing structure.
The process of establishment will begin immediately. Subject to
regulatory approval, we expect to complete the restructuring well
in advance of March 2019 in order to ensure a seamless transition
for our customers, brokers and business partners.
Luxembourg was selected for its pro-business position, strong
financial services experience and well-respected regulator, and is
close to many of our major markets.
ENDS
For further information:
Hiscox Ltd
Jeremy Pinchin, Company Secretary +1 441 278 8300
Kylie O'Connor, Head of Communications +44 (0) 20 7448 6656
Brunswick
Tom Burns +44 (0)20 7404 5959
Simone Selzer +44 (0)20 7404 5959
Notes to editors
About The Hiscox Group
Hiscox is a global specialist insurer, headquartered in Bermuda
and listed on the London Stock Exchange (LSE:HSX). Our ambition is
to be a respected specialist insurer with a diverse portfolio by
product and geography. We believe that building balance between
catastrophe-exposed business and less volatile local specialty
business gives us opportunities for profitable growth throughout
the insurance cycle. It's a long-standing strategy which in 2016
helped generate gross premiums written of GBP2,402.6 million and a
record profit before tax of GBP354.5 million.
The Hiscox Group employs over 2,300 people in 13 countries, and
has customers worldwide. Through the retail businesses in the UK,
Europe and the US, we offer a range of specialist insurance for
professionals and business customers as well as homeowners.
Internationally traded, bigger ticket business and reinsurance is
underwritten through Hiscox London Market and Hiscox Re and
ILS.
Our values define our business, with a focus on people, quality,
courage and excellence in execution. We pride ourselves on being
true to our word and our award-winning claims service is testament
to that. For more information, visit www.hiscoxgroup.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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