TIDMHSX
RNS Number : 2308N
Hiscox Ltd
08 May 2018
Interim Management Statement
Hamilton, Bermuda (8 May 2018) - 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 2018.
Gross written premiums grew by 20.3% in constant currency to
$1,155.8 million (2017: $929.8 million). Hiscox London Market and
Hiscox Re & ILS took advantage of the hardening market at the
important 1 January renewals. Hiscox Retail continued its good
momentum.
Bronek Masojada, Group CEO, commented: "After a costly year for
catastrophes in 2017, our London Market and reinsurance businesses
mobilised quickly to grasp the opportunity and grew strongly.
Sadly, discipline and good sense is receding in the market, so for
the rest of the year growth in big-ticket business will be more
measured.
"Our long-term strategy of investing in less volatile retail
lines continues to provide balance and opportunity for growth."
Gross Written Premiums for the period:
Gross Written Premiums Gross Written Growth in constant currency Growth in USD
to 31 March 2018 Premiums
to 31 March 2017
---------------------- ----------------------- ------------------ ---------------------------- --------------
US$m US$m % %
---------------------- ----------------------- ------------------ ---------------------------- --------------
Hiscox Retail $572.9 $465.1 14.0% 23.2%
---------------------- ----------------------- ------------------ ---------------------------- --------------
Hiscox London Market $219.8 $195.4 8.7% 12.5%
---------------------- ----------------------- ------------------ ---------------------------- --------------
Hiscox Re & ILS $363.1 $269.3 42.0% 34.8%
---------------------- ----------------------- ------------------ ---------------------------- --------------
Total $1,155.8 $929.8 20.3% 24.3%
---------------------- ----------------------- ------------------ ---------------------------- --------------
Rates
After years of deterioration in big-ticket lines, the first
quarter saw some continuation of the positive rate movement
experienced in the second half of 2017, however it has not been
widespread.
In the London Market, rates have improved most in
catastrophe-exposed business, particularly in loss-affected lines.
Rates in major property have increased by 20% in aggregate, and US
household and commercial property binders have seen increases of up
to 10%. Some casualty lines which are under stress have also seen
rating growth.
In reinsurance, 2017 price declines have arrested and the
positive momentum experienced in the lead-up to 1 January renewals
has continued. The US portfolio has seen the most movement, with
prices up 9% on average. Rates at 1 April, a key renewal for much
of the international book, were generally flat. As we look ahead to
further mid-year renewals in June and July, we see little prospect
of rate improvement as an abundance of capacity from traditional
and alternative sources remains a feature of the market.
Rates in retail business are broadly flat.
Investments
The investment environment has been challenging in the first
quarter. Whilst we have seen a welcome rise in interest rates and
we are beginning to see a corresponding increase in investment
income, this is accompanied by the short term adverse effect of
mark to market accounting on our fixed income portfolio. We have
also experienced a more volatile environment for equities, with
many of the global indices falling. The investment return to 31
March 2018 was -0.2% (2017: 0.7%) on a non-annualised basis.
Invested assets totalled $6.6 billion at the end of March, with
asset allocation remaining largely unchanged from the end of last
year. The high quality and short duration of our portfolio sees us
well positioned to respond to changing macroeconomic conditions and
monetary policy moving forward.
Hiscox Retail
Gross Written Premiums for the period:
Gross Written Gross Written Growth in Growth
Premiums Premiums constant in USD
to 31 March 2018 to 31 March 2017 currency
-----------------------
GBPm/EURm US$m GBPm/EURm US$m % %
------------ --------- ---------
Hiscox Retail
* Hiscox UK & Ireland GBP142.1 $197.7 GBP125.8 $155.9 12.9% 26.8%
EUR106.5 $130.9 EUR99.0 $104.8 7.6% 24.9%
* Hiscox Europe
$39.7 $36.9 3.9% 7.6%
* Hiscox Special Risks
$200.3 $164.0 22.1% 22.1%
$4.3 $3.5 13.2% 21.6%
* Hiscox USA
* DirectAsia
----------------------------- ------------ --------- ----------- --------- ---------- --------
Hiscox Retail
total $572.9 $465.1 14.0% 23.2%
------------------------------------------- --------- ----------- --------- ---------- --------
Hiscox UK & Ireland
Hiscox UK & Ireland increased gross written premiums by
12.9% in constant currency to $197.7 million (2017: $155.9
million), driven by strong contributions from both personal and
small business lines and our growing network of partners who offer
our products to their customers.
On-going investment in IT is bearing fruit as improved
conversion, pricing and service fuelled good growth. The business
is also benefiting from the transfer of contingency business, which
includes cancellation and event insurance, from Hiscox London
Market in January 2018.
Growth in our direct-to-consumer business has largely been
driven by our home insurance partnership with Barclays, while
customer retention remains above 90%.
The strong performance more than offset the impact of claims
from February's cold weather system, the 'Beast from the East'.
In February we launched a new advertising campaign, CyberLive,
targeting small business customers. The campaign used real-time
cyber attacks fed into live digital posters at prominent stations
and roadside sites across the UK to raise awareness of the threat
that cyber-crime poses to small businesses.
We continue to build scale in the UK and Ireland, and with
sustained investment in systems and processes, we expect to see an
incremental benefit to the expense ratio over time.
Hiscox Europe
Hiscox Europe has had a strong start to the year, growing gross
written premiums by 7.6% in constant currency to $130.9 million
(2017: $104.8 million). All countries in our European business
contributed to the growth, with Germany and the Netherlands the
stand-out performers, as cyber insurance continues to be a key
driver of growth in both countries.
There has been notable growth in specialty commercial and
management liability in in France and Spain, where our partnership
division continues to perform strongly.
Hiscox Europe had a benign claims experience in the first
quarter.
Hiscox Special Risks
Hiscox Special Risks grew by 3.9% in constant currency to $39.7
million (2017: $36.9 million), driven by growth in new
business.
The team remains disciplined in the face of challenging market
conditions, with a relentless focus on innovation in product,
process and service, and a commitment to exploring new distribution
opportunities around the world.
The Security Incident Response product, which covers a range of
security issues such as criminal threats, workplace violence,
corporate espionage and cyber extortion, continues to perform well,
attracting commercial clients of all sizes.
Hiscox USA
Hiscox USA continues to deliver strong growth, with gross
written premiums up by 22.1% to $200.3 million (2017: $164.0
million).
On-going investment in partnerships, brand and marketing has
seen above budget growth in new business in the direct and
partnerships division, as well as casualty lines in the broker
channel.
Retention rates remain high across the portfolio, as customers
and brokers are attracted to the quality and speed of service that
is enabled by our investment in infrastructure and the quality of
our people.
Our new US property MGA will commence trading in May, supported
by capacity from Hiscox London Market as well as third-party
capital providers through Lloyd's. It will enable us to increase
our line size and make us a more material player in the market,
whilst transferring the volatility to Lloyd's, which has an
appetite for this kind of business. As part of the arrangement, we
are moving our existing property portfolio from Hiscox USA into the
MGA.
We see plenty of opportunity for growth in the US, where we
remain a relatively small player. It should be expected that growth
rates, which have regularly been above 30%, will naturally taper as
the law of large numbers prevails. This will be amplified by the
transfer of the property business to the MGA.
DirectAsia
DirectAsia grew gross written premiums by13.2% in constant
currency to $4.3 million (2017: $3.5 million). Our Thai business
operates as an agency therefore is not reflected in these
figures.
The good performance has been driven by growth in new business
across all product lines in Singapore, where a sustained focus on
product innovation and delivery of market-leading service is making
inroads in a competitive market. We launched a new travel product
earlier in the year, and continued investment in marketing and
partnerships is showing encouraging signs.
In Thailand, our latest TV advertising campaign has had a
significant impact on brand awareness.
Hiscox London Market
Following a period of contraction in response to challenging
market conditions, gross written premiums in our London Market
business grew by 8.7% in constant currency to $219.8 million (2017:
$195.4 million) as we took advantage of opportunities across the
portfolio.
We have capitalised where rate improvement has been most
pronounced, most notably in major property and US household and
commercial property binders. We have also seen good growth in
casualty lines, including general liability, and cyber. This
growth, however, is tempered by those lines where we have taken the
decision to reduce or exit such as aviation hull and liability, as
we continue to maintain a disciplined approach. Whilst the rate
environment has improved in some lines, the momentum is slowing and
pricing discipline in the market is beginning to recede. This may
impact the volume of business written this year.
We continue to experience strong demand for our FloodPlus
product for homeowners, as awareness of the flood peril spreads in
the aftermath of Hurricane Harvey. We plan to launch a commercial
FloodPlus product later this year.
In the second quarter the property team will launch BindPlus, an
online platform which provides coverholders with fast and flexible
access to our household and commercial products through an API or
via our own website.
The period has been largely benign for large losses in the
London Market, though there has been a slight uptick in attritional
property claims.
Hiscox Re & ILS
In our reinsurance and ILS business, gross written premiums
increased in constant currency by 42.0% to $363.1 million (2017:
$269.3 million) as prices improved. The bulk of this increase was
written on behalf of our ILS and quota share partners. Net written
premiums grew by 31.0%.
Growth in US property catastrophe and excess of loss business,
where rate improvement has been most significant, has been hard
fought. We will maintain our disciplined approach and grow where
returns are attractive. We have seen increasing demand for our
suite of risk excess of loss products, where we have been market
leaders for some time.
During the period we expanded our cyber offering with a new
cyber industry loss warranty (ILW) product - the first of its kind.
The cyber ILW helps (re)insurers address uncertainty around cyber
tail risk by allowing them to take out coverage based on the total
insured industry loss, rather than their own specific loss.
Our material line size and ILS capability continue to
differentiate us, enabling us to compete for larger accounts in a
highly competitive market and service clients whose risk appetites
differ materially from our own.
Assets Under Management in the Hiscox ILS funds now exceed $1.5
billion, evidence of the sustained demand for our underwriting
expertise.
Change in reporting currency
As previously announced, the functional currency of some of our
subsidiaries including Syndicate 33 and the reporting currency of
the Group changed to US Dollars on 1 January 2018. Ahead of our
interim results, we will publish comparative restated data for our
final and interim results of 2017.
ENDS
For further information
Hiscox Ltd
Marc Wetherhill, Group Company Secretary,
Bermuda +1 441 278 8300
Kylie O'Connor, Head of Group Communications,
London +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 2017
saw the business deliver a profit before tax (excluding foreign
exchange) of GBP93.6 million despite reserving net $225 million for
claims in the most costly year ever for natural catastrophes.
The Hiscox Group employs over 2,700 people in 14 countries, and
has customers worldwide. Through the retail businesses in the UK,
Europe, Asia 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 &
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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