Hiscox Ltd
(LSE:HSX), the international specialist insurer, today issues its trading statement for the first three months of the year to 31 March 2022 .
Highlights:
- Group gross premiums written up 10.3% to $1,386.3 million, as strong growth in Re & ILS and a good performance in Retail digital partnerships and direct (DPD) offset planned slow-down in Hiscox USA.
- Hiscox Retail underwriting profitability is continuing to progress with positive momentum and remains on track to return to 90%-95% combined ratio range in 2023; gross premiums written up 4.0% in constant currency to $670.8 million (2021: $663.9 million). Momentum for the underlying business[1] is improving with growth of 7.6% in constant currency.
- Group DPD grew gross premiums written by 9.6% in constant currency. US DPD growth has been intentionally slowed down to 12.5% during the IT platform replacement which is expected to be largely completed in H1; US DPD is on track to deliver 15%-20% growth at full year
- Hiscox London Market gross premiums written declined 3.1% to $294.5 million (2021: $303.9 million), as a result of a deliberate reduction in under-priced natural catastrophe exposure.
- Excellent growth in Hiscox Re & ILS, with gross premiums written up 45.8% to $421.0 million (2021: $288.8 million), as ILS net inflows of $217.5 million allowed the business to capitalise on the hard market in North American catastrophe and retrocession. This is consistent with a strategy of building balanced portfolios and growing fee income.
- Investment return loss of $119.4 million (2021: profit of $20.7 million), or a negative return of 1.7% year to date (2021: positive return of 0.3%), is the result of unrealised losses in our bond portfolio due to higher interest rates, which are non-economic and non-cash in nature. Reinvestment yield has improved significantly to 2.4%.
- Good non-natural catastrophe loss performance across all business divisions, as a result of re-underwriting actions undertaken over recent years.
- Natural catastrophe losses are within the first quarter budget and in line with our expectations.
- While the losses from the conflict in Ukraine incurred in the first quarter are minimal, the Group has reserved circa $40 million net of reinsurance for expected losses mainly through the political violence, war and terror (PVWT) portfolio; impact of Russian sanctions on the Group is minimal.
- No change to previously-disclosed estimates for claims related to Covid-19.
- The Group remains strongly capitalised with liquid resources sufficient to pay claims, dividends and execute on its growth strategy where attractive opportunities arise.
Aki Hussain, Chief Executive Officer, Hiscox Ltd, commented:
“The Group delivered a solid performance in the first quarter. The rate environment remains favourable and both our big-ticket and Retail businesses delivered good underlying growth in areas where we see attractive opportunities. In big-ticket, we continue to position our businesses for strong and sustainable returns by growing where we see opportunity and reducing exposures where we believe risks are under-priced. In Retail, our US and European operations are making good progress in rolling out new technology platforms to support our growth ambitions.
“Beyond the quarterly performance, we remain deeply saddened by the conflict in Ukraine. We are supporting affected customers and have contributed to the global humanitarian aid effort through donations to the Red Cross and the Disasters Emergency Committee.”