Interim Management Statement

RNS Number : 1552U

Hiscox Ltd

11 May 2008

 



Interim Management Statement

Hiscox regional growth strategy succeeding

Hamilton, Bermuda (12 May 2008) -- Hiscox Ltd, the international specialist insurer, is today issuing its Interim Management Statement for the first three months of the year to 31 March 2008.

The Group had a good start to the year. Our strategy of growing our specialist regional businesses to balance the more volatile international business is working. Hiscox UK and Hiscox Europe experienced strong growth with increases in gross written premiums of 13% and 29% respectively.  In line with expectations premium income underwritten by Hiscox Global Markets and Hiscox International reduced. Overall, premium income is down by 10% to £321.3 million (2007: £358.4 million) as we maintained discipline in large globally traded business where rates continue to decline. 

	Gross Written Premiums  To 31 March 2008 £m	Gross Written Premiums  To 31 March 2007 £m	Change %
Hiscox Global Markets	177.7	212.4	-16
Hiscox International Hiscox Bermuda Hiscox Guernsey  Hiscox USA	30.9 11.5 5.7	49.8 11.6 4.0	-38 -1 +43
Hiscox UK Hiscox Europe	60.7 34.8	53.7 26.9	+13 +29
Total	321.3	358.4	-10

Robert Hiscox, Chairman, commented:

'We have had a good start to the year with relatively small involvement in the many large individual losses which have occurred around the world. Despite those losses, market conditions in international and larger business are becoming challenging so we are reducing our exposure to these areas through disciplined underwriting. However, we are continuing to drive profitable growth in our more stable specialist regional businesses, which are less prone to extremes of market competition.' 

Hiscox Global Markets

As announced last year, we have reduced our 2008 capacity by 20% in anticipation of a softer market. Rates are softening but remain healthy in catastrophe reinsurance and most of our specialist lines. In all areas underwriters are maintaining discipline and declining unprofitable business. We commuted the sidecar Panther Re in the first quarter and its income will earn in the first half of 2008.  

Hiscox International

Hiscox Bermuda continued to be selective in its writing of external reinsurance where rates are also softening. Premium income was down in the first quarter as we declined to renew a number of large European accounts following rate reductions.  Hiscox Guernsey delivered similar returns to the previous year.  Hiscox USA achieved strong growth in the first quarter despite the challenging environment. The integration of the recently purchased business, American Live Stock (now Hiscox Insurance Company Inc.), is proceeding as expected. Good progress was made obtaining state licences for admitted lines of business, which will permit wider distribution of our products in the US during the year.  

Hiscox UK and Hiscox Europe 

It has been a strong start to the year for our specialist regional businesses. With gross written premiums up in Hiscox UK and Hiscox Europe, we saw rates rise in our UK household insurance while new commercial products introduced in Europe were well received.

In order to build on our market leading position in the UK personal lines market we have launched a motor policy for drivers of high value vehicles.

Claims

It has been an active first quarter for claims in the industry, but overall largely benign for Hiscox. We have had limited exposure to large losses such as Cyclone Emma and the Australian mine floods. Our position on sub-prime claims remains unchanged with very few losses which are fully reserved.  

Investments

Investments have performed reasonably given the turbulent market conditions.  Cash and investments have remained steady since the year end at £2,062 million.  Return on investments was 0.5% in the quarter. The asset allocation in the portfolio remains similar to the 2007 year end, but we aim to increase our weighting in corporate bonds and equities selectively during the year.  Direct exposure to sub-prime investments remains minimal.

Balance sheet

The Group is in a strong financial position, with no significant changes to the balance sheet since the 2007 year end. We have effectively exceeded our £150 million capital repayment programme with a proposed annual dividend payment of approximately £50 million, share buy-backs to date totalling £26.1 million in shares at an average price of 249.9p and recent repayment of approximately £100 million of bank debt. We will continue to buy back shares as suitable opportunities arise.

Bank facilities

Hiscox has refinanced its bank facilities, with an increase to £350 million with a £150 million letter of credit facility and a five-year £200 million revolving credit facility with drawings priced at a 1% margin.  This was provided by the existing syndicate of banks.  Recent good cash flow has allowed Hiscox to repay its existing loan of US $182 million in full.

New appointment

We have appointed Michael Gould to be our Group Chief Operating Officer. Michael's experience includes five years as COO for AON's corporate division and 14 years with American Express in a variety of operational and marketing positions.  

Outlook

We remain committed to disciplined underwriting throughout our business. In Global Markets and International, we will continue to benefit from healthy rates in catastrophe reinsurance, though rates are softening and we are carefully retreating from poorly priced business.  We expect to grow our specialist regional lines in the US, UK and Europe, where rates are at favourable levels and loss activity is currently low.  We are pleased with the progress overall as it shows our strategy to grow regionally is working as we continue to deliver balance to the business.

AGM

The Group's Annual General Meeting will be held on 4 June 2008 in Bermuda.

ENDS

For further information:

Hiscox Ltd

Robin Mehta, Company Secretary                                 [phone]

Jennifer Crowl, Director of Communications                    [phone]

Maitland                                                                    [phone]

Suzanne Bartch

Richard Farnsworth

Notes to editors:

About Hiscox

Hiscox, headquartered in Bermuda, is an international specialist insurance group listed on the London Stock Exchange. There are three main underwriting parts of the Group - Hiscox Global Markets, Hiscox UK and Europe and Hiscox International. Hiscox Global Markets underwrites mainly internationally traded business in the London Market - generally large or complex business which needs to be shared with other insurers or needs the international licences of Lloyd's. Hiscox UK and Hiscox Europe offer a range of specialist insurance for professionals and business customers, as well as high net worth individuals. Hiscox International includes operations in Bermuda, Guernsey and USA. Hiscox Insurance Company Limited, Hiscox Underwriting Limited and Hiscox Syndicates Ltd are regulated by the Financial Services Authority. For further information, visit www.hiscox.com.

 

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