Interim Management Statement

RNS Number : 1614C

Hiscox Ltd

09 November 2009

 



Interim Management Statement

A period of good growth

Hamilton, Bermuda (9 November 2009) -- Hiscox Ltd (LSE:HSX), the international specialist insurer, today issues its Interim Management Statement for the first nine months of the year to 30 September 2009.

The Group continues to thrive with good growth. Overall year to date premium income was up 31.7% to £1,212.2 million (2008: £920.1 million). At constant exchange rates year on year growth was 10.5%.  

Robert Hiscox, Chairman, commented:  

"Hiscox is in good health. We have continued to benefit from solid investment decisions and have maintained growth in our most profitable underwriting lines. Rates are stable and still very healthy in most areas, particularly reinsurance which accounts for over a third of our business. Our mix of business is designed for these market conditions."  

Gross Written Premiums for the period:

	Gross Written Premiums  to 30 Sept 2009         US$m            £m		Gross Written Premiums  to 30 Sept 2008 US$m               £m		Growth in original Currency %	Growth in Sterling %
Hiscox London Market		£575.7		£452.1	-0.1	+27.3
Hiscox International  -    Hiscox Bermuda -    Hiscox Guernsey  -    Hiscox USA	$252.7 $93.4 $133.9	£163.7 £60.5 £87.2	$207.9 $80.2 $83.4	£106.7 £41.1 £48.4	+21.5 +16.5 +60.6	+53.4 +47.2 +80.2
Hiscox UK Hiscox Europe		£228.7 £96.4		£196.3 £75.5	+17.4 +19.1	+16.5 +27.7
Total	£1,212.2		£920.1		+10.5	+31.7

At the interim results in August we announced that we were adopting a new segmental reporting structure along geographic lines to follow the management structure. The above numbers are reported under the new segments.

Investments

The investment yield to 30th September 2009 was +6.5% as the portfolio produced a strong third quarter return of +3%. Our non-government bonds and equities have continued to perform well. 

Since the end of June we modestly increased our exposure to investment grade corporate bonds and following the strong market rally, have sold some equities keeping our equity weighting near 5%. Invested assets totalled approximately £2.5bn at the end of September.

The reduction in mark to market discounts in our non government bonds and their return to more normal prices has been faster than we anticipated. However, we still see value in corporate bonds. When combined with our cash and short term government securities, a period of lower investment returns is to be expected in the near term.

Rates

Despite the insurance industry's 2008 capital losses, we have not seen across the board increases in rates as some expected. Regardless, our mix of catastrophe and specialty business is designed for this environment and rates across the Group are healthy. Throughout the year the rates on our key reinsurance lines have increased by over 10%. Over the same period energy rates have increased by between 5 - 10% with increases in excess of 50% for Gulf of Mexico risks, all at better terms and conditions. Our specialty lines are holding up well. 

Hiscox London Market

Hiscox London Market has seen a 27.3% rise in gross written premiums to £575.7 million (2008: £452.1 million), assisted by favourable exchange rates.  

It has been a benign quarter for claims with no major catastrophes or individual losses.     

The newly branded London Market business is focused on developing accounts that come to the London Market and our increased 2010 capacity for Syndicate 33 of £1bn (2009: £750 million) reflects a stronger US Dollar and our belief in the Market.

Hiscox Bermuda

Over the year Hiscox Bermuda has taken advantage of hardening reinsurance rates and grown by 21.5% to US$252.7 million (2008: US$207.9 million).  

As previously announced Hiscox Bermuda plans to build a portfolio of healthcare liability business. The two new senior healthcare underwriters are now in place and are focused on writing tailored business for larger, well-run health institutions.    

Hiscox Guernsey

Gross written premiums increased by 16.5% to US$93.4 million (2008: US$80.2 million). This growth is being driven by our kidnap and ransom, and piracy lines of business. 

Hiscox USA

We successfully recruited over 100 staff and opened five new offices in the first half of the year, and this expansion has helped deliver good growth of 60.6% to US$133.9 million (2008: US$83.4 million). 

US management is now focused on developing these teams, products and licences. We will maintain steady growth in the existing rating environment and be in a good position to accelerate when rates improve.

Part of the USA business is underwritten by Syndicate 3624 (supported 100% by Hiscox capital) and we are increasing this Syndicate's capacity to $150 million in 2010 (2009: $80 million).

Hiscox UK

The established retail business in the UK continues to provide steady growth. Gross written premiums grew by 16.5% to £228.7 million (2008: £196.3 million). This growth is driven mainly by our commercial lines business where we have established products and a respected brand.  

Hiscox Europe 

Hiscox Europe grew by 19.1% to gross written premiums €117.0 million (2008: €98.2 million).

After a series of losses in the first half of the year, Hiscox Europe has returned to profitability. Management is focused on growing the most profitable lines, sharing resources and best practices across Europe, and building on a strong unified management team.

Summary

With strong investment returns and overall growth, we have good reasons to be optimistic. 

ENDS

For further information:

Hiscox Ltd
Charles Dupplin, Company Secretary	[phone]
Kylie O'Connor, Head 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 (LSE:HSX). There are three main underwriting parts of the Group - Hiscox London Market, Hiscox UK and Europe and Hiscox International. Hiscox London Market 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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