Interim Management Statement

RNS Number : 8715M

Hiscox Ltd

12 May 2015

 

Interim Management Statement

Hamilton, Bermuda (12 May 2015) -- 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 2015.

Gross written premiums increased by 12% to £561.7 million (2014: £501.6 million) in the first quarter as the Group continues to find good opportunities for profitable growth.

Bronek Masojada, Chief Executive, commented:

"It's been an excellent start to the year, flattered by a good claims experience and favourable foreign exchange movements.  While the market has been tough, with a reduction in pricing in the big ticket businesses, we have continued to grow in our specialty lines and expand our ILS business."

Gross Written Premiums for the period:

	Gross Written Premiums to 31 March 2015		Gross Written Premiums to 31 March 2014		Growth in local Currency	Growth in Sterling
	US$/€m	£m	US$/€m	£m	%	%
Hiscox Retail -       Hiscox UK -       Hiscox Europe	€85.8	£103.5 £65.6	€79.5	£98.2 £66.4	5.8 7.9	5.4 -1.2
-       Hiscox Guernsey -       Hiscox USA -       DirectAsia	US$26.3 US$95.8 US$7.3	£17.3 £63.3 £4.8	US$28.1 US$82.6	£17.0 £49.9 -	-6.4 16.0	1.9 26.8
Hiscox London Market		£148.7		£126.8	11.4	17.3
Hiscox Re	US$240.2	£158.5	US$237.1	£143.3	1.3	10.6
Total		£561.7		£501.6	8.6	12.0

Rates

Rates in retail insurance lines are stable with sustainable margins. Rates for larger insurance risks, including big ticket US property business, aviation and offshore energy, are under pressure.  The Group maintains a policy of walking away from unprofitable business.

The on-going benign claims environment continues to put pressure on reinsurance rates with US catastrophe rates down by 10% in the first quarter. For the 1 April renewals for Japanese Earthquake, rates were down 12%.

Investments

The investment result to 31 March 2015 was 0.8% for the quarter on a non-annualised basis.  It has been a positive period for both bonds and equities particularly following the announcement of quantitative easing by the European Central Bank. Invested assets totalled approximately £3.2 billion at the end of March, excluding third party assets managed by Kiskadee Investment Managers.  In early April approximately £192 million was returned to shareholders. Risk assets now account for approximately 8.5% of the portfolio. 

There have been a number of false dawns but consensus is building that the Federal Reserve, albeit gradually and subject to the data, will announce their first increase in interest rates since 2006 before the end of the year.  We therefore prefer credit risk to duration risk in our bond portfolios and still expect equities to outperform over the medium term.

Claims

The first quarter has been another period for low claims activity.  The exception to this is in political risks where events such as unrest in Russia and Ukraine, and falling oil prices are impacting clients.   Three different claims are being reserved in total at net $17 million.

In April, the Group reserved net US$15 million for the Pemex Abkatun gas rig explosion in the Gulf of Mexico.

Hiscox Retail

Hiscox UK

Hiscox UK increased gross written premiums by 5.4% to £103.5 million (2014: £98.2 million) with excellent retention in core lines of business and all UK regions performing well.  Growth in the emerging professions and small office products continue to contribute significantly.  Core household and luxury motor personal lines have also done well.

The cyber and data risks product for small businesses launched last year is growing ahead of budget. The project to insource the customer support function for our direct commercial business is progressing according to plan. 

Hiscox Europe

Hiscox Europe grew gross written premiums by 7.9% in local currency to €85.8 million (2014: €79.5 million) driven mainly by Germany and the emerging and technology PI businesses across Europe. We have seen a pleasing return to profitable growth in our art and private client business across much of Europe, and have also benefited from the benign weather seen across the continent, with a warm winter and relatively dry conditions contributing to a strong start to the year.    

Investment in our direct-to-consumer commercial business continues.  Brand building activity, a revamped speciality commercial product in France and the launch of a small office package across most territories in Europe have produced almost 25% growth year-on-year.

Hiscox Guernsey

Hiscox Special Risks wrote gross written premiums of US$26.3 million (2014: US$28.1 million). Investment in Latin American business is generating good new opportunities. Despite competition, the division continues to perform well and is maintaining market share as clients value our expertise and relationship with security provider Control Risks.

Hiscox USA

Hiscox USA continues its good performance, increasing premium income by 16.0% in local currency to US$95.8 million (2014: US$82.6 million). The core professional liability and small commercial products continue to drive growth, both in the broker channel and in our direct-to-consumer business. New initiatives supporting this growth include coverage for financial institutions and investment managers, and increased standalone general liability offerings.  The team has also developed additional professional liability solutions to simplify the purchase process for brokers and customers.  The business continues its push towards scale with deeper market penetration in key areas and an increasingly streamlined platform to support growth.

DirectAsia

Hiscox acquired Direct Asia in Q2 2014. The business is developing as expected and delivered gross premium income of US$7.3 million.  Brand awareness in Thailand has reached a pleasing 23% driven by a new TV campaign.     

Hiscox London Market

Hiscox London Market premium income increased by 11.4% in local currency to £148.7 million (2014: £126.8 million).  Growth in specialty, marine, and casualty more than offset a reduction in big ticket property business, where we are seeing fierce competition and remain disciplined.  Hiscox London Market has also benefited from the expansion of the alternative distribution business, where we are adding new partners and building on existing relationships such as White Oak.

Hiscox Re

Hiscox Re remained broadly stable with gross written premiums of US$240.2 million (2014: US$237.1 million).  Premium income generated from the Insurance Linked Securities operation is balancing reductions elsewhere. As stated in our preliminary results, our Kiskadee family of insurance linked funds is on track to attract $500 million in capital.

ENDS

For further information:

Hiscox Ltd

Jeremy Pinchin, Company Secretary                                [phone]

Kylie O'Connor, Head of Communications                         [phone]

Brunswick                                                                     [phone]

Tom Burns

Notes to editors

About Hiscox

Hiscox, the international specialist insurer, is headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). There are three main underwriting divisions in the Group - Hiscox Retail (which includes Hiscox UK and Europe, Hiscox Guernsey, Hiscox USA and subsidiary brand, DirectAsia), Hiscox London Market and Hiscox Re. Through its retail businesses in the UK, Europe and the US Hiscox offers a range of specialist insurance for professionals and business customers, as well as homeowners. Hiscox underwrites internationally traded, bigger ticket business and reinsurance through Hiscox London Market and Hiscox Re.

For further information visit www.hiscoxgroup.com.

 

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