Trading Statement

RNS Number : 2179M

Hiscox Ltd

26 January 2009

 



Hiscox update on renewal rates, investments, currency and hurricane estimates

Hamilton, Bermuda (26 January 2009): Hiscox Ltd (HSX:L), the international specialist insurer issues the following trading update.

Renewal rates

The Group has seen good rate increases in key areas, especially reinsurance which accounts for over one third of our gross written premium.  Rates for peak zone US reinsurance business rose on average by 15 - 25%, and on regional business by between 5% and 30% depending on claims experience.  The US accounts for over 70% of our reinsurance business and gross written premiums for reinsurance during this period have increased even as we cut back on accounts which did not meet our target returns.  We expect these rates to remain strong and to have increased further by the time of the important US renewals in June and July.

Investment return

The investment return for 2008, excluding currency hedging contracts as described below, is approximately -1.3% calculated on the average value of the portfolio over the year. The value of the portfolio at the end of the year was approximately £2.5 billion. The negative return includes mark to market losses on prime mortgage and asset backed US bonds which continue to perform and are expected to return to par as they mature.  

Currency

As previously reported in our October update, the weakness of Sterling against the US dollar has led to a material increase in net asset value per share, and increased the value of the Group's capital held in Hiscox International (Hiscox Bermuda, Hiscox USA and Hiscox Guernsey). The benefit to the Group's balance sheet is expected to exceed £150 million, but will be partially offset by a loss on attributable currency hedging contracts of £42 million which will be reflected in the consolidated income statement.

Hurricanes

We have completed our reserving process and our estimates of ultimate claims from Hurricane Gustav and Ike are unchanged at $25 million and $150 million, respectively (both figures are net of reinsurance and reinstatement premiums). These estimates are based on industry losses of $2.75 billion for Gustav and $17.5 billion for Ike.

Hiscox will report preliminary results for 2008 on 9 March 2009.

ENDS

For further information:

Hiscox Ltd
Robin Mehta, Company Secretary, Bermuda	[phone]
Kylie O'Connor, Head of Communications, London	[phone]
Maitland	[phone]
Suzanne Bartch
Richard Farnsworth

Notes to editors:

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 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, and tailored products for 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.

 

END

 

 

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