Insurance provider Hiscox sees solid growth in gross premiums

Hiscox posts solid growth in gross premiums as underwriter’s global reinsurance and ILS arm tops $1bn

  • Hiscox announced that its gross written premiums were up 9.3% to $3.68bn
  • Almost all the growth in premiums derived from the firm’s Re & ILS business
  • The group has set aside $135m to cover potential losses from Hurricane Ian

Hiscox has revealed written premiums have boomed on the back of ‘strong rate momentum’ across the business, especially its global reinsurance division.

The Lloyd’s of London underwriter told investors on Wednesday that its gross written premiums were up 9.3 per cent on a constant currency basis to $3.68billion in the first nine months of 2022.

Almost all the growth derived from the company’s reinsurance and insurance-linked securities business, which saw premiums jump from $806million in the equivalent period last year to more than $1billion this time around.

The Hiscox Action Group is demanding to join the action being taken against the insurance giant by the Financial Conduct Authority

Hiscox said rates within the division had cumulatively grown by over half in the past five years, driven by healthy demand in the cyber, North American property catastrophe and retrocession portfolios.

It noted ‘material rate improvements’ in Australia following a surge in claims when extreme flooding hit the country’s east coast in February.

The FTSE 250 firm also expects a further boost to rates from Hurricane Ian, which was the deadliest tropical cyclone to hit Florida in nine decades.

In response to that natural disaster, the group set aside $135million to cover possible losses and incurred a $40million hit in the third quarter, though it said this would have been higher had it not cut its exposure to ‘under-priced Florida business’.

Aki Hussain, chief executive of Hiscox, said: ‘The performance of our big-ticket businesses remains robust after the impact of Hurricane Ian, and improving conditions are presenting new opportunities.’ 

Hiscox’s additionally reported a bumper result in its US Digital Partnerships and Direct arm, where gross premiums increased by 9.8 per cent and are set to expand by 5 to 15 per cent this year.

But it took an investment result loss of nearly $300million, against a $62.7million profit in 2021, as tighter monetary policy from central banks led to significant losses in the group’s bond portfolio.

Hiscox shares were up 4.6 per cent to £9.40 by the early afternoon, meaning their value has only slightly grown since the beginning of the year.

Analysts at UBS hailed the firm’s ‘very strong update’ and reiterated its buy recommendation for the group’s stock.

They added: ‘Hiscox reiterate they remain strongly capitalised with flexibility to invest in structural growth opportunities in retail as well as favourable market conditions, particularly in reinsurance. 

‘They would expect to deploy more of their own capital and increase retained premiums in the event of material hardening, showing willingness for material growth at the right opportunity. 

‘Only a business well placed can make such strong statements at this point in our view.’