Hiscox Ltd (HSX) - Interim Management Statement
RNS Number : 2983Q
05 November 2012
Interim Management Statement
Hamilton, Bermuda (5 November 2012) -- 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 2012.
Hiscox's gross written premiums increased year on year by 6.4% to £1,244.4
million (2011: £1,169.5 million) as the Group grew where rates are rising,
particularly US errors and omissions and internationally traded US property
Bronek Masojada, Chief Executive, commented: "Until Superstorm Sandy hit last
week it had been a relatively quiet year for Hiscox which puts us in a good
position to absorb any losses. The devastation wreaked by Sandy reminds us
all of the critical role insurers play in people's lives. Our focus now is to
help our clients get back on their feet."
Gross Written Premiums for the period:
Gross Written Premiums Gross Written Growth in Growth
to 30 September 2012 Premiums Currency Sterling
US$/€m to 30 September 2011 % %
Hiscox London £499.3 £475.3 4.4% 5.1%
US$299.5 £189.9 US$265.9 £164.7 12.7% 15.3%
Bermuda US$87.3 £55.3 US$95.3 £59.0 -8.4% -6.3%
- Hiscox US$172.5 £109.3 US$135.4 £83.9 27.4% 30.4%
- Hiscox USA
Hiscox UK £283.0 £280.0 1.2% 1.1%
Hiscox Europe €129.3 £107.6 €123.3 £106.6 4.9% 1.0%
Total £1,244.4 £1,169.5 6.0% 6.4%
Primary US property business has experienced rate increases of up to 10% year
Reinsurance rates for US and international property catastrophe business rose
by 5-10% during the year, and so remain close to an all-time high level in
Rates are also improving in marine liability insurance.
US casualty rates for admitted business reached a tipping point during the
year as the continuing low interest rate environment forces the industry to
underwrite more profitably. We have seen average rate rises of up to 5% in
errors and omissions (E&O) business so far this year, though there is
continuing weakness in big-ticket E&O lines.
Rates in other specialty insurance lines are generally flat to slightly
New York City and surrounding states are not yet fully functioning as people
are struggling to get back to their homes and businesses. We have not received
any material notifications of claims from our insureds at this stage which
makes it too early to produce any meaningful estimate of claims from Sandy.
The reinsurance teams in Bermuda and London have a very manageable exposure to
crop losses caused by drought conditions in the US. Our reserves for the
Costa Concordia remain unchanged at net US$20 million.
The investment return to 30 September 2012 was +2.7% year to date. Further
intervention by monetary authorities, notably the Federal Reserve and the
European Central Bank, has produced a general increase in asset prices.
Within our portfolio this has led to a good performance from equities and
non-government bonds during the third quarter. Invested assets at the end of
September totalled approximately £3.03 billion and asset allocation remains
largely unchanged from the end of June.
Whilst we are currently benefiting from central bank policy to reduce
borrowing costs and force investors to take more risk, the resultant lower
yields in our bond portfolios suggest that future returns will be more
modest. The investment world remains a very uncertain place, reliant on
political decisions to address the most significant problems. Our strategy
therefore remains a largely conservative one. We continue to favour credit
over duration as a source of extra yield from bonds and remain prepared to
take advantage of opportunities that may arise in the event of any dislocation
in equity markets.
As previously stated, we will review our position on capital when the result
for the year is clear.
Hiscox London Market
Hiscox London Market increased premium income by 5.1% to £499.3 million
(2011:£475.3 million). This growth was mainly driven by US property insurance,
with modest growth in terrorism, marine liability, aviation and space
In reinsurance business volumes remained broadly stable. As stated at the half
year, this year's growth has been offset by the non-renewal of certain inwards
proportional treaties and the (welcome) lack of reinstatement premiums due to
the absence of catastrophe losses. Hiscox London Market and Hiscox Bermuda
are making strides in replacing quota share arrangements for 2013.
Gross premium income for Hiscox Bermudagrew by 12.7% to US$299.5 million
(2011: US$265.9 million) as it continues to take advantage of attractive
During the quarter Jeremy Pinchin became CEO of Hiscox Bermuda and Group
Company Secretary. He continues to oversee Group Claims.
Hiscox Guernsey reduced premium income as planned by 8.4% to US$87.3 million
(2011: US$95.3 million). This business continues to hold a disciplined
approach to piracy risks and has maintained market share despite increased
competition and a softening market. Reduced income was also due to business
that was previously signed in three year deals to take advantage of good
terms, prices and conditions. These will earn through in line with
projections until 2014.
Hiscox USA increased premium income by 27.4% to US $172.5 million (2011:
US$135.4 million). Hiscox USA is growing in every product area and location
with core specialty and wholesale broker lines continuing to do well.
Our direct to consumer small business insurance offering continues its
accelerated growth through direct marketing and partnerships.
The retail business in the UK remained broadly flat with growth of 1.1% to
£283.0 million (2011: £280.0 million). As previously stated this business
withdrew from two underwriting partnerships at the end of 2011. Hiscox UK has
done well to replace this lost income with strong growth in professions and
specialty commercial business.
During the quarter Hiscox UK launched five new liability products for
professions such as green energy consultants and designers. The business also
returned to TV with a second burst of brand advertising.
Hiscox UK announced its intention to open a multi-function office in York
during 2013 with a mix of underwriting and support staff.
Hiscox Europe grew by 4.9% to €129.3 million (2011: €123.3million).This
steady growth is being driven mainly by specialty commercial and technology
and media business. The direct business in France is growing well as the
marketing campaign earlier in the year generated an increased awareness among
our target audience.
In August Fitch Ratings upgraded the Group's core entities' Insurer Financial
Strength (IFS) ratings to 'A+'. Fitch also upgraded all Hiscox's holding
companies' Long-term Issuer Default Ratings (IDRs) to 'A-'. The outlooks on
all the ratings are Stable.
For further information:
Jeremy Pinchin, Company Secretary +1 441 278
Kylie O'Connor, Head of Communications +44 (0) 207 448
+44 (0)20 7404 5959
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 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.
For further information, visit www.hiscox.com.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSUGGCCGUPPUQA -0- Nov/05/2012 07:00 GMT
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