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Hiscox gets off to slow start as re-insurance weighs

“We have done what we said we would do in the first quarter,” said chief executive Bronek Masojada
lloyds insurance
Lloyd’s of London rates were up after two consecutive years of heavy market losses

Insurer Hiscox Ltd (LON:HSX) got off to a slow start to the year as gains at its Lloyd’s of London and retail business were counterbalanced by a re-insurance dip.

Gross written premiums of US$1.16bn in the first quarter of the year were up 0.6% on a year ago, or 3.3% higher on a constant currency basis, compared to the 13% trend last year. Retail and London premiums were respectively 3.2% and 4% higher on a dollar basis and 7.7% and 5.3% at constant currencies, but re-insurance was down 5.6% or 4.6%.

Claims were “more normal” in the retail business after a benign start last year, the London Markets business was hit by a higher frequency of property losses and the re-insurance businesses saw some deterioration on Typhoon Jebi.

Rates in retail were “broadly flat”, with increases in UK home insurance but the FTSE 100 group saying it was being “cautious” in its approach in cyber, where rates are under pressure.

In the Lloyd’s of London market, rates were up around 4% so far in 2019, rallying after two consecutive years of heavy market losses, most notably with double-digit increases in cargo, marine hull and US public company directors and officers' (D&O) and pricing in property lines continuing to firm. Pricing in cyber and terrorism was said to remain competitive.

Amid “abundant” capacity in the reinsurance market, rates have seen rates up around 2%, though pressure continues in the international book where rates are down slightly overall despite strong increases on loss-affected Japanese business at the April renewals.

Investment returns were up 5.3% on an annualised basis, thanks to declining yields and credit spreads boosting unrealised gains on the bond portfolio.

“We have done what we said we would do in the first quarter,” said chief executive Bronek Masojada.

For the retail business, he guided to premium growth at the mid-point of the 5-15% target range in the second half, while in the London Market and in reinsurance he said conditions were improving and “we are growing in the right areas and maintaining our focus on writing profitable business”.

Hiscox shares were down 0.3% to 1,623p after an hour of trading on Tuesday morning.

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