Interim Management Statement

RNS Number : 7470L

Hiscox Ltd

12 May 2010

 



Interim Management Statement

Hamilton, Bermuda (12 May 2010) -- 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 2010.

Hiscox's gross written premiums grew year on year by 6.4% in local currencies to £504.1 million (2009: £486.5 million). The Group made a good profit despite the winter freeze, the Chilean earthquake, Windstorm Xynthia and recessionary related claims in UK commercial.  Rates in reinsurance and many of the Group's specialty lines continue to present opportunities in a challenging environment. 

Robert Hiscox, Chairman, commented: 

"True to form, having given us a wonderfully quiet year last year, Mother Nature was busy in the quarter.  However, astute underwriting, sensible reinsurance protection and good investing kept us profitable.  We will continue to focus on regions and products where we see greatest profit potential, taking advantage of our spread and specialisation."

Gross Written Premiums for the period:

	Gross Written Premiums to 31 March 2010 US$/€m                  £m		Gross Written Premiums to 31 March 2009 US$/€m                  £m		Growth in local Currency %	Growth in Sterling %
Hiscox London Market		£234.8		£239.1	-0.8%	-1.8%
Hiscox International -     Hiscox Bermuda -     Hiscox Guernsey -     Hiscox USA	US$136.3 US$33.1 US$39.8	£87.3 £21.2 £25.5	US$121.6 US$28.5 US$37.2	£84.5 £19.8 £25.9	+12.1% +16.1% +6.9%	+3.3% +7.0% -1.5%
Hiscox UK Hiscox Europe	€62.1	£79.8 £55.5	€53.9	£69.0 £48.2	+14.9% +15.2%	+15.6% +15.1%
Total		£504.1		£486.5	+6.4%	+3.6%

Investments

The investment return to 31 March 2010 was +1.3%.  With short-term interest rates remaining low, our allocation to equities and corporate bonds continues to deliver attractive returns relative to cash.  Invested assets totalled around £2.8 billion at the end of March and asset allocation remained largely unchanged during the first quarter.

The outlook, however, is still volatile and duration, particularly for government bonds, is being kept short.  The Group holds no sovereign debt of Greece, Italy, Ireland, Portugal or Spain.  We are maintaining our exposure to corporate bonds at present but the best of the exceptional opportunities that we were able to take advantage of last year are clearly past.  Therefore investment returns for the balance of the year are still forecast to be relatively modest.

Market events

As previously announced Hiscox estimates net claims for the Chilean earthquake and Windstorm Xynthia to be approximately £100 million (based on an insured market loss of US$8 billion for Chile and US$3 billion for Xynthia).  This includes both insurance and reinsurance exposure across the Group.

The Deepwater Horizon oil platform disaster is a major energy industry event.  Hiscox is a leading underwriter of offshore energy business but relative to our size we have a small exposure to this event. For an industry insured loss of up to $2 billion we anticipate net claims of less than £10 million.  We expect a significant improvement in rates, terms and conditions in both energy and marine reinsurance and insurance lines. 

Rates

Reinsurance makes up around a third of our business and rates in this area remain attractive. In most of our specialty lines rates are healthy and broadly stable. Property rates in the London Market and US businesses remain under pressure and we have reduced exposure here. 

In the UK, rate increases are being achieved in targeted areas.  We have seen a rate increase in excess of 4% in the high net worth household account and 2% in areas of our commercial combined property and liability book.  

Hiscox London Market

Hiscox London Market has reduced premium income less than anticipated by only -1.8% to £234.8 million (2009: £239.1 million).  It has cut back in areas where rates are weakening, mainly in property insurance lines.  The business is benefiting from its good reputation as a reinsurance underwriter and is able to use third party capital to expand where rates are attractive.

The London Market team plans to expand into aviation insurance and has employed market leading underwriter David Slevin.  Subject to Lloyd's approval, David and a small but experienced team will begin building a quality book of aviation business for Hiscox in the fourth quarter of 2010.

Hiscox Bermuda

Hiscox Bermuda has grown by 12.1% to US$136.3 million (2009: US$121.6 million) as it continues to take advantage of attractive rates in reinsurance.  As with Hiscox London Market, Hiscox Bermuda is benefiting from third party capital to underwrite more reinsurance business.

Hiscox Bermuda's new healthcare liability team has started underwriting, focusing on tailored solutions for larger, well-run health institutions.   

Hiscox Guernsey

Hiscox Guernsey is on track to deliver another good result as gross written premiums increased by 16.1% to US$33.1 million (2009: US$28.5 million).

Hiscox USA

The underwriting environment in the US remains challenging.  As planned, Hiscox USA is growing cautiously, focusing on areas where rates are favourable particularly in specialty lines. Gross written premiums grew by 6.9% to $39.8 million (2009: $37.2 million).

Hiscox UK

The retail business in the UK continues to grow as planned in its most profitable lines.  Gross written premiums grew by 15.6% to £79.8 million (2009: £69.0 million).

The household book suffered some losses as a result of one of the worst winter freezes in modern times.  The recession has caused an increase in claims in the commercial book.

More recently, Hiscox UK experienced some small losses on both event contingency and travel lines due to the disruption relating to the Icelandic volcanic ash cloud during April.  The business provides broad cover and has been paying claims when others have not, reinforcing Hiscox's reputation as a brand that can be trusted.

Hiscox Europe

Hiscox Europe grew by 15.2% to gross written premiums of €62.1 million (2009: €53.9 million) by focusing on its most profitable lines.  It had a positive start to the year despite Windstorm Xynthia. 

ENDS

For further information:

Hiscox Ltd

Charles Dupplin, Company Secretary                               [phone]

Kylie O'Connor, Head of Communications                        [phone]

Maitland                                                                      [phone]

Philip Gawith, Rebecca Mitchell

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 parts of the Group - Hiscox London Market, Hiscox UK and Europe and Hiscox International. Hiscox London Market underwrites 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. Hiscox Insurance Company Limited, Hiscox Underwriting Limited, Hiscox Europe Underwriting Limited and Hiscox Syndicates Limited are authorised and regulated by the Financial Services Authority.

For further information, visit www.hiscox.com.

 

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