Hiscox gross written premiums up 14%, but warns of moderate growth
Specialist insurer Hiscox said gross written premiums increased by 14.3% to $3.04bn to the end of September, but added that it expected growth to moderate over the balance of the year.
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Hiscox Limited (DI)
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The company said it had set aside $125m to cover claims in the third quarter from US Hurricanes Florence and Michael and Typhoons Jebi and Trammi, which hit Japan.
Hiscox also saw a number of larger individual claims in big-ticket and retail businesses, including a large marine loss of $13m, while the UK & Ireland saw an uptick in subsidence claims following a particularly dry summer, as well as a continuation of escape of water claims.
Hiscox said it Brexit preparations had cost $15m and it was already using its new Lloyd's Brussels subsidiary, adding that it would inject €40m into the new entity.
“Our new European subsidiary, Hiscox SA, is fully operational and expected to start writing business from 1 January 2019,” the company said.
“Our plans have always assumed a worst-case scenario 'hard Brexit' and we are prepared, irrespective of the outcome of the government's negotiations.”
"Challenging" market conditions saw a fall in investment return to $44m from $83m. Assets under management at 30 September 2018 were $6.4bn from $6.1bn.
Hiscox said most asset classes generated "low or even negative returns".
"Rising yields, most apparent in our US fixed income portfolio, are driving negative mark to market effects and adversely impacting investment income. Clearly over the medium term rising yields hold the promise of improved investment returns. Despite our modest allocation to riskier assets, turbulence in global equity markets is further dampening returns," the company said.
"Given on-going economic and global political tensions, we expect our full year investment return to be subdued."
Analysts at RBC Capital Markets marked the shares a 'perform', adding that the price had "been relatively resilient in recent months despite our view that there has been around $30bn of large losses in Q318 and the beginning of Q418".
"As a result of this statement, we would not be surprised to see 2018 estimated earnings estimates for Hiscox to moderate across the street," they said