7 May 2014 Insurance

Hiscox Re shrinks on back of softening rates

Re/insurer Hiscox said it is seeking growth in commercial lines as Hiscox Re, its reinsurance division, shrunk under considerable market pressure in the first quarter.

The company’s total gross written premiums grew by 2.3 percent to £501.6 million compared with £506.1 million in the first quarter of 2013. But much of this increase came from its commercial lines operations as the group pulled back from its reinsurance business.

Gross written premiums in Hiscox Re reduced by 14.2 percent to $237.1 million compared with $276.3million in the first quarter of 2013. Despite market challenges, Hiscox said it said it believes it can remain a top-tier reinsurer and wants to focus on clients who value its underwriting, product design and ethos. “As disclosed previously we expected this area to shrink in 2014 as rates decline and the team remains disciplined,” it said.

The first quarter saw a diverse list of losses for Hiscox, including marine liability, upstream energy and movie production claims. The group also has a small exposure to the tragic Malaysian Airline flight 370 and the Korean ferry loss.

Hiscox USA continued to grow with its gross premium income up by 28.5 percent to $82.6 million, compared with $64.3 million in the first quarter of 2013.

Its London market business also grew by 13.6 percent to £126.8 million, up from £111.6 million in 2013. The growth was driven by property and small ticket binding authority business in North America, as well as extended warranty business.

Hiscox expects rates in many lines to remain under pressure, particularly in the absence of any catastrophe losses. However, it believes its diverse business mix provides it with options and the company said it is hungry for new business opportunities.

The group’s long-term strategy of building local retail businesses to balance internationally traded business continues to present opportunities, the company said.

Bronek Masojada, chief executive of Hiscox, said: “The market is softening, but conditions in many of our insurance lines are good. Our retail businesses continue to benefit from long-term investment in the brand and our acquisition of DirectAsia represents another important milestone.”

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