31 July 2017Insurance

Hiscox pre-tax profit halves in H1 on foreign exchange hit

Bermuda-based specialist insurer Hiscox has seen its pre-tax profit halve in the first six months of 2017 as foreign exchange rates impacted results.

Pre-tax profit fell to £102.6 million in the first six months of 2017 compared to £206.0 million in the same period a year ago. Excluding the effect of foreign exchange, pre-tax profit would have been £133.5 million, up from £118.7 million a year ago.

“In contrast to the prior year, foreign exchange has moved against us with a £30.9m negative impact on the result,” said Hiscox chairman Robert Childs.

Gross premiums written were up at £1.46 billion in the first six months of 2017 compared to £1.29 billion in the same period a year ago. The group combined ratio deteriorated to 91.0 percent from 80.7 percent over the period. Excluding the foreign exchange effect the combined ratio still worsened to 89.9 percent from 88.4 percent.

Hiscox CEO Bronek Masojada, said: "We are managing the cycle and driving retail growth, as our long-held strategy of balancing the portfolio between volatile big-ticket business and steady retail business continues to deliver.  Despite tough market conditions we are finding opportunities."

Hiscox has been offsetting on-going volatility in bigger ticket lines, Childs explained. “It is pleasing to see that Hiscox Retail has made the biggest contribution to the bottom line in the first half for the second consecutive year.  We now have more than 750,000 retail customers,” he added.

At the same time, as conditions in the London Market continue to be challenging, Hiscox has been trimming back in some of the most affected areas, reducing its involvement or withdrawing completely from some lines of business.

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