Hiscox dives deep at 1.1 renewals, ups premium 50%
Hiscox increased net premiums written in its reinsurance & ILS unit by nearly 50% at the 1.1 reinsurance renewals, adding exposures above and beyond the boost from skyrocketing rates.
“We are witnessing the best market conditions in over a decade and have deployed additional capital at January renewals,” CEO Aki Hussain (pictured) said in comment to FY2022 results.
The Hiscox segment ended with a risk-adjusted rate increase of 45% in property and 26% in specialty at the renewals.
Rates remain on track for “material improvement across nearly all lines for 2023.” Hiscox can grow into the continuing market gap. “Hiscox Re & ILS has the expertise, strong balance sheet and financial flexibility to capitalise on the current trading conditions,” Hussain said.
Retrocession purchase for 2023 appears to have not kept pace with the group's growth plans.
While Hiscox “secured the required retrocession protection to support our 2023 business plan,” net premium written growth is likely to exceed gross written premium growth, management said. Continued drought in ILS will further that.
For the 1.1 growth, Hiscox mustered capital from its own pen to “fill the gap in the market” left by third-party capital contraction and "retrenchment" by some reinsurers.
That market gap remains. Hiscox still sees “uncertainty within the market regarding the availability of new or replacement ILS capital in the near term” on account of the loss record and the new macro uncertainties. For its part, Hiscox had managed $511 million in net inflows to its ILS operations million during the first half of the year, then succumbed to light outflows in H2.
For the full-year, Hiscox Re & ILS took an average risk adjusted rate increase of 13% to beat management expectations. North American property and retrocession led with rates up 14% and 16% respectively. Specialty lines rose on rate gain of 42% for cyber and 26% for terrorism.
That pushed the segment to $1.04 billion in gross written premium, a 28.5% increase on the prior year. Net written premiums were down lightly year on year, in part on the contribution in H1 from strong ILS flows. The segment's combined ratio rose year on year to a still-strong 81.6%.
In Hiscox London Market, gross premiums written declined 4.8% to $1.1 billion with management attributing the decline to underwriting actions taken on the property binder portfolio. Mark combined ratio at 84.8%, down 4.3 points year on year.
"The attractive rating environment means London Market is expected to grow gross premiums written in 2023," management said in consolation.
For the group as a whole, gross premiums written increased by 3.6% to $4.4 billion, with rate gains sufficiently counter FX headwinds.
Underwriting profits rose by a quarter to $269.5 million, what Hiscox called the highest level since 2015.
Those gains came despite a heavy year in large loss, including a previously announced $135 million from Hurricane Ian and $48 million on the Russian war in Ukraine, also flat from prior estimate.
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