The typical limited disclosure of first-quarter trading statements for London-listed carriers allows for only a partial picture of companies’ financial health but provides a useful tool to assess their mood and identify their key themes ahead of the year.
This time, the excitement around the opportunities offered by the hardening market in property insurance and reinsurance, as well as specialty lines, has appeared as a common feature across companies’ commentary.
Other consistent themes of Q1 trading statements included the manageable impact of natural cat losses as well as higher investment yields supporting positive net investment returns.
On the top-line growth front, Conduit Re led the charge with gross written premiums (GWP) - under IFRS 17 - expanding at 59.1 percent in the first quarter, as the class-of-2020 reinsurer achieved a new quarterly record figure of $278mn.
CEO Trevor Carvey said the group was enjoying strong pricing momentum, especially in property - up 39 percent - and specialty lines - up 14 percent - and predicted this would continue into the US-focused mid-year renewals, including Florida at 1 June.
Lancashire also posted significant top-line growth in Q1, with overall GWP increasing 22.7 percent year on year to $586.2mn. The company said the growth record was the highest the Group had delivered in a first quarter.
Within Lancashire’s insurance unit, GWP was up 29.4 percent with growth primarily driven by property insurance.
The company benefited from significant rate increases in property cat treaty as well as D&F.
In contrast, Beazley's renewal business saw a notable decrease in average rate uplifts, with these down to 10 percent from the previous year's 17 percent as a result of an anticipated slowdown in specialty market pricing.
However, the carrier reported a significant 24 percent growth in cyber premiums despite rate hikes levelling off after previous increases.
Beazley’s overall GWP increased 11.6 percent to $1,372mn.
The carrier completed a £350mn capital raise last year to support its growth drive, particularly in the property and cyber and specialty lines.
Meanwhile, Hiscox reported a more modest picture of growth in the first quarter, with its top-line expanding 8.6 percent for the Hiscox London Market unit and 5.0 percent for Hiscox Re & ILS.
The roll out of new accounting standards in Europe this year has added some complexity to comparisons, with Hiscox reporting insurance contract written premiums (ICWP) under IFRS 17 as their measurement of underwriting top line, contrary to Beazley and Lancashire which have continued to report GWP under IFRS 4.
However, Hiscox’s results - revealed on 4 May – indubitably failed to impress equity investors who sent the stock down 4.2 percent on the day. As of yesterday’s close, it was trading 2.5 percent below its pre-release level.
Hiscox Group CFO Paul Cooper highlighted an “attractive and improving underwriting environment” for the London market unit but CEO Aki Hussain said the firm was applying a “gentle brake” on D&O where rates are falling.
Hussain also acknowledged challenges with fundraising for the firm’s ILS platform which resulted in net outflows of $148mn in the first quarter.
None of the four London reporters provided an update on specific loss activity during the quarter but highlighted that natural catastrophe losses were within expectations.
Despite Q1 US winter losses, the largest ever New Zealand cyclone loss and costliest Turkish earthquake on record, Conduit said no cat event had a material impact on its balance sheet in the quarter.
Alongside natural cat loss activity, Lancashire mentioned it had incurred some risk loses in energy but flagged that “both individually and in aggregate, were not sufficiently material to exceed our normal disclosure threshold.”
Beazley said the level of claims was within their held margins as they were able to reiterate the “high 80s” combined ratio guidance assuming claims experience remained as expected for the remainder of the year.
Hiscox also affirmed that total net reserves for the main Q1 catastrophic events as well as attritional losses were in line with the Group’s expectations.
The news were also positive on the balance sheet side across the board.
Hiscox disclosed a first quarter investment return of 1.3 percent while Beazley achieved a return of 1.2 percent.
For Lancashire, net investment returns stood at 1.5 percent for the quarter with the same metric reaching 1.8 percent for Conduit.
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