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Q1 2020 Trading Statement

  • Published by:

  • Topics:
    • Alternative Capital
    • Claims & Losses
    • Covid-19 (Coronavirus)
    • Rates
    • Strategy
    • Supply Chain / Business Interruption
    • Topical Trends

Hiscox Ltd has issued its trading statement for the first three months of the year to 31 March 2020...

...and announces an equity placing for up to 19.99% of its issued share capital in order to position the Group to respond to future growth opportunities and rate improvement in the US wholesale and reinsurance markets.

Gross written premiums grew by 2% in constant currency to $1,181.8 million (2019: $1,164.7 million), with strong growth in Hiscox Retail driven by the US and Europe, as Hiscox London Market benefited from continued rate momentum and Hiscox Re & ILS reduced as planned.

Bronek Masojada, Chief Executive Officer, commented: “In the first quarter, Hiscox has seen continued growth in our Retail and London Market divisions. Hiscox Re & ILS remained cautious.

“The business responded rapidly to the changing circumstances caused by the global Coronavirus pandemic, and almost all of our employees around the world are working from home. We have redeployed staff to frontline roles where possible.

“We are paying claims for event cancellation and abandonment, media and entertainment and travel which are covered by our policies and in the UK we welcome the positive steps by the FCA to resolve disputes in the industry over the application of property policies relating to business interruption.

“We are announcing an equity placing today in order to respond to growth opportunities and rate improvement in the US wholesale and reinsurance markets. We have managed our investments prudently and our capital position is robust, with an estimated group regulatory solvency ratio at the end of March of 195%.”

Gross Written Premiums for the period:

 Gross Written Premiums to 31 March 2020Gross Written Premiums to 31 March 2019Growth in USDGrowth in constant currency
 US$mUS$m%%
Hiscox Retail$635.1$593.37%8%
Hiscox London Market$254.5$228.611%12%
Hiscox Re & ILS$292.2$342.8(15%)(15%)
Total$1,181.8$1,164.71%2%


Rates

Hiscox London Market has seen continued rate momentum for the third consecutive year, reporting an aggregate rate increase across the portfolio of 12% year to date. Rates are up in 15 of 16 lines, including US public company directors and officers’ (D&O) which is up 85%, US general liability up 26%, cargo up 23%, major property up 16% and household and commercial property up 11%. The market is expected to continue to harden, driven by further capital contraction due to the uncertainty from COVID-19.

Pricing in reinsurance so far is below our expectations, despite an unprecedented succession of natural catastrophes, however we are now beginning to see rate improvement accelerate. Rates are up 8% year to date, including the impact of the Japanese renewals in April, with retrocession up 15%, international catastrophe up 12% and North American catastrophe up 7%. While rates are expected to improve further, growth for Hiscox Re & ILS for the remainder of the year will depend on pricing adequately reflecting recent loss experience.

In Hiscox Retail, rates are up by 4% across our US portfolio, with notable increases in excess and surplus lines including general liability, E&O and terrorism, and terms and conditions are also improving. In the UK and Europe, pricing is stable.

 

To view full statement, click here.