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Q1 2021 Trading Statement

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Topics: Financial Results

Group gross written premiums up 6.3% to $1,256.6 million, as strong growth in Hiscox London Market...

  • Hiscox Europe and direct and partnerships business more than offset planned reductions in the US broker channel.
  • Good performance in Hiscox Retail with gross premiums up 8.6% (3.7% in constant currency) in a challenging operating environment.
    • Strong growth in direct and partnerships, with premiums up 22.1% (16.8% in constant currency) and the US growing gross premiums 30.1% to $109.2 million.
    • UK Retail remains resilient with premiums up 8.2% (1.8% in constant currency), reflecting strong renewals and growing customer numbers.
    • Excellent top-line performance in Hiscox Europe up 20.4% (10.1% in constant currency) led by Germany, Benelux and Iberia.
  • Hiscox London Market continues to perform well, benefitting from favourable rate momentum, with rates up 13% across the portfolio and premiums up 9.3%.
  • Hiscox Re & ILS achieved good rate growth at both the January and April renewals; net premiums grew 35.6% as we retained more risk.
  • Investment return of $20.7 million, or 1.1% on an annualised basis.
  • New leadership in Hiscox USA and Hiscox Europe.
  • $47 million net reserved for the North American winter storm Uri.
  • Good progress on course correction actions across the Group with US broker portfolio repositioning on track.
  • No change to previously-disclosed estimates for claims related to Covid-19 in 2020 and 2021.

Bronek Masojada, Group Chief Executive Officer, commented:

"The year has got off to a good start as rates continue to strengthen in all areas. Our big-ticket businesses are benefitting from improved conditions and strong market positions. Our Retail businesses continue to benefit from the shift to digital trading."


Gross Written Premiums for the period:

 Gross Written Premiums to 31 March 2021Gross Written Premiums to 31 March 2020*Growth in USDGrowth in constant currency
Hiscox Retail$663.9$611.58.6%3.7%
Hiscox London Market$303.9$278.19.3%9.0%
Hiscox Re & ILS$288.8$292.2(1.2%)(1.4%)

*2020 gross written premiums have been represented to reflect reclassification of the Special Risks division.



Rate momentum continues to be favourable across all Hiscox businesses. Hiscox London Market achieved a further aggregate rate increase across the portfolio of 13% year-on-year, building on the significant rate increases over the past three years.

Rate improvement has also continued in Hiscox Re & ILS, with an average increase of 10% across the portfolio. April reinsurance renewals, which are focused primarily on Japan, showed mid-to-high single digit rate rises. This builds on good rate momentum at the January renewals, where the business achieved double digit increases in risk, marine, retro and North American property. Rate increases are expected to moderate over the rest of the year, although winter storm Uri is likely to provide further support to pricing.

In Hiscox Retail, rates are increasing across all regions, with professional indemnity and cyber delivering the strongest growth. Hiscox UK has achieved an average 5% rate increase on the prior year. Hiscox Europe saw annual rate increase of 2%, with the strongest momentum in Ireland, France and Spain. Hiscox USA benefitted from a 5% increase on Q1 2020 driven predominantly by the broker channel, as pricing in the US excess and surplus lines market continues to harden. 



The first quarter of the year has seen a number of natural catastrophes and large man-made events. Based on an industry loss pick of $15 billion, Hiscox has reserved $47 million net for winter storm Uri. The majority of the exposure is in Hiscox Re & ILS with much smaller expected losses in Hiscox London Market and Hiscox USA. The Australian floods and the Ever Given marine loss are not expected to be material events for the Group.

Overall, Hiscox London Market has had a good start to the year with limited large loss activity and claims below prior year. 

Setting aside the previously reported impact of Covid-19, Hiscox Retail has had a more normal claims experience. Both the UK and European businesses have experienced claims frequency below expectations, partly offset by a continued rise in US cyber claims.

We have seen a continued uptick in ransomware claims across the Group. In response, we are taking proactive measures to reduce exposure, refocusing new business on customers with smaller revenues and driving through risk appropriate pricing.


Covid-19 claims and potential exposure

There is no change to the Group's previously disclosed estimates for claims related to Covid-19 in 2020, which total $475 million net of reinsurance. Hiscox UK's exposure to potential business interruption claims has been running off at approximately 8% per month since June 2020. Residual exposure is expected to be largely run-off by the end of June 2021. As previously disclosed, the Group estimates exposure to restrictions already announced in 2021 to the end of June, to be less than $40 million.

In January, the Judgment handed down by the Supreme Court of England and Wales largely confirmed the outcome of the High Court's earlier ruling in respect of Hiscox UK policyholders that, except in rare circumstances, business interruption cover was restricted to customers whose businesses were mandatorily closed.

We have been working with customers and brokers in the UK to pay claims in line with the Judgment as quickly as possible. Business interruption claims require detailed analysis of financial data for each policyholder from experienced loss adjusters, accountants and claims professionals in order to calculate an accurate claims settlement, and that process is well underway.

Since the Judgment was handed down, all customers with valid claims have been contacted and the complex process of assessing and paying those claims remains a priority for the Group.



The investment return for the first quarter was $20.7 million (2020: -$78.9 million), or 1.1% on an annualised basis (2020: -1.2%). Assets under management at 31 March 2021 were $7.7 billion (2020: $6.8 billion).

Governments have continued to extend stimulus in response to the pandemic, most notably the recent US $1.9 trillion support package. This, combined with early success in the US and UK vaccination roll-out, has bolstered global equity markets. The expected normalisation of trade and the utilisation of built up cash balances by both corporations and consumers has led to growth forecasts for the remainder of 2021 and for the next few years being higher than seen in recent years. The expected economic recovery, government stimulus and disruption in various supply chains, has now led markets to focus on inflationary risks. Whilst sentiment remains optimistic, markets need to see more evidence that the vaccine roll-out will be successful and lead to the reopening of economies. Delays could unsettle markets and result in further volatility.  

The more positive market outlook has pushed longer bond yields materially higher, although at shorter maturities - where we invest - only slight upwards movement has been seen. This shift has held back returns on our bond portfolios to some extent, while some of our diversifying exposures have contributed favourably.  

The current yield to maturity on the bond portfolio has increased marginally to 0.5%, from 0.4% at the end of 2020. Hiscox is comfortable maintaining its credit exposure given the supportive economic and policy backdrop. The Group maintains modest exposure to selected risk assets and increases in volatility could provide opportunities, but otherwise we continue to look to incrementally improve long-term risk and capital adjusted outcomes through further diversification.


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