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Hiscox 2012 half yearly report and new Chairman
Hiscox has released its 2012 half yearly report which is availablehere in fullOur extract from various areas
Highlights
· Interim pre-tax profit of £125.8 million (2011: loss £85.6 million),
· Gross written premiums increased by 7.0% to £906.4 million (2011: £847.5 million)
· Interim dividend increased by 17.6% to 6.0p (2011: 5.1p).
· Group combined ratio 81.7% (2011: 116.9%).
· Catastrophe reserves holding steady.
· Robert Childs to succeed Robert Hiscox as Chairman from February 2013.
Rates
"Rates for US property catastrophe reinsurance grew in excess of 10% in the first quarter, and then between 0-5% in the second quarter. Japanese earthquake catastrophe rates have doubled since the Tohoku Earthquake, and Japanese wind rates rose by between 10-30% at the April renewals.Large casualty business is still under pressure, but rates are continuing to improve in internationally traded property lines. In other specialty insurance lines rates are generally flat, with some under continuing downward pressure."
People
"Since I announced in February my retirement as chairman in February 2013, the Nominations Committee has conducted a rigorous search for a new Chairman. Outside consultants searched from within and outside the company and a shortlist was produced. Ultimately, the Board accepted the Nominations Committee's recommendation of our current Chief Underwriting Officer and member of the Board of Hiscox Ltd, Robert Childs....Finally, if I am to leave my life's work and my family's financial health in the hands of others, I feel safe in the knowledge that the chairman at the head of the table has an incisive knowledge of the risks in our business, and is unlikely to allow foolishness to take place. A few more insiders at the helms of some other financial institutions in the City might have stopped some of the idiocy that occurred."
"Hiscox London Market had an extremely low combined ratio due to the absence of catastrophe losses and through avoidance of attritional losses from the considerable number of weather events in the US and the earthquake in Italy. This resulted in an excellent first half profit of £69.5 million. Premium income grew by 6.4% with growth in terrorism, upstream energy, commercial property and aviation, and a stable income in other lines. Terrorism business is ahead of budget due to our continued strong focus on the class and increased new business from the Middle East and North Africa. Rates remain strong in political risks business. After several years of pulling back whilst rates were falling, the property division is once again growing, with well-rated business coming from the US as well as loss impacted areas such as New Zealand."
Hiscox London Market
"The gross premium income of the reinsurance division grew 2% year-on-year. Increased writings of Japanese catastrophe business were offset by the non-renewal of certain inwards proportional treaties, and the (welcome) lack of reinstatement premiums due to the absence of catastrophe losses. Rates on the core US catastrophe reinsurance account remain strong."
Outlook
"Investment returns have traditionally been a large part of the return for us and the insurance industry. Now that they are so much reduced, our underwriting skill will be even more essential in the near future. Reinsurance rates are healthy and property rates in some areas are rising. Otherwise in our retail books life remains competitive, but it always has been and we have specialist products and volume which enables us to compete and grow profitably. As usual, we wait to see what Mother Nature throws at us in the second half, but given nothing absolutely extraordinary happens, I believe I will be handing over to Robert next February the chairmanship of a very healthy business."