Hiscox group has announced its trading Statement for Q1 2023 today to the LSE.
The key financials and comments as follows below:-
- Hiscox Retail written premiums: + 6.5%
- Hiscox London Market + 8.6%
- Hiscox RE & ILS: + 37.6%
- Investment return: + 5.1%
Hiscox London Market which is the Syndicate 33 business in the main, saw good growth, "notably in major property, marine and terrorism.."
The following extract mentions the improved insurance market:-
"Hiscox London Market benefitted from an average risk-adjusted rate increase of 10%, as the hard reinsurance market is driving improving rate momentum in property (household up 25%; major property up 23%) and in specialty (terrorism up 14%). Overall, since 2017, the London Market portfolio has achieved cumulative rate increases of 86%. In 2023, casualty rates are softening with D&O rate declining 11%, driven by increased capacity and reduced IPO activity. This business class however, remains attractively priced, having achieved cumulative rate increases of over 180% since the end of 2017."
Hiscox Re & ILS which is the reinsurance arm of the group, saw "excellent growth" with average risk-adjusted rate increase of 41% in the first quarter.
The following extract mentions the dramatically improved reinsurance market:-
"The reinsurance marketplace is undergoing a seismic shift, triggered by a combination of factors including continued capacity reduction in traditional and ILS markets, an inflationary environment and recent heightened catastrophe losses. At the January renewals, our reinsurance business benefitted from the best market conditions in over a decade. We achieved risk-adjusted rate increases of 45% in property and 26% in specialty, with rate improvement in all lines of business. The favourable market conditions have created the opportunity to refine the profile of business we are writing, through moving up the layers in towers at the same time as increasing net limits, and reducing exposure to aggregate covers where experience has been highly attritional."
"For the April 1 Japanese renewals rate increases were approximately 20%, having already undergone material re-rating following wind loss activity in 2018 and 2019. Our existing market share coming into this renewal season was in line with our targets, as a result the positive rate environment in Japan was used primarily as an opportunity to move up the reinsurance programmes, further away from attritional layers, rather than increasing exposure, and consequently we have seen minimal premium growth, but continued growth in expected profitability. We remain optimistic about the reinsurance rate environment and expect the hard market conditions to persist throughout the remainder of 2023, and into 2024."
"June and July renewals have every potential to be extremely attractive, so the outlook for net growth in the first half is positive."
"The first quarter has also seen capital markets volatility with a particular focus on banks. Our public D&O book is extremely diversified across over 700 clients and is underweight in banks which represent less than 1% of the book with a maximum line size of $5 million. We have seen very low loss activity in this area so far this year."
"Hiscox’s estimated ultimate loss from all risks in the Ukraine and Russia remains unchanged at $48 million net of reinsurance. The majority of the loss estimate is incurred but not reported. Hiscox London Market exited the aviation hull insurance business in 2018 and political risk/trade credit business in 2017."
"...is an area where our considerable technical resources have been vigilant for some time. Hiscox has a conservative reserving philosophy and maintains robust reserves with a high probability of favourable run-off. Over the past two years we executed a number of legacy portfolio transactions and took early action in 2022 to strengthen our best estimate by $55 million as a precautionary net inflationary load. The combination of these actions reinforces the robustness of Hiscox's reserves and balance sheet position."
These numbers augur well for the Groups' half-year results and as hoped the investment performance is now contributing to the bottom line with the bond portfolio's investment yield at +5.1%.
In an echo of today's Hiscox report, Swiss Re announced today that its property and casualty reinsurance net income had quadrupled thanks to the renewal book benefitting from 19% renewal increases and much increased investment income, all despite the Turkey/Syria earthquake, US convective storms and flooding and cyclone Gabrielle in NZ.