Hiscox posts solid growth in gross premiums as global underwriter and ILS business reinsurance business above $1 billion
- Hiscox announced its gross written premiums are up 9.3% to $3.68 billion
- Nearly all premium growth has come from the company’s Re & ILS business
- The group has set aside $135 million to cover potential losses from Hurricane Ian. to cover
Hiscox has revealed written premiums have skyrocketed as a result of ‘strong interest rate momentum’ across the company, especially the global reinsurance division.
Lloyd’s of London insurer told investors on Wednesday that gross written premiums rose 9.3 percent at constant exchange rates to $3.68 billion in the first nine months of 2022.
Nearly all of the growth came from the company’s reinsurance and insurance-related securities business, which saw premiums soar from $806 million in the same period last year to more than $1 billion this time around.
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Hiscox said rates within the division had increased cumulatively by more than half in the past five years, driven by healthy demand in its cyber, North American real estate catastrophe and retrocession portfolios.
It noted ‘material improvements’ in Australia following a spate of claims when extreme flooding hit the country’s east coast in February.
The FTSE 250 company also expects further increases in rates from Hurricane Ian, the deadliest tropical cyclone to hit Florida in nine decades.
In response to that natural disaster, the group set aside $135 million to cover potential losses and suffered a $40 million hit in the third quarter, though it said this would have been higher if it increased its exposure to “undervalued Florida businesses.” had not diminished.
Aki Hussain, chief executive of Hiscox, said: “The performance of our big ticket business remains robust after the impact of Hurricane Ian, and improving conditions present new opportunities.”
Hiscox’s also reported great performance in its US Digital Partnerships and Direct business, where gross premiums were up 9.8 percent and are set to grow by 5 to 15 percent this year.
But it cost an investment loss of nearly $300 million, down from a gain of $62.7 million in 2021, as tighter central bank monetary policies led to significant losses in the group’s bond portfolio.
Hiscox shares were up 6 percent to £9.52 just before trading closed, making them the top riser on the FTSE 250, although their value has only risen slightly since the start of the year.
Analysts at UBS praised Hiscox’s “very strong update” and reiterated their buy recommendation for the group’s stock.
They added: ‘Hiscox reiterates that they [sic] remain highly capitalized with the flexibility to invest in structural growth opportunities in the retail sector and in favorable market conditions, especially in reinsurance.
“They would expect to deploy more equity and increase deducted premiums in the event of material surfacing, and show a willingness for material growth when the appropriate opportunity arises.
“Only a well-positioned company can make such strong statements at this point in our view.”