Hiscox reports $284m profit in first half year

Hiscox Group reported its results for the first half year of 2024 on Wednesday 7^th August. These showed growth in premiums of 3.3% and an improvement in pre-tax profit of 7%.

Growth in premium volumes was slightly less than many analysts had expected, with premium growth lower than the level of rate increases,. In the London market division, renewal rates improved by 4% in the half year, but insurance contract written premiums reduced by 2.8%. This was driven by a decision to non-renew some binding authority deals and to reduce some line sizes. Hiscox does expect more growth in the second half year.

The combined ratio, was very slightly worse this year at 90.4%  compared to last  year’s 90.2%. Please see the note below for comments on combined ratios.

Pre-tax profits were up from $265m to $284m, with stronger investment returns a large part of the difference.

Hiscox said that the London market division had suffered a number of non-correlated losses, including the collision of a container ship with the Frances Scott Key Bridge in Baltimore, flash floods in Dubai, some satellite losses and hurricane Beryl. Pricing overall has continued to improve in the year to date, although there are pockets of competition causing underwriters to manage what it describes as micro-cycles across the portfolio. This division, alongside the reinsurance account, written by the Reinsurance and ILS division is largely written into Lloyd’s Syndicate 33. Hiscox data shows that this syndicate has reported better profits at lower volatility than its peer group of the largest syndicates at  Lloyd’s. The combined ratio for the London market division was 86.9%, up from 83.2% in 2023.

Conditions in the reinsurance market continue to be good. CEO, Aki Hussain, said that 2023 was the best market in a generation for reinsurance, and 2024 is the second best. The market showed discipline at mid year renewals, and while there is more capital prepared to commit to the market, this is to be set against increased demand for reinsurance from cedants. The combined ratio improved from 76.3% to 73.8%. Of course, the nature of reinsurance business, with its exposures to the North Atlantic hurricane season means that the first half year traditionally has less loss activity than the second half.

Underwriting members advised by Argenta Private Capital Limited provide capital to two Hiscox entities at Lloyd’s; Syndicate 33, a large diversified syndicate, the oldest of any trading at Lloyd’s today, and SPA 6104, a smaller, reinsurance specialist. Forecasts for the open years of the syndicates are  normally released within a week of the group result’s announcement. Hiscox will share details of its plans for Syndicate 33 and SPA 6104 in early September.

The complete report is available here and the analysts’ presentation pack here.

Note on combined ratio: The combined ratio is a measure of insurance company performance, where claims and expenses are expressed as a proportion of premium income. At 100%, an insurer is breaking even from its underwriting operations, and at combined ratios below 100%, the insurer is making an underwriting profit. Under newer accounting standard IFRS 17, companies are required to report combined ratios on a discounted basis (in other words including the impact of the time value of money). Hiscox continues to report undiscounted combined ratio alongside the discounted ratio. As syndicates are required to report on an undiscounted basis, this is the version of the combined ratios we report here.