Hiscox Ltd (LSE:HSX), the international specialist insurer, today issues its trading statement for the first three months of the year to 31 March 2019.
Gross written premiums grew by 3.3% in constant currency to $1,164.7 million (2018: $1,157.7 million). Hiscox Retail continued its disciplined approach, while Hiscox London Market and Hiscox Re & ILS have been opportunistic, growing where rates are improving most.
Bronek Masojada, Chief Executive Officer, commented: “We have done what we said we would do in the first quarter. In retail we continue to pull back in US private company D&O, where conditions are challenging, and the UK business is adapting to a new IT system which will help us capture the long-term opportunity. We expect growth for our retail businesses to trend towards the mid-point of our 5-15% target range in the second half.
“In the London Market and in reinsurance, where conditions are improving, we are growing in the right areas and maintaining our focus on writing profitable business.”
In Hiscox London Market, rates have increased across the portfolio by approximately 4% year to date, as the cumulative impact of two consecutive years of heavy market losses and the Lloyd’s ‘Decile 10’ directive continues to drive rate improvement in the majority of classes. Cargo, marine hull and US public company directors and officers’ (D&O) have seen the most significant rate rises, all up double digits, while pricing in property lines continues to firm. Pricing in cyber and terrorism remains competitive.
In reinsurance, where capacity is abundant, rate improvement has been more incremental. For Hiscox Re & ILS, rates are up by approximately 2% across the portfolio, with the retrocession and risk excess accounts achieving the highest increases. Rates in US catastrophe-exposed business are up low-single-digits, while pressure continues in the international book where rates are down slightly in aggregate, despite increases of more than 25% on loss-affected Japanese business at the April renewals.
In our retail businesses pricing is broadly flat, with claims trends in the market driving increases in UK home insurance. Rates in cyber are under pressure and we are being cautious in our approach.
Hiscox Retail has seen a more normal claims experience compared to a very benign start to 2018. Hiscox USA continued to see claims in the D&O book where we are actively reducing.
Hiscox London Market has been impacted by a higher frequency of losses in the property book, including a single large household loss.
In line with the market, Hiscox Re & ILS has seen some deterioration on Typhoon Jebi and the risk excess book, where notifications continue to come in later than expected. As a result, our aggregate reserve development, whilst remaining positive, is expected to be at the lower end of the normal range.
Hiscox UK’s gross written premiums grew by 3.2% in constant currency to $178.9 million (2018: $184.9 million), with growth subdued as we continue to adapt to a new IT system.
In the broker channel, we have successfully piloted a new operating model which is now being rolled out across the UK. We are on track to commence the transition of our high net worth business onto the new system in the second half of the year as planned, and service standards are expected to return to normal once these changes are fully embedded. We expect growth to remain subdued until these changes take full effect.
Our direct-to-consumer business has continued to deliver strong growth, however we are seeing increased competition in Direct Commercial. Our strong brand is key to differentiating us in this space and we will continue to invest significantly in marketing to boost our growth.
In March we launched our new CyberClear product in London, with over 350 brokers and partners in attendance. Cyber insurance is a key area of growth in the UK and CyberClear offers market-leading protection for our customers against a wide range of threats.
Bob Thaker joined as CEO during the quarter, returning from Asia where he led DirectAsia since 2015. Bob’s background in strategy and experience running a fast-growing digital insurance business will be invaluable as we continue to scale our direct platform in the UK.