Hiscox Re & ILS, the Group’s reinsurance businesses in London and Bermuda and insurance-linked securities (ILS) activity, produced a strong and improved combined ratio of 73.8% for the first half of 2024, while net premiums written in the segment rose by 10.5% as Hiscox looked to capitalise on attractive market conditions.
Across Hiscox Re & ILS, net insurance contract written premium (ICWP) increased to $381.2 million from $345.1 million in H1 2023, as the business deployed additional capital early in a favourable environment.
ICWP rose by almost 4% to $829.3 million from $797.9 million, with most of the growth taking place during the January reinsurance renewals when Hiscox says that market conditions were most attractive.
“The overall growth rate has reduced at subsequent renewal periods, as additional quota share capacity and own capital deployed were offset by a reduction in ILS capital,” explains the firm.
According to Hiscox, the market remained disciplined at the mid-year renewals, and while capacity has increased, this has largely been offset by heightened demand.
At Hiscox ILS, the company notes gross capital inflows of $300 million into its sidecar and ILS funds from new and existing investors in 2024, lifting assets under management to $1.7 billion as at the end of June 2024. However, after a planned return of capital to investors, these reduced to $1.4 billion at 1 July 2024.
Within Hiscox ILS, fee income increased by 57.7% to $44.3 million for H1 2024, driven by a rise in performance fees reflecting underwriting performance.
All in all, Hiscox Re & ILS generated an insurance service result of $43.5 million in H1 2024, an increase of 33% on H1 2023’s $32.7 million, with a combined ratio improvement of 2.5 percentage points to 73.8%, and profit before tax of $86.5 million, up 57% on last year’s $55.1 million.
In terms of claims, Hiscox notes that H1 2024 witnessed several natural catastrophe loss events around the world. But for flooding in Dubai and Germany, the earthquake in Taiwan and severe convective storms in the U.S., Hiscox says that the total net loss reserved for these events for the Group is in line with its expectations.
However, the Group has reserved $28 million net for the events relating to the MV Dali collision with the Francis Scott Key Bridge in Baltimore, the majority of which has been recognised within Hiscox London Market, with the remainder booked in Hiscox Re & ILS.
Turning to Hiscox London Market’s performance in H1 2024, and ICPW fell 2.8% to $648.3 million as net ICPW decreased 3.2% to $439.1 million. The reductions, according to Hiscox, are a result of non-renewing certain large binder deals, proactive management of the underwriting cycle in casualty lines, and a decrease in space premiums.
The division’s insurance service result fell from $77.8 million in H1 2023 to $74.2 million in H1 2024, while the combined ratio moved higher to 81.5% from 79.2%, and profit before tax decreased to $108.1 million from $114.1 million.
In Hiscox Retail, ICWP increased 5% year-on-year to more than $1.3 billion, and net ICWP rose slightly to $1.2 billion. The segment’s insurance service result increased from $110.9 million to $123 million, and profit before tax fell to $144.3 million, and the combined ratio strengthened slightly to 88.8% from 89.3%.
Group-wide, Hiscox has reported a rise ICWP of 3.3% year-on-year to $2.8 billion for H1 2024 compared with last year’s $2.7 billion, as net ICWP reached $2 billion, up from $1.9 billion a year earlier.
The Group insurance service result increased to $240.7 million from $221.4 million with a group combined ratio of 85.4% for H1 2024, so in line with last year’s 85.7%.
Hiscox’s investment result for H1 2024 hit $152.4 million compared with $121.8 million for H1 2023, supporting the 7.1% year-on-year rise in profit before tax to $283.5 million.
In H1 2024, Hiscox also benefited from $50.8 million of positive prior year development, while the annualised group return on equity for the half-year period was 16.5%, compared with 19.9% a year earlier.
“Our business has built on the momentum from 2023 and delivered strong profits and robust growth in the first half. We are focused on deploying capital to generate profitable growth and investing in underwriting and technology capabilities to build out our competitive advantages. This has delivered a strong and increased underwriting result of $241 million, despite a more active loss environment, and positions us well to deliver high-quality growth through the insurance cycle,” said Aki Hussain, Group Chief Executive Officer, Hiscox.
