Hiscox Ltd has recommended an interim dividend at 12.0 cents per share, an increase of 4.3%. The record date for the dividend will be 12 August 2022 and the payment date will be 20 September 2022.
Highlights
Gross premiums written increased by 9.2% to $2,649.8 million (H1 2021: $2,426.2 million), despite FX headwinds from a strengthening US Dollar. Rate momentum is continuing to keep pace with or exceed inflation expectations in all three divisions.
Premium growth and portfolio adjustments leading to strong underwriting result of $123.2 million (H1 2021: $99.8 million), up 23.4% on prior period and the best result since 2018.
Growth momentum is building across Hiscox Retail, as gross premiums written increased 1.5% to $1,235.2 million (H1 2021: $1,216.4 million), or 5.9% in constant currency, driven by strong growth in Europe and improved performance in the UK. Growth in Retail go-forward gross premiums written accelerated to 8.5% in constant currency (H1 2021: 6.4%).
o The planned US broker channel re-underwriting is now complete, and good progress is being made on the US DPD re-platforming, with all direct customers now live across 50 states; partner migration will commence in the third quarter. To maintain excellent customer service and reduce complexity during the technology transition, they have chosen to switch off some new business opportunities and pause onboarding of new partners. For these reasons growth in US DPD gross premiums written has moderated to 10.1% in the first half and it is expected it to grow in the middle of 5% to 15% range in 2022, before accelerating to in excess of 15% in 2023.
o Hiscox Retail combined ratio remains on track to be in the 90% to 95% range in 2023, with a strong result of 95.5% (H1 2021: 100.7%).
In Hiscox London Market, focus continues to be on selective growth and building balanced portfolios at attractive returns.
o Deliberate reductions in under-priced natural catastrophe exposure resulted in a 3.0% decline ingross premiums written to $591.9 million (H1 2021: $609.9 million). Growth continues in attractive business classes, such as casualty, marine, energy and flood.
o A combined ratio of 86.1% (H1 2021: 81.7%) after absorbing the net loss from the conflict between Russia and Ukraine ('Ukraine net loss') contributing around 10 percentage points. This reflects the benefits of multi-year underwriting actions undertaken to reduce volatility of returns.
In Hiscox Re & ILS excellent growth is underpinned by ILS inflows and an improving market environment.
o Gross premiums written up 37.1% to $822.7 million (H1 2021: $599.9 million).
o ILS net inflows of $561 million and assets under management (AUM) of $1.9 billion as at 1 July 2022.
o Combined ratio of 80.2% (H1 2021: 76.7%) after absorbing the Ukraine net loss.
The ultimate Group loss from all risks in Ukraine and Russia, including aviation, is $48 million net of reinsurance, with $34 million attributable to Hiscox London Market.
Good claims performance across the Group with natural catastrophes in line with expectations.
Two further legacy portfolio transactions (LPT) completed in 2022. Overall 20% of 2019 and prior years' gross reserves reinsured up to a 1-in-200 downside risk through four LPTs executed over the last two years.
Conservatively reserved with a 11.0% margin above actuarial best estimate (H1 2021: 11.3%).
Strongly capitalised with BSCR of 200% and well funded with leverage below 25%.
Investment result loss of $214.1 million (H1 2021: profit of $61.9 million), due to interest rates rising sharply, credit spreads widening and equity markets selling off. Debt and fixed income losses are mostly unrealised and non-economic in nature.
