Hiscox seeks more rate gain in reinsurance to assure margin through the cycle
Hiscox has taken strong rate momentum through the January renewals, but needs still more rate gains in reinsurance to keep ahead of trend, officials argued Wednesday (March 02).
“If we wish to generate return through the cycle, we feel we need further rate,” chief underwriting officer Joanne Musselle told her company’s Q4 earnings call.
Rates taken recently look “adequate,” especially given steps taken by Hiscox to reduce parts of the portfolio and increase attachment points on treaties, she indicated. “Momentum continued at 1.1,” she said of the latest signals.
Hiscox claims an 8% increase in rates in 2021. Of the 35% increase since 2017, Hiscox claims that only the latest gains have gone to margin improvement after a long period playing catch-up to loss cost.
The Hiscox Re & ILS unit swung to a $91 million underwriting profit from a prior year loss on an astonishing 64 percentage point improvement in the combined ratio to 68%. Prior period adjustments helped offset a heady $122 million nat cat loss. Gross written premiums were up 8.7%.
Officials cited “strong non catastrophe loss experience as the portfolio benefits from multiple years of underwriting action.”
Hiscox has leveraged hardening market conditions to increase the share of its business in core lines including property catastrophe XOL (excluding small lines), risk excess (non risk aggregate product) retro, specialty and marine. Long-tail casualty and health care, risk aggregate product and small lines have been on the out.
Hiscox isn’t counting on a full repeat of the latest results. The group writes business to target a combined ratio in the low 80’s on normalized nat cat conditions, CEO Aki Hussain (pictured) said, with caveat for “a lot of variables in that.” A strong rate environment could offer downside to the combined ratio.
CEO Aki Hussain played down the notion that the group’s drive to smooth earnings volatility following some headline losses in recent years could drive the group away from reinsurance.
“The ambition is to produce somewhat more consistent returns, but not to eliminate volatility,” Hussain said. Rebalancing had served to “increase optionality in various parts of the insurance market.”
“You should expect more consistent results from us in the future, but there will still be volatility.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze