Hiscox sweeping up ILS flows just as reinsurance options explode: CEO

Hiscox is sweeping up institutional ILS money from rivals, drawing $561 million in net inflows in H1 with hopes of more in H2 just as a ripening reinsurance market lines up some promising opportunities, CEO Aki Hussain has claimed.

“There is a degree of excitement,” Hussain told analysts of talks with ILS investors. “There’s a potential for further inflows in the second half of the year, but I can’t make any promises.”

The H1 haul, bringing total AuM at the  Hiscox ILS unit to $1.9 billion, came as long-standing  Hiscox ILS investors both ponied up new money and shifted their own portfolios towards the Hiscox stable at the expense of rivals.

Hussain cited “institutional investors that have been with us a long period of time – many, many years” who have “increased their capacity in this space, but only with us.”

From those old-hat investors, Hussain claimed “some new money” while “some of it is money they've poured in from other funds.”

Hiscox increasingly likes the look of the reinsurance space, at least outside the London market, so stands ready to deliver investment opportunities for ILS moneys, Hussain said.

Market conditions “are changing” and “significant rate increases” in property cat, retro and cyber have turned  Hiscoxx from “cautious” to captivated. Property cat could be “flat to slightly rising” in the portfolio.

“It is becoming a very interesting market,” Hussain said.  Citing two years of heady rate growth in Florida, he insisted even that market “is beginning to get very interesting.”

H1 inflows helped drive a 37% year on year increase in gross written premium for the  Hiscox Re & ILS unit to $822.7 million from $599.9 million in the prior year period. Growth for GWP on third-party sums came to 55% versus 6% growth in retained GWP.  Net premiums written grew at a milder 9.1% annual rate.

Underwriting profits at the Re & ILS unit rose 13% year on year to $31.8 million, before the investment result allocated to the unit, hit by the broad market turbulence, pushed the segment to an operating loss. Losses from the Ukraine helped push the combined ratio up 3.5 percentage points to 80.2%.

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