Profits at Hiscox plummet after big claims but GWP show solid growth

Hiscox endured a significant dip in profits for 2019 and a deteriorated combined ratio. The company’s chairman said its retail division had been battered by catastrophes in Japan and an active claims year in the London market but that it is expected to get back on track.

Hiscox Re & ILS was also impacted by natural catastrophes, market-wide adverse development on prior year catastrophes, as well as deterioration in some previously exited lines.

The company’s gross premiums written for 2019 were $4 billion, up 8.1 percent compared with the $3.7 billion it posted in 2018. Its profit was $53.1 million, down from $135.6 million in 2018, and its combined ratio was 105.7 percent, compared with 94.9 percent in 2018.

Chairman Robert Childs said: “The combined ratio for Hiscox Retail is 98.7 percent, outside of our target range of between 90 percent - 95 percent, but still profitable, and it's needed to be as our big-ticket lines took a battering from a series of catastrophes in Japan and an active claims year in the London Market.

“Paying claims and restoring businesses is the raison d'etre of an insurance company. We have fulfilled our promise to pay this year, having paid out $1.2 billion in claims across the Group. The London Market has responded well, with increased prices across the board; the reinsurance market is a little slower to adjust and we will shrink accordingly.”

He added that the aim now is to balance Hiscox Retail with the higher-volatility big-ticket businesses.

“Looking forward, we expect our retail business to get back on track, with better growth this year than last and an improved combined ratio,” he said. “We will trim the reinsurance business to suit conditions. The London Market is seeing improvements in rates and conditions. In the past these improvements have made it straight through to much better returns. We have the brand, talent and diversity of product and geography to make the most of the opportunities ahead.”

Bronek Masojada, chief executive officer, Hiscox, said: "Our strategy of balance, between big-ticket lines and our more steady retail earnings, provides resilience and opportunity. Our growing Retail profits and strong investment return has enabled us to weather a third consecutive year of storms. We are investing for growth as we look to capture the many opportunities we see ahead."