Hiscox Posts Good Earnings, Despite a ‘Difficult Year’

International insurer Hiscox Ltd, which operates in the London/Lloyd’s market, Guernsey and the U.S., posted lower full year profits than its 2009 results, but still did remarkably well in a difficult year. The Group’s earnings bulletin described it as a “a resilient result”

Hiscox listed the following earnings highlights:
– Gross premiums written £1.4327 billion [$2.322 billion], compared to £1.4354 billion [$2.326 billion] in 2009
– Net premiums earned £1.1312 billion [$1.833 billion] compared to £1.0981billion [$1.7795 billion] in 2009
– Profit before tax £211.4 million [$342.58 million], compared to £320.6 million [$519.5 million] in 2009, “despite specific catastrophe claims of £165 million [$267.8 million].”                                                      –Profit after tax £178.8 million [$289.7 million], compared to £280.5 million [$454.5 million] in 2009                                                                    — Earnings per share 47.2 pence [$0.7648] compared to 75.2 pence [$1.218] in 2009
– Total dividend per share for year 16.5 pence [$0.267], compared to 15.0 pence [$0.243] in 2009
– Net asset value per share 332.7 pence [$5.39], up from 299.2 pence [$4.85] in 2009
– Group combined ratio – excluding foreign exchange – 89.8 percent [82.2 percent in 2009]
– Group combined ratio 89.3 percent [86.0 percent in 2009]
– Return on equity 16.5 percent 30.1 percent

Some “Operational Highlights” were given as follows
–Hiscox London Market focused on margin over growth reducing income by 13.6 percent, delivering profits of £121.4 million [$197.07 million] despite catastrophes.
– Specialist retail businesses in the UK and Europe delivered good growth and doubled profits, again despite catastrophes.
– Rates still attractive in reinsurance and stable in other specialty lines.
–The first ‘direct from insurer’ small business offering in the US launched with promising early results.

Chairman Robert Hiscox stated: “In our 2010 Interim Statement I said that a half-year profit of £97.2 million was a testament to the strength of our business given the unnatural number of natural catastrophes (and one massive oil-spill) during the period. Well, Mother Nature has well and truly tested us further in the second half and a full-year pre-tax profit of £211.4 million is further strong evidence of the resilience of our business.

“Our long-term strategy has been to build a balanced book of international businesses, retreating from any area when the competition gets foolish and advancing when we can charge the proper price. It seems an immutable rule of insurance that a big loss will hit the area of weakest rates, and this year has proved the rule. We were underweight in Chile, New Zealand and Australia, had declined a significant insured in the oil-spill and had pruned our UK household book, as our view was that each area was under-rated for just the catastrophes which have occurred.”

Source: Hiscox Ltd