Hiscox Ltd. Chairman Robert Childs said the Lloyd’s of London insurer is writing less “big ticket” reinsurance as excess capital pushes rates lower.
The second-largest Lloyd’s insurer by market value reported a 22 percent drop in gross written premiums at its reinsurance unit to £271.5 million ($461 million) for the six months to June 30, according to a statement today.
“Big ticket business will grow and contract according to market conditions,” Childs said in a telephone interview. “We have seen rate reduction in reinsurance at year end and again at the half year and we are trimming our sales.”
Hiscox joins others insurers including Beazley Plc to focus on smaller and specialty lines of business as increased competition drives prices lower for larger risks and catastrophes. Lancashire Holdings Ltd. said last week that it’s prepared to avoid coverage that it considers underpriced for the degree of risk.
For reinsurance contracts renewed on April 1, prices covering potential earthquakes in Japan fell by about 15 percent, U.S. property catastrophe was down by 15 percent and rates for international business dropped by about 8 percent, Childs said in the statement.
Lower income from reinsurance as rates deteriorate is being offset by the growth in Hiscox’s retail business, which includes its acquisition of DirectAsia, a consumer unit in Singapore, Hong Kong and Thailand, the chairman said.
Pretax profit fell 31 percent to £124.6 million [$211.685 million] in the first half, hurt by a £51 million [$86.65 million] loss from foreign- exchange movements. The interim dividend increased 7.1 percent to 7.5 pence a share.
Profit at the reinsurance division climbed 15 percent to £75.6 million [$128.44 million] amid an absence of global catastrophes.