Hiscox, the Bermuda-based specialist insurer, delivered a pre-tax profit of £135.1 million* ($205.2 million) in the first half ending June 30, 2015, compared with £124.6 million ($189.3 million) during the same period in 2014.
Gross written premiums for the six-month period increased to £1.1 billion ($1.7 billion), compared with £978.9 million ($1.5 billion) in 2014.
Net earned premiums were £709.8 million ($1.1 billion) for the first half, compared with £643.5 million ($977.6 million) in the first half of 2014. The impact of foreign exchange was relatively constant at a loss of £15.7 million ($23.9 million), compared with a loss of £16.4 million ($24.9 million) in 2014.
Net combined ratio was a 82.5 percent, compared with 82.0 percent during the six months period in 2014.
Earnings per share were 43.7 pence (66.4 pence), compared with 36.4 pence (55.3 pence) during the first half of 2014, while and net assets per share grew to 505.5 pence (767.9 pence), compared with 425.6 pence (646.6 pence) reported during the first six months of 2014. The annualized return on equity was 19.9 percent (2014: 18.9 percent).
Bronek Masojada, chief executive officer, Hiscox Ltd, commented: “We are reaping the benefits of our growing retail specialty businesses in the U.K., Europe and the USA. Although conditions for reinsurance and big ticket insurance remain tough, our teams have demonstrated their creativity and determination to succeed. Hiscox has the brand, distribution and talent for a bright future.”
He said the good pre-tax profit was thanks to a combination of sound underwriting, the growing strength of the company’s retail operations, and a paucity of major catastrophes.
The top line increased by 12.0 percent, driven mainly by opportunities in the London market business and a continued good performance from Hiscox USA. This compared with a drop in the top line of 3.8 percent in 2014.
“As usual, we are reporting on the cusp of the hurricane season and Mother Nature can still deliver some surprises in the second half,” said Masojada in his chairman’s statement.
“Strong results across the industry mask what we regard as a market that is defying gravity, as pension funds and others pour capital in, fueling further competition in big-ticket insurance and reinsurance,” he said. “Rating levels are being gnawed away, yet attritional losses remain constant, and thus underlying loss ratios are creeping up. The market’s profitability is being propped up by a lack of meaningful catastrophe losses.”
Masojada said the company is maintaining its strategy of balancing “volatile big-ticket business with more stable specialty retail lines. It provides us with opportunities regardless of prevailing conditions, and we see plenty of room for further expansion in our chosen markets.”
Rating levels in insurance lines are still satisfactory across many territories and products, although there is a downward trend in some lines such as property, marine and energy, according to the chairman’s statement.
Trading conditions in reinsurance remain tough, though there are signs that rates are now finding their floor, he affirmed. Rates for U.S. property catastrophe business were down on average by 10 percent at the June 1 and July 1 renewals. International property catastrophe business was down by 10 percent at the July renewals. In Hiscox’s retrocession book it saw increases of between 5 percent and 20 percent on mid-year renewals, as demand outstripped supply. Other non-catastrophe exposed lines of business saw more modest reductions.
*Currency conversions in this article were based on an exchange rate of £1 = $1.52, as of July 27, 2015.
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