Hiscox beats forecasts for first half profits

30th Jul 2018 08:27

(Sharecast News) - Hiscox beat analysts' forecasts for the first six months of the year, posting a double-digit increase in profits while telling shareholders that the field was wide open to continue growing its Retail arm.Commenting on the insurer's performance, chairman Robert Childs said: "Hiscox is in good shape. The London Market business is navigating the market and finding opportunities in areas such as flood, cyber and general liability. In reinsurance we have grown and are achieving good margins. The retail businesses, in their respective regions and product lines, continue their good momentum."The opportunities are legion."Profits before tax at the insurer jumped by 27% over the six months ending on 30 June to reach $163.6m (Numis: $146.0m), driven by a "strong" 21% rise in gross premiums to $2.229bn.The group's combined ratio improved from 90.8% to 87.9%, helped by reserve releases of $154m, which were in part the result of lower loss estimates for catastrophes in 2017.In Retail, the combined ratio was unchanged from a year ago at 91%, but in its London Market and Reinsurance and ILS units it decreased to 88% and 72%, respectively.On an annualised basis, the investment return on its $6.46bn of assets under management was 0.7%, down from 2.3% one year ago.For the reporting period, investment income was $19.5m, alongside other income of $24.4m.To take note of, the insurer was cautious on the outlook for markets in anticipation of higher interest rates."We remain cautious on our expectations for investment return, with a modest exposure to risk assets of 6.7% and a relatively high allocation to cash at 24.8%. This leaves sufficient leeway to re-invest at higher yields as circumstances allow, and protects the balance sheet against rising interest rates," management said.Like other UK outfits, Hiscox was focused on the US market for growth, telling shareholders that the bulk of the $75m earmarked for marketing spend in 2018 would be directed at the States.The interim dividend was increased by 5.2% to $0.1325.