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Retail profits help Hiscox through another stormy year
2nd Mar 2020 07:21
(Sharecast News) - Hiscox reported an 8.1% rise in gross premiums written in constant currency in its full-year results on Monday, to $4.03bn (?3.14bn), despite disciplined action to reduce $200m in underperforming lines.
The FTSE 250 company said its group profits were impacted by large catastrophe events, with $165m reserved for Hurricane Dorian and typhoons Faxai and Hagibis, in addition to $25m of reduced fees and profit commissions.
Its net premiums earned rose to $2.64bn for the year ended 31 December, from $2.57bn, while its profit before tax was $53.1m, falling from $135.6m.
Earnings per share on a dollar basis were 17.2 cents and were 13.5p in sterling, compared to 41.6 cents and 31.2p in 2018, respectively.
Its net asset value per share was 768.2 cents and 580.1p at year-end, down from 798.6 cents and 627p in 2018.
Hiscox reported a group combined ratio of 105.7% for 2019, up from 94.9% in 2018, while its annualised return on equity fell to 2.2% from 5.3%.
Its annualised investment return was 3.6%, up from 0.7%, while reserve releases totalled $25.9m, compared to $326.5m in the 2018 financial year.
On the operational front, the company said Hiscox Retail was now a $2.2bn business with profits there up 22% at $178.4m.
The division's combined ratio was 98.7%, which was in line with its guidance of between 97% and 99% for 2019.
Hiscox UK and Hiscox Europe both generated "good" profits, the board said, driven by a strong performance in small business insurance.
Hiscox USA was said to be profitable for the period, with action taken to improve its performance in directors and office liability (D&O), and media business progressing as planned.
A total of 180,000 retail customers were added in 2019, taking the total to 1.2 million globally, including more than 450,000 direct and partnerships customers.
Growth in retail was expected to be in the middle of the 5% to 15% target range for 2020.
Hiscox said its retail combined ratio was set to to improve by between 1% and 2% per annum, and return to the 90% to 95% target range in 2022.
Hiscox London Market's operations were impacted by catastrophes and property claims, although the board said market conditions continued to improve.
Hiscox Syndicate 33 increased its capacity by 19% to "make the most of any opportunities" for profitable growth in 2020, as rates rose for the third successive year, and were up in 14 out of 15 lines.
Hiscox Re and ILS were also impacted by natural catastrophes, as well as market-wide adverse developments on prior-year catastrophes, and a deterioration in some previously-exited lines.
The company reported a "strong" investment return of $223m for the year, up from $38.1m year-on-year.
It said its reserves remained "robust" at 9.4% above actuarial estimates, with continued positive development in retail, and reserve releases expected to be between 3% and 5% of opening net reserves in 2020.
Hiscox said its full-year dividend was being raised by 3.5% to 29.6 cents, in line with its progressive dividend policy.
The board said the total ordinary dividend for the year totalled 43.4 cents, rising from 41.9 cents in 2018.
"Our strategy of balance, between big-ticket lines and our more steady retail earnings, provides resilience and opportunity," said chief executive officer Bronek Masojada.
"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."
At 0803 GMT, shares in Hiscox were up 3.59% at 1,270p.
The FTSE 250 company said its group profits were impacted by large catastrophe events, with $165m reserved for Hurricane Dorian and typhoons Faxai and Hagibis, in addition to $25m of reduced fees and profit commissions.
Its net premiums earned rose to $2.64bn for the year ended 31 December, from $2.57bn, while its profit before tax was $53.1m, falling from $135.6m.
Earnings per share on a dollar basis were 17.2 cents and were 13.5p in sterling, compared to 41.6 cents and 31.2p in 2018, respectively.
Its net asset value per share was 768.2 cents and 580.1p at year-end, down from 798.6 cents and 627p in 2018.
Hiscox reported a group combined ratio of 105.7% for 2019, up from 94.9% in 2018, while its annualised return on equity fell to 2.2% from 5.3%.
Its annualised investment return was 3.6%, up from 0.7%, while reserve releases totalled $25.9m, compared to $326.5m in the 2018 financial year.
On the operational front, the company said Hiscox Retail was now a $2.2bn business with profits there up 22% at $178.4m.
The division's combined ratio was 98.7%, which was in line with its guidance of between 97% and 99% for 2019.
Hiscox UK and Hiscox Europe both generated "good" profits, the board said, driven by a strong performance in small business insurance.
Hiscox USA was said to be profitable for the period, with action taken to improve its performance in directors and office liability (D&O), and media business progressing as planned.
A total of 180,000 retail customers were added in 2019, taking the total to 1.2 million globally, including more than 450,000 direct and partnerships customers.
Growth in retail was expected to be in the middle of the 5% to 15% target range for 2020.
Hiscox said its retail combined ratio was set to to improve by between 1% and 2% per annum, and return to the 90% to 95% target range in 2022.
Hiscox London Market's operations were impacted by catastrophes and property claims, although the board said market conditions continued to improve.
Hiscox Syndicate 33 increased its capacity by 19% to "make the most of any opportunities" for profitable growth in 2020, as rates rose for the third successive year, and were up in 14 out of 15 lines.
Hiscox Re and ILS were also impacted by natural catastrophes, as well as market-wide adverse developments on prior-year catastrophes, and a deterioration in some previously-exited lines.
The company reported a "strong" investment return of $223m for the year, up from $38.1m year-on-year.
It said its reserves remained "robust" at 9.4% above actuarial estimates, with continued positive development in retail, and reserve releases expected to be between 3% and 5% of opening net reserves in 2020.
Hiscox said its full-year dividend was being raised by 3.5% to 29.6 cents, in line with its progressive dividend policy.
The board said the total ordinary dividend for the year totalled 43.4 cents, rising from 41.9 cents in 2018.
"Our strategy of balance, between big-ticket lines and our more steady retail earnings, provides resilience and opportunity," said chief executive officer Bronek Masojada.
"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."
At 0803 GMT, shares in Hiscox were up 3.59% at 1,270p.