Hiscox profits tumble

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Robert HIscox says 2008 will be written about for decades

Hiscox’ profits more than halved to £105.2m in year “that will be written about for decades”.

Highlights

Gross premiums written £1,147.4m (£1,198.9m)
Net premiums earned £953.0m (£965.2m)
Profit before tax £105.2m (£237.2m)
Profit before tax and certain foreign currency items £156.2m (£237.2m)
Earnings per share 18.8p (48.4p)
Total dividend per share for year 12.75p (12.0p)
Net asset value per share 258.1p (209.5p)
Combined ratio 76.1% (84.4%)
Combined ratio excluding foreign exchange 91.9% (85.5%)
Investment return of -1.3% (5.4%)

Robert Hiscox, chairman, said: “This is a robust performance, especially in view of the near-collapse of the financial markets and the third most expensive hurricane on record. Rates in our markets are increasing selectively, especially in reinsurance which is a third of our book, so conditions are good for our existing and new teams to continue to grow a profitable balanced business.

“2008 was a year that will be written about for decades to come, and it was a good year for Hiscox to show the robustness of its business. Global Markets' underwriting was tested by the third most expensive hurricane on record but the reinsurance account still made a decent profit; the regional business continued to grow in size and profitability, and the worldwide financial collapse stress tested our investment portfolio beyond any expert forecast and a very small investment loss was a fair result, with currency movements adding substantially to our profits and assets.

“The market overall is solid and healthy. There is comment that rates are not rising fast everywhere, but much as I enjoy surging rates following a big loss, underwriters do tend to push prices too high which attracts new capital. And if rates are pushed too high, they have to come down and the momentum of the insurance cycle starts to swing down. Rates are being put up selectively, capital is tight, our current combined ratio is 91.9% stripping out currency distortions, so market conditions are profitable and improving. The better underwriters can make good money at these rates so we do not want to push them up faster which will just help the weaker ones.

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