Hiscox UK H1 profit more than doubles

Hiscox UK’s profit more than doubled in the first half of 2013, amid a strong group-wide performance at the Lloyd’s insurer.

The UK division’s profit before tax in the first half of 2013 was £34m, compared with £15.8m in the same period last year.

The combined ratio improved by 7.5 percentage points to 87.7% (H1 2012: 95.2%) and gross written premiums (GWP) increased 12% to £205.5m (H1 2012: £184m).

The company attributed the UK performance to strong GWP growth and underwriting discipline, which it said contributed to a “particularly low” claims experience.

It added: “A lack of freeze, and generally favourable weather conditions, resulted in a decrease in household claims.”

Specialty commercial

Hiscox said the rise in GWP was mainly driven by specialty commercial lines. It also said its higher value household product had returned to growth after “tough pricing decisions” in 2010 and 2011, and its prestige motor business for luxury cars “continues to perform well”.

The company focused on its schemes business during the first half of the year, and launched scheme partnerships for wedding and classic cars.

Marketing for its direct-to-consumer commercial business had worked well, it said in a statement. “Advertising to target small businesses is driving expansion outside the south-east of the UK, particularly in Manchester and Birmingham. Across the UK, this business is attracting 2,000 new customers a month,” it said.

The company is building an office in York. Forty people are currently based in the city, but the new office will provide space for 500 staff.

Group performance

The UK improvement came amid a strong group performance for Hiscox. Group profit after tax was up 27% to £158.1m (H1 2012: £125m) and the combined ratio was down seven percentage points to 74.7% (H1 2012: 81.7%).

This was despite a 37% drop in reserve releases to £73.6m (H1 2012: £116.3m).

The company also suffered a drop in investment returns to 1.5% from 3.1%.

Hiscox chief executive Bronek Masojada said: “Our strategy is working. Our specialist businesses and insurance lines provide stability and opportunity as we navigate more turbulent times in reinsurance. We have a strong brand, good discipline and plenty of options.”

Claims

The company is expecting $22m (£14.3m) in claims from the 2013 catastrophes to date, which include the Oklahoma tornadoes and the European and Calgary floods.

Hiscox has also reduced its loss estimate from the Costa Concordia cruise ship disaster to $19m.

Group GWP increased 12% to £1bn (H1 2012: £906.4m).