Hiscox reports retail premium growth as rates remain flat

Hiscox has reported a 7.3% increase in gross written premiums for the first nine months of 2019 with the UK retail rates standing firm.

Company chief executive, Bronek Masojada, said the premium increase to $3.21bn (2018 $3.04bn), had been driven by growth in every segment of the underwriter’s operations. He added the balance between its retail business and large commercial risks had enabled the firm to lessen the impact of a series of major claims in the last quarter.

It reported gross written premiums for its UK and US retail business grew 7% to $1.66bn compared with $1.59m for the first nine months of 2018.

“The third quarter has been an active period for claims, with the market experiencing significant catastrophe losses from storms in the US, the Caribbean and Japan,” he explained. “Paying claims is what we are here for, and we have reserved $165m for claims from Hurricane Dorian and Typhoons Faxai and Hagibis. We expect an additional impact from lower fees and profit commissions.

“It is pleasing to see good growth across all of our segments, with Hiscox London Market leading the way as conditions continue to improve. In Hiscox Retail, growth is accelerating following the decisive action we have taken in the US and UK, and Europe is delivering strong double-digit growth. We are on track to meet our full year growth guidance for the retail segment.

Positive pricing momentum

“Pricing momentum in the London market and reinsurance continues to be positive. In Hiscox Retail, rates in the UK and Europe remain broadly flat across the portfolio. In the US, there are early signs that the market is responding to adverse claims trends in casualty business, where we are taking an increasingly cautious approach to reserving.

“Yet again the balance between our retail and big-ticket businesses has given Hiscox resilience in the face of challenging events. From these challenges comes opportunity.”

Hiscox added: “Due to the combined impact of increased claims activity and a cautious approach to reserve development, the Group expects the full year combined ratio for Hiscox Retail to be between 97-99%. The Group continues to target a combined ratio range for Hiscox Retail between 90-95% over the medium term.

“In aggregate, the Group expects to experience a small positive reserve development for the year.”

Examining the current rating environment for its retail classes Hiscox said rates remain “broadly flat across the portfolio, with pockets of positive momentum”.

The underwriter added: “In the UK, rates are broadly flat across the portfolio, with pricing improving in household lines as the market reacts to claims trends.”