Chief Masojada has doubts that commercial lines pricing will go up
The pain being felt in UK commercial lines business shows no signs of abating, according to Hiscox chief executive Bronek Masojada.
Heavy competition in UK commercial insurance is forcing rates down, and many UK insurance chiefs are hoping for increases in 2010, but Masojada is sceptical that they will get them.
“I am much less optimistic than some of my competitors that pricing will go up in the commercial space,” he told Insurance Times, as Hiscox announced a 36% decline in 2010 profit after tax. “I’ve seen what Brit and RSA had to say but we are just not seeing it on the front line.”
As a result, Hiscox’s growth in commercial lines will be slower. “You can’t expect people to grow in falling markets and make money,” Masojada said. “If the price isn’t right then we are not going to sell the product. If we lose market share, that’s okay.”
Hiscox’s 2010 profit of £178.8m, which compares with a 2009 profit of £280.5m, was hit by £165m of catastrophe losses in addition to a 45% drop in investment return to £100.2m from £183.2m. The firm’s combined ratio increased 3.3 points to 89.3%.
However, while pre-tax profit at Hiscox London Market and Hiscox International fell by 33% and 65%, respectively, Hiscox UK’s profit was broadly flat at £28.8m in 2010 compared with £29.1m in 2009. The European operations also performed well, with profit jumping to €11.9m (£10.2m) from €400,000.
The combined UK and Europe operating division made a pre-tax profit of £39.6m for 2010, almost double the £20.5m it made in 2009.
“I am very happy with the fact that our UK and European businesses doubled their profits in 2010 versus 2009,” Masojada said.