US reinsurance rates – 70% of cover – up 15-25%
Hiscox has said it raised its US reinsurance rates, which account for 70% of its reinsurance business, by 15-25% and other regional rates between 5% and 30%.
“Gross written premiums for reinsurance during this period have increased even as we cut back on accounts which did not meet our target returns. We expect these rates to remain strong and to have increased further by the time of the important US renewals in June and July,” the company said
But the insurer warned its investment return for 2008, excluding currency hedging contracts, is approximately -1.3% calculated on the average value of the portfolio over the year. The value of the portfolio at the end of the year was approximately £2.5 billion.
“The negative return includes mark to market losses on prime mortgage and asset backed US bonds which continue to perform and are expected to return to par as they mature,” Hiscox said.
The weakness of Sterling against the US dollar has led to an increase in net asset value per share, and increased the value of Hiscox’s capital held in Hiscox International (Hiscox Bermuda, Hiscox USA and Hiscox Guernsey). The benefit to the balance sheet is expected to exceed £150m. This will be offset by a loss on currency hedging contracts of £42m.
The company also said its final estimates of claims from Hurricane Gustav and Ike were unchanged at $25m and $150m.
Hiscox will report preliminary results for 2008 on 9 March 2009.
