Hiscox premium flat as unprofitable lines are cut

Lloyd’s insurer Hiscox wrote £1.205bn of gross premiums in the first nine months of 2010, down slightly from the £1.212bn it wrote in the same period last year.

The flat premium income is a result of the company continuing to grow its local specialty lines but contract in areas where rates are challenging – mainly US property lines and big-ticket professional indemnity.

However, the company added that it is ready to expand in offshore energy lines where market conditions are expected to improve after the Deepwater Horizon oil rig loss.

Hiscox London market reduced premium income by 13.9% £495.8m from £575.7m. However, Hiscox Bermuda increased premium income by 16.9% and Hiscox USA by 17.6%. Hiscox UK grew premium income by 8.9% and Hiscox Europe increased its premium income by 9.7%. Premiums at Hiscox Guernsey remained flat.

Hiscox reported that in reinsurance, rates for US business remained better than elsewhere but the absence of significant losses in this year’s North Atlantic hurricane season would lead to increased pressure on prices at the January 1 renewals. The company added that rates are broadly stable in specialty lines.

The insurer has implemented higher deductibles across its household book, effectively increasing rates by between 5% and 10%. Hiscox UK has implemented rate increases across the household book of over 4%.

Separately, Hiscox has also increased profit estimates for syndicates 33 and 6104 for the 2008 and 2009 underwriting years. The company now expects Syndicate 33 to make a profit of 10%-17.5% of capacity in 2009 up from 7.5%-15%. Its 2008 profit estimate for Syndicate 33 remains unchanged at 7.5%-15% of capacity.

The company has raised its 2008 profit estimate for syndicate 6104 to 30%-37.5% from 27.5%-35%, and its 2009 profit estimate for the syndicate to 27.5%-37.5% from 20.0%-35.0%.