Hiscox profits hit by nat cats

Hiscox blamed an “historic year” for natural catastrophes for a dramatic slump in its profits.

Pretax profit for 2017 fell to £30.8m from £354m in 2016. Excluding the impact of foreign exchange movements, pretax profit was £93.6m versus £202.1m. Those figures came after reserving a net $225m for natural catastrophe losses.

Gross written premiums grew to £2.5bn from £2.4bn. The group combined ratio moved out to 99.9% from 84.2%, though excluding foreign exchange movements, the COR was 98.8%, compared with 90.6% in 2016.

2017 saw foreign exchange losses of £62.8m against prior year gains of £152.4m. Reserve releases were £251.5m compared with £213.0m.

Hiscox Retail now accounts for 56% of the group’s GWP and its profits exceeded £100m for the second consecutive year. Hiscox USA remains the standout performer with premium growth of 29% in constant currency.

Hiscox London Market reduced premiums as planned by 20%, and is now set to grow as rates rise following the hurricanes, earthquakes and wildfires in the second half of 2017, the company said.

Hiscox Re & ILS was profitable in a costly year for reinsurers, due to good underwriting on behalf of Hiscox and third-party capital providers, it said.

“The strong growth and profits in retail countered the volatility felt in our big-ticket businesses which were impacted by an historic year for natural catatrophes,” said Hiscox chief executive Bronek Masojada (pictured).

“We have made significant investments in infrastructure and brand both of which will continue. Market pricing has improved and as a consequence we have growth ambitions for every part of our business.”