April renewals ‘beat expectations’, says chief executive

Lloyd’s insurer Hiscox’s first quarter 2012 gross written premiums were broadly flat at £450.7m (Q1 2011: £453.5m).

The company said in its first-quarter interim management statement that it withheld some reinsurance capacity in the first quarter in anticipation of better rates and terms later in the year.

Despite this, Hiscox chief executive  Bronek Masojada said that the April renewals were better than expected. “The year has started well with good growth in retail lines, a strong investment return and the reinsurance renewals in April beating our expectations,” he commented.

Hiscox said rates in catastrophe exposed lines, such as US property, continue to improve. Rates for Japanese earthquake catastrophe excess of loss have doubled since last year’s Tohoku earthquake and tsunami, the company said. At the April renewals, Hiscox’s reinsurance businesses more than doubled their budgeted premium income in that area.

The company also reported a first quarter investment return on 1.3% which it said reflected a strong quarter for its risk assets and a narrowing of corporate bond spreads as confidence returned to investment markets.

It added, however, that despite a good start to the year, it expected investment returns for the rest of the year to be relatively depressed, with the Federal Reserve and the Bank of England continuing to hold down yields available from cash and short dated government bonds.

“We still see value in corporate bonds and equities but they are likely to be prone to bouts of volatility as political and economic issues, particularly in Europe, create uncertainty,” the interim management statement read.

Hiscox Q1 2012 GWP percentage changes versus Q1 2011

  • London Market: -0.9
  • Bermuda: -14.1
  • Guernsey: -9
  • USA: +23.6
  • UK: +3.4
  • Europe: +7.5
  • Total: -0.6