UK profits surge 69% to £49m
The UK retail division of Lloyd’s insurer Hiscox made a profit of £49m in 2011, up 69% on the £28.8m it made in 2010.
The division’s net written premium increased 12.3% to £367.1m (2010: £327m). The combined ratio for the combined UK and Europe division was 91% (2010: 95.3%).
The UK profit improvement came despite a big fall in investment income and competitive market conditions.
Shore Capital analyst Eamonn Flanagan described Hiscox’s UK retail result as “excellent”.
Hiscox attributed the performance to underwriting discipline and the strength of the Hiscox brand. It also credited the relationship it has developed with brokers and other intermediaries.
Hiscox pointed to the distribution agreements it signed with Hyperion-owned MGA Dual in 2010, the specialist team it established to focus on UK business from the big three brokers – Marsh, Aon and Willis, and relationships with specialist independent brokers.
But the company admitted that not all off its UK partnerships had gone according to plan and said it had cancelled a household partnership that had not performed to expectations.
“This will have a negative impact on Hiscox UK’s 2012 top-line growth, but we expect that it will have a positive effect on profitability,” the company said.
Despite the improvement in the UK, Hiscox’s 2011 group profit dropped 88% to £21.3m (2010: £211m) after it paid out £270m in catastrophe claims.
Despite the heavy catastrophe losses, Hiscox’s combined ratio was a still-profitable 99.5% (2010: 89.3%). The underwriting result was helped with £199m of reserve releases (2010: £133m).
“We have made a small profit in an unusually difficult year,” Hiscox chairman Robert Hiscox said in a statement. “Some key rates are rising, we are employing some brilliant talent, we have fledgling businesses poised for growth and profit, and our mature businesses have small market shares and enormous opportunities.”
Hiscox also revealed in the results that Robert Hiscox will be stepping down as the company’s chairman in 12 months’ time.
Hiscox 2011 results (compared with 2010)
- Gross written premium: £367.1m (£327m)
- Profit: £49m (£28.8m)
- Gross written premium: £1.449bn (£1.433bn)
- Profit after tax: £21.3m (£178.8m)
- Reserve releases: £199m (£133m)
- Combined ratio: 99.5% (89.3%)
- Return on equity: 1.7% (16.5%)