Exposure to Deepwater Horizon just £10m
Hiscox's Q1 gross written premiums grew 6.4% in local currencies to £504.1m (2009: £486.5m) and the group claimed a good profit despite the winter freeze, the Chilean earthquake, Windstorm Xynthia and recessionary related claims in UK commercial.
Rates in reinsurance and many of the Hiscox’s specialty lines “continue to present opportunities in a challenging environment”, it said..
Robert Hiscox, chairman, said: "True to form, having given us a wonderfully quiet year last year, Mother Nature was busy in the quarter.
“However, astute underwriting, sensible reinsurance protection and good investing kept us profitable. We will continue to focus on regions and products where we see greatest profit potential, taking advantage of our spread and specialisation."
Q1 GWP ms (2009 in brackets)
- Hiscox London Market £234.8 (£239.1)
- Hiscox Bermuda £87.3 (£84.5)
- Hiscox Guernsey £21.2 (£19.8)
- Hiscox USA £25.5 (£25.9)
- Hiscox UK £79.8 (£69.0)
- Hiscox Europe £55.5 (£48.2)
- Total £504.1 (£486.5)
Hiscox estimates net claims for the Chilean earthquake and Windstorm Xynthia to be approximately £100m (based on an insured market loss of US$8bn for Chile and US$3bn for Xynthia). This includes both insurance and reinsurance exposure across the group.
The Deepwater Horizon oil platform disaster will be about £10m, Hiscox estimated, from an industry insured loss of up to $2bn. “We expect a significant improvement in rates, terms and conditions in both energy and marine reinsurance and insurance lines.”
“Reinsurance makes up around a third of our business and rates in this area remain attractive. In most of our specialty lines rates are healthy and broadly stable. Property rates in the London Market and US businesses remain under pressure and we have reduced exposure here.
“In the UK, rate increases are being achieved in targeted areas. We have seen a rate increase in excess of 4% in the high net worth household account and 2% in areas of our commercial combined property and liability book.
Hiscox London Market
“Hiscox London Market has reduced premium income less than anticipated by only -1.8% to £234.8m (2009: £239.1m). It has cut back in areas where rates are weakening, mainly in property insurance lines.
“The business is benefiting from its good reputation as a reinsurance underwriter and is able to use third party capital to expand where rates are attractive.
“The London Market team plans to expand into aviation insurance and has employed market leading underwriter David Slevin. Subject to Lloyd's approval, David and a small but experienced team will begin building a quality book of aviation business for Hiscox in the fourth quarter of 2010.
“Hiscox Bermuda has grown by 12.1% to US$136.3m (2009: US$121.6m) as it continues to take advantage of attractive rates in reinsurance. As with Hiscox London Market, Hiscox Bermuda is benefiting from third party capital to underwrite more reinsurance business.
“Hiscox Bermuda's new healthcare liability team has started underwriting, focusing on tailored solutions for larger, well-run health institutions.
“Hiscox Guernsey is on track to deliver another good result as gross written premiums increased by 16.1% to US$33.1m (2009: US$28.5m).
“The underwriting environment in the US remains challenging. As planned, Hiscox USA is growing cautiously, focusing on areas where rates are favourable particularly in specialty lines. Gross written premiums grew by 6.9% to $39.8m (2009: $37.2m).
“The retail business in the UK continues to grow as planned in its most profitable lines. Gross written premiums grew by 15.6% to £79.8m (2009: £69.0m).
“The household book suffered some losses as a result of one of the worst winter freezes in modern times. The recession has caused an increase in claims in the commercial book.
“More recently, Hiscox UK experienced some small losses on both event contingency and travel lines due to the disruption relating to the Icelandic volcanic ash cloud during April.
“The business provides broad cover and has been paying claims when others have not, reinforcing Hiscox's reputation as a brand that can be trusted.
“Hiscox Europe grew by 15.2% to gross written premiums of €62.1m (2009: €53.9m) by focusing on its most profitable lines. It had a positive start to the year despite Windstorm Xynthia.