In a briefing call with journalists this morning following the publication of the insurer’s year-end financial results, Hiscox’s chief executive revealed the firm will be reinstating its dividend as its ’first priority’

Despite 2020 being a “challenging year” for Hiscox following a declared loss of $258m for last year, the insurer is now facing 2021 with renewed optimism.

In a briefing call this morning discussing Hiscox’s preliminary financial results for the year ending 31 December 2020, chief executive Bronek Masojada revealed that the business has been able to keep its top line steady.

He said: “The group performance is very resilient and I am really pleased with the performance of the London market, delivering a profit of almost $100m.

“Excluding Covid, all our business units have made money - none of that would have been possible without the hard work of our 3,000 employees, who like many other people went from a good working environment to working in a variety of personal settings and have juggled the needs of their personal lives with their work lives to serve customers. I would like to thank each and every one of them.”

In the US, Hiscox has taken the decision to exit around $100m of bigger ticket business in classes where performance has not been to standard.

“As you will recall in September last year, we announced that we are creating a crisis management unit in Hiscox London Market, bringing together our terrorism business [and] our product recall business. That means that $100m of premium will transfer from the retail segment into the London Market segment.

“Those two changes will clearly put pressure on our expense ratio.”

Reinstating the dividend

Masojada said that due to shareholder capital, Hiscox has had the opportunity to be able to grow and it will now be reinstating the dividend as a “first priority”. It suspended its dividend in April 2020

“We have excess profit available and we will use some of that to overinvest in the retail business,” he said.

This, he added, could be in two areas – marketing or improving relations with broker and partners.

In terms of building digital productivity with its brokers and partners, Hiscox already has almost 150 of these connections.

Masojada continued: “We think their importance is going to grow and grow and this [is] the key to becoming a digital business. If we do that, we will put in the sustainable growth opportunity to keep growing and developing the business.”

‘A more prudent view’

Looking forward to 2021, given the economic uncertainty, Masojada said that Hiscox will take the more “prudent view” of its initial loss ratio.

This means that Hiscox’s combined ratio for 2021 will be “pretty similar to [the] level achieved by Hiscox Retail in 2020, excluding the impact of Covid,” but the insurer expects a return to its COR 90% to 95% target range in 2023.

“We believe that we have a very sustainable business. Clearly the events of 2020 have had a mega impact on the brand. We need to work to strengthen that. In the UK, it is a rebuild task and in Europe and the US, it is a build task because we are still relatively unknown, he continued. 

“The way we expect to do that is to serve one customer, one policy and one claim at a at time in an exceptional way. That is how we bought the brand in the first place and that’s how we will strengthen it going forward.”

Robert Childs, chairman at Hiscox, added that the insurer has had a major role in the ABI’s Covid-19 recovery fund.

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