The insurer also saw no further rises in its Covid-19 claims estimate

Hiscox has recorded a positive third quarter, with a growth in premiums fuelled by rate rises and no worsening of its Covid-19 claims liabilities, it said in a trading update posted today.

The insurer said that premium income had grown 15% in constant currency over the latest quarter, while its Covid-19 claims estimate remained unchanged at $387m net of reinsurance.

Other highlights for the quarter included:

  • Hiscox Retail reported growth in each of its five business units, driven by its digital platforms.
  • Hiscox London Market continued to benefit from accelerating rate improvement, with rates up 18% across the portfolio.
  • Hiscox Re and ILS achieved good growth at the July renewals, with rates up 12% for the year.
  • $75m reserved for catastrophe claims in the third quarter.


Covid-19 claims constituted $232m reserved in the first half of the year (including $150m for event cancellation and abandonment), as well as $130m (£100m) for business interruption claims, most of which are coming from Hiscox UK, it said. 

”If these restrictions continue into 2021, Hiscox has an additional $30m to $40m potential exposure relating to event cancellation. This would be recognised in 2021 if events are unable to proceed,” Hiscox said.

The company added that ”exposure to potential business interruption claims arising from further local or national restrictions in the UK as a result of government measures to contain the spread of Covid-19 has been running off at approximately 8% per month from June 2020, with residual exposure to be fully run off by the end of June 2021”.

”Any further claims for business interruption resulting from government restrictions imposed in 2020 would continue to benefit from reinsurance cover. Any potential exposure remains subject to the final outcome of the industry test case on business interruption insurance.”

Hiscox said it recognised these are ”extremely difficult times for businesses and [it] is committed to seeking an expedited resolution to contract disputes relating to business interruption through the industry test case”.

Retail growth

Hiscox’s retail division grew by 4% in the first nine months to $1.7bn, while direct and partnerships grew by 15%, reaching half a billion dollars in GWP with over 800,000 customers expected by the end of the year.

”The strong growth continues to be driven by the group’s investment in developing its digital capabilities, including new policy administration systems for Hiscox UK, Hiscox USA and Hiscox Europe,” the company said.

”As these new systems embed, they will enable improvements in pricing and risk selection, increased operational efficiency and a better front-end customer experience.”

The company’s retail division is on target to hit a combined operating ratio of 90% to 95% by 2022, it said, driven by ”the benefits of portfolio optimisation, operational efficiencies and scale”.

London Market

The group’s London Market division also reported a successful performance, with a 7% growth in GWP over the period, driven by “strong rate momentum”, Hiscox said. 

”Conditions in Lloyd’s continue to improve in every line of business Hiscox writes, with double-digit rate improvement reported in nine of 17 lines.

”The most significant rate improvement continues to be seen in casualty lines, such as US public company D&O and US general liability, where markets continue to retreat, creating further opportunities for profitable growth.

At the same time, the underwriting teams are taking action to reduce exposure and remediate underperforming portfolios.

”The benefit of portfolio action to improve profitability in the property book is beginning to show through, with lower attritional losses in commercial lines now evident.

”The business is well capitalised and has sufficient headroom to execute its business plan next year and grow in lines where margins are attractive,” it said. 

Commenting on the performance, chief executive Bronek Masojada said the company’s year-to-date performance ”demonstrates the resilience of the group, as we delivered good growth in every target area, including in all of our retail businesses”.

He continued: “We are benefitting from the inexorable shift towards digital in our retail businesses thanks to our ongoing investment in technology, as well as the strongest pricing we have seen in the London Market and in reinsurance for more than five years.

”We have the financial strength, operational resilience and underwriting expertise to take advantage of these favourable market trends.”