REG - Hiscox Ltd - Q1 2025 Trading Statement

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RNS Number : 9296G  Hiscox Ltd  01 May 2025

Hiscox Ltd trading statement

Hamilton, Bermuda (1 May 2025) - Hiscox Ltd (LSE:HSX), the international
specialist insurer, today issues its trading statement for the first three
months of the year to 31 March 2025.

Highlights:

 ●    Group insurance contract written premiums (ICWP) increased by 2.4% to $1,558.0
      million (Q1 2024: $1,521.9 million(1)) driven by continued momentum in Hiscox
      Retail, which grew by 6.1% in constant currency, and a return to growth in
      Hiscox London Market, which grew by 4.0%.
 ●    No change in estimates for the California wildfires loss.
 ●    Investment result of $114.1 million or a return of 1.4% year-to-date.
 ●    Share buyback announced on 27 February 2025 progressing well with 2.2 million
      shares repurchased as at 30 April 2025.

 

Aki Hussain, Chief Executive Officer, Hiscox Ltd, commented:

 

"The Group is capturing high quality growth. The multi-year improving growth
trajectory continues in Retail, driven by growth in all parts of our Retail
business and in particular excellent momentum in Europe, double-digit growth
in US digital direct and US broker returning to growth. London Market growth
benefitted from new commercial deals and Re & ILS has found attractive
opportunities to grow net premiums at the January renewals. We look forward to
providing greater insight into our business at our Capital Markets Day on 22
May 2025."

Hiscox Group

The Group's diversification across both class of business and geography is
enabling the business to react with agility to changing macro and geopolitical
circumstances to capture opportunities and achieve high quality growth while
maintaining underwriting discipline.

Retail growth momentum continued to build in the first quarter with growth
achieved in every market, largely driven by rising policy count. The Retail
business is on track to deliver growth in excess of 6% in constant currency
for 2025.

Both Re & ILS and London Market have deployed capital early in the year to
take advantage of favourable market conditions. While both businesses have
seen single-digit rate reductions for the first time in over seven years, this
is from decade highs and the risks we are focused on remain attractive.
Overall market conditions remain favourable, and we are managing the portfolio
with our customary proactive and disciplined approach.

 

Insurance contract written premiums for the period:

 

                       Insurance contract written premiums  Insurance contract             Growth in USD  Growth in constant currency

                       to 31 March 2025                     written

                                                            premiums

                                                            to 31 March 2024 1  (#_ftn1)
                       US$m                                 US$m                           %              %
 Hiscox Retail         $736.1                               $707.6                         4.0%           6.1%
 Hiscox London Market  $329.7                               $316.9                         4.0%           4.0%
 Hiscox Re & ILS       $492.2                               $497.4                         (1.0%)         (1.0%)
 Total                 $1,558.0                             $1,521.9                       2.4%           3.3%

Hiscox Retail(1)

Hiscox Retail grew by 6.1% in constant currency to $736.1 million (Q1 2024:
$707.6 million). The segment remains on track to deliver growth in excess of
6% for 2025. The distribution engine continues to build momentum and add
customers and policies well in excess of rate increases, which remain positive
at 2%, although are moderating.

Importantly, all three geographies are growing, and momentum is expected to
continue to build through the year as new deals and partnerships come on line.

Insurance contract written premiums for the period:

                      Insurance contract written premiums to      Insurance contract  written premiums to       Growth in USD     Growth in constant currency
                      31 March 2025
31 March 2024(1)

                      £m/€m                 US$m                  £m/€m                  US$m                   %        %
 Hiscox Retail
 -   Hiscox UK        £166.3                $209.4                £159.3                 $202.2                 3.6%     4.4%
 -   Hiscox Europe    €262.4                $273.5                €241.2                 $263.3                 3.9%     8.8%
 -   Hiscox USA                             $253.2                                       $242.1                 4.6%     4.6%
 Hiscox Retail total                        $736.1                                       $707.6                 4.0%     6.1%

Hiscox UK

Hiscox UK grew by 4.4% in the quarter, on a constant currency basis, to $209.4
million (Q1 2024: $202.2 million) as the business benefits from management
actions taken over recent years.

In UK commercial, overall policy count growth more than offset softening
rates, notably in the mid-market segment. Schemes 2  (#_ftn2) growth was very
strong as production begins to ramp up from recently won broker distribution
deals. Two new deals went live in the first quarter with a further nine
scheduled to go live later in the year. Art and private client (APC) grew at a
double-digit rate, continuing the trend from last year, as we capture market
opportunities and benefit from technology-led initiatives that are enhancing
both productivity and broker service.

The UK is benefitting from its award-winning brand campaign, with brand
awareness and affinity metrics continuing to improve, driving growth across
personal and commercial lines and in both direct and broker.

Hiscox Europe

Hiscox Europe grew by 8.8%, on a constant currency basis, with ICWP of $273.5
million (Q1 2024: $263.3 million). Growth is broad-based across geographies,
channels and both commercial and personal lines. Production from recent
distribution deals is beginning. We continue to build share in existing
sectors and launch new products to help build further momentum, including an
innovative e-reputation product in France and a new start-ups product in
Belgium.

Hiscox USA

Hiscox USA's ICWP increased by 4.6% to $253.2 million (Q1 2024: $242.1
million), accelerating on the 2024 exit rate, as US broker returned to growth
and momentum in US DPD continued, most notably in digital direct.

US DPD grew ICWP by 6.6% in the first quarter to $156.0 million (Q1 2024:
$146.3 million) as US digital direct continued to deliver strong double-digit
growth underpinned by attractive levels of new business and high levels of
retention. In March we launched a new brand campaign, "There's no business
like small business", which is expected to provide an additional tailwind
going forward. US digital partnerships continues to grow at a more moderate
rate, with the team working closely with partners on a number of
growth-enhancing initiatives. These include the launch of a
growth-incentivising compensation strategy, the ongoing refinement of
underwriting appetite and customer segmentation, and the streamlining of our
onboarding process for new partners to accelerate the time it takes to reach
meaningful production.

US broker ICWP grew by 1.5% to $97.2 million (Q1 2024: $95.8 million). The
initiatives implemented over recent periods, such as the streamlining of the
submissions process and the optimisation of business placed under
auto-renewal, have resulted in the business returning to growth.

Hiscox London Market

Hiscox London Market returned to growth, in line with expectations, with ICWP
up 4.0% to $329.7 million (Q1 2024: $316.9 million) driven by strong growth in
property and marine, energy and specialty. For the first time since 2017 rates
have fallen in aggregate, reducing by 3%, but remain up 69% cumulatively since
2018.

The property division is benefitting from the property binders written in the
second half of 2024, some new commercial deals in 2025 and improving rate in
flood. More generally, we are seeing rates beginning to soften in the US
property market, but this is from decade highs and the business remains
attractive. In marine, energy and specialty, we are winning new construction
contracts following investment in our underwriting capabilities.

In crisis management we are seeing a modest reduction in demand for kidnap and
ransom from NGOs, driven by the changing political environment in the US.
There remains significant competition in product recall, despite elevated
market losses. In these areas we remain disciplined.

The business continues to manage the cycle in casualty, as low IPO volumes
have driven further rate declines of 9% in D&O, while cyber remains
competitive, with rates falling by 5%. In general liability, where rates are
strengthening, we are writing new business while maintaining underwriting
discipline through line size management.

Looking forward, we continue to see attractive opportunities in certain lines
against the backdrop of increased rate softening across the portfolio. We
continue to maintain underwriting discipline, as we manage these micro-cycles
across the Hiscox London Market portfolio.

Hiscox Re & ILS

Hiscox Re & ILS net ICWP grew by 9.1% to $222.1 million (Q1 2024: $203.6
million) in the first quarter as the business found attractive deployment
opportunities at the January renewals. ICWP reduced by 1.0% to $492.2 million
(Q1 2024: $497.4 million).

While rates reduced by 7% in the first quarter, the business remains
well-rated, with cumulative rate increases of 80% since 2018. Furthermore, the
terms and conditions as well as attachment points have broadly held as the
market remains disciplined. These continued to hold into the April renewals,
although rates saw further downward pressure. Following the natural
catastrophe losses in the market over the last 12 months, conditions at the
mid-year renewals are expected to be slightly more favourable than in January.
Given substantial net growth in recent years, including at the January 2025
renewals, at mid-year we expect to maintain the level of capital deployed and
take rate on loss-affected business.

Hiscox Re & ILS has continued to build quota share support from both
traditional partners and alternative capital providers. ILS assets under
management (AUM) was $1.3 billion as at 1 April 2025, reflecting the impact of
the California wildfires on the funds.

Claims

The Californian wildfires was the largest event during the first quarter and
the Group's previously disclosed estimate remains unchanged. The Group has
reserved a net loss of $170 million, of which $150 million is in Hiscox Re
& ILS, and $10 million is in each of Hiscox London Market and Hiscox
Retail. This estimate does not take allowance for any subrogation despite an
increasing likelihood of recoveries in relation to the Eaton fire.

Outside of the wildfires, the Group's loss experience was within expectations
for the first quarter of the year.

Investments

The investment result for the first quarter was $114.1 million (Q1 2024: $66.9
million), or a year-to-date return of 1.4% (Q1 2024: 0.8%). Group invested
assets as at 31 March 2025 were $8.5 billion (FY 2024: $8.2 billion). At 31
March 2025, the Group's bond portfolio reinvestment yield was 4.5% with a
duration of 1.8 years. The fixed income portfolio remains conservatively
positioned, with an average credit rating of 'A'.

While growth and employment held up in the first quarter and some central
banks cut rates, market movements were more focused on the potential policy
actions of the new US administration. As such, the fixed income portfolio saw
some mark-to-market gains, with the investment result largely driven by coupon
and cash income.

In the wake of the US government announcing a range of tariffs in April,
market volatility has significantly increased, with two-year government bond
yields fluctuating, spreads widening and equity markets falling. Hiscox's
investment portfolio has remained resilient through this period as rate moves
have helped to offset a widening of credit spreads and the impact from equity
markets has been limited given the Group's relatively low exposure to this
asset class. While continued volatility is anticipated, the Group's short
duration and high-quality fixed income portfolio means that Hiscox is well
positioned.

Capital management

The Group remains well capitalised on both a regulatory and rating agencies
basis, with high levels of liquidity and strong capital generation.

We have the flexibility to deploy capital into each of our business units
where we see attractive growth opportunities, while maintaining balance sheet
strength and financial flexibility in line with our strategy.

As at 30 April 2025, the Group had repurchased 2.2 million shares for a total
consideration of approximately $33.0 million as part of the $175 million share
buyback programme announced on 27 February 2025.

 

 

 

ENDS

A conference call for investors and analysts will be held at 09:00 BST on
Thursday, 1 May 2025.

Participant dial-in numbers:

United Kingdom (Local):            +44 20 3936 2999

All other locations: +44 800 358 1035

Participant Access Code: 219364

Investors and analysts

Yana O'Sullivan, Director of Investor Relations, London +44 (0)20 3321 5598

Marc Wetherhill, Group Company Secretary, Bermuda +1 441 278 8300

 

Media

Eleanor Orebi Gann, Group Director of Communications, London +44 (0)20 7081
4815

Simone Selzer, Brunswick +44 (0)20 7404 5959

Tom Burns, Brunswick +44 (0)20 7404 5959

Notes to editors

About The Hiscox Group

Hiscox is a global specialist insurer, headquartered in Bermuda and listed
on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected
specialist insurer with a diverse portfolio by product and geography. We
believe that building balance between catastrophe-exposed business and less
volatile local specialty business gives us opportunities for profitable growth
throughout the insurance cycle.

The Hiscox Group employs over 3,000 people in 13 countries, and has customers
worldwide. Through the retail businesses in the USA, UK and Europe, we offer a
range of specialist insurance products in commercial and personal lines.
Internationally-traded, bigger-ticket business and reinsurance is underwritten
through Hiscox London Market and Hiscox Re & ILS.

Our values define our business, with a focus on people, courage, ownership and
integrity. We pride ourselves on being true to our word and our award-winning
claims service is testament to that. For more information, visit
www.hiscoxgroup.com (http://www.hiscoxgroup.com) .

 

 

 1  (#_ftnref1) Hiscox Asia is considered non-core and is not included within
Hiscox Retail. 2024 financials have been restated to report on a consistent
basis.

 2  (#_ftnref2) Otherwise referred to as programmes.

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