Q3 2017 Interim Management Statement

Hamilton, Bermuda (7 November 2017) – Hiscox Ltd (LSE:HSX), the international specialist insurer, today issues its Interim Management Statement for the first nine months of the year to 30 September 2017.

Gross written premiums grew by 12.4% to £2,088.8 million (2016: £1,858.2 million) reflecting a strong performance across all segments, particularly from Hiscox USA where premiums grew 29% in constant currency.

Bronek Masojada, Group Chief Executive Officer, commented: “2017 is turning out to be an historic year for catastrophes and Hiscox’s first priority is to help our customers get back on their feet. Our long-held strategy of balance and diversity was built for this environment, as our retail businesses provide stability when volatility impacts the big-ticket areas. Our balance sheet is strong, and we are in a good position to capitalise on changes in the market.”

Gross Written Premiums for the period:

  Gross Written Premiums
to 30 September 2017
Gross Written Premiums
to 30 September 2016
Growth in constant currency Growth in Sterling
  US$/€m £m US$/€m £m % %
Hiscox Retail  






- Hiscox UK and Ireland  






- Hiscox Europe €193.4 £167.3 €173.9 £136.1


- Hiscox Special Risks







- Hiscox USA







- DirectAsia   £8.4   £10.2 (24.3%) (17.0%)
Hiscox London Market   £463.0  



Hiscox Re US$705.9 £553.3 US$649.2 £466.8 8.7% 18.5%
Total   £2,088.8   £1,858.2 4.9%



Our early estimates for Hurricanes Harvey and Irma have proved to be prudent. As a result, we now estimate combined net claims for Hurricanes Harvey, Irma and Hurricane Maria of US$225 million against a previous estimate US$225 million for Harvey and Irma alone. This is based on an insured market loss of US$25 billion for Harvey (excluding the government backed National Flood Insurance Program), US$35 billion for Irma, and US$30 billion for Maria.

Claims arising from the Mexico earthquakes and California wildfires are not expected to be material for the Group.


The recent catastrophes are estimated to have cost the industry $100 billion and follow a decade of rate reductions. Therefore, it is not surprising that we are seeing signs of a hardening market. Price corrections are occurring in loss-affected and loss-exposed US property lines business where we are seeing increases of between 10% and 50% and sometimes more. In other London Market insurance lines, momentum is building ahead of the busy renewal season and reductions are coming to an end.

For reinsurance, we anticipate double-digit increases in rates for US catastrophe-exposed business at the important January renewals, with higher increases on loss-affected accounts and retro business.

Rates in our retail business are broadly flat with significant rises in US commercial property.


The investment result to 30 September 2017 was 1.6% on a non annualised basis. The third quarter proved to be a challenging one for bond investors as central banks continued to prepare the market for a gradual move towards a less accommodative monetary policy. The fixed income portfolios delivered modest positive returns overall in the period largely due to their allocation to non-government bonds. Our risk assets have made further gains as equity markets benefited from a more optimistic outlook for global growth. Invested assets totalled £4.4 billion at the end of September, with asset allocation remaining largely unchanged from the end of June.

Hiscox Retail

Hiscox UK and Ireland

Hiscox UK and Ireland increased gross written premiums by 12.2% in constant currency to £417.4 million (2016: £369.4 million). This growth was driven by all regions and all distribution channels.

In our broker channel, the professions and specialty commercial business is performing well, with an expanded appetite for larger risks attracting new business. In the direct-to-consumer channel, we have seen good growth from our core direct commercial and home portfolios.

The power of the Hiscox brand has been an important driver of our growth. In the UK we have returned to TV with a sponsored Channel 4 series ‘Best Laid Plans’ to support our renovations and extensions product for home insurance customers.

Hiscox Europe

Hiscox Europe performed well, growing gross written premiums by 11.2% in constant currency to €193.4 million (2016: €173.9 million).

This was driven by a strong performance across all regions, with commercial lines in Germany, Spain and the Netherlands performing particularly well.

Hiscox Europe is benefiting from a focus on products where we have strong specialist expertise and a solid reputation, particularly in cyber and classic cars.

Hiscox Special Risks

Hiscox Special Risks reduced by 2.3% in constant currency to US$94.1 million (2016: US$96.4 million).

New business growth has been challenging, however Security Incident Response, the broad security-based product for corporates and private clients we launched earlier in the year, has been well received and is gaining traction. After a successful roll out in the US, Spain and Japan, we expect to introduce the product into other markets over time.

Hiscox USA

Hiscox USA delivered another strong performance, growing gross written premiums by 29.2% in constant currency to US$518.0 million (2016: US$400.9 million) driven by growth in general liability and professional risks.

The direct and partnership business has performed particularly well, with strong partnership distribution and an increased effectiveness in marketing activity. This area has also benefited from an expansion of underwriting appetite into adjacent small business segments such as food trucks.

Hiscox USA is also seeing significant rate increases on new and renewal business for commercial property, a trend we expect to continue in Q4.


DirectAsia has seen gross written premiums reduce by 24.3% in constant currency to £8.4 million (2016: £10.2 million). This is partly due to the on-going impact of the sale of the Hong Kong business in August 2016, as well as the extremely competitive environment in Singapore.

We are making progress with investment in the brand. In Singapore, marketing and product innovation continues to differentiate us. We have launched a new partnership with Shell which is yielding encouraging results, as well as a number of new features in our core product range, including NCD60 for car customers and cover for motorcycle delivery riders. In Thailand we have launched a new TV campaign to drive volume.

Hiscox London Market

Our London Market business reduced during the period as planned with gross written premiums decreasing by 17.1% in constant currency to £463.0 million (2016: £520.2 million).

This reduction is in line with previous guidance and follows our decision to re-focus the division over the last year. We have reduced in areas where margins have eroded, such as healthcare, aviation, big-ticket property, and extended warranty, while targeting growth in marine cargo, general liability, product recall and US flood.

Hurricane Harvey was an historic flood event and exposed the lack of flood cover in the US. In 2016 we launched FloodPlus, an alternative to the National Flood Insurance Program (NFIP), in anticipation of deregulation in the US flood market. Harvey has taught us a lot about the responsiveness of this product and we have seen strong increase in demand. We believe the opportunity to write more US flood business is significant and we are well positioned to serve more customers.

In order to participate fully in any widespread market turn, we have secured Lloyd’s approval to increase the capacity of Syndicate 33 by £450 million to £1.6 billion. As a result of the improving environment, we are expecting to return Hiscox London Market to growth in 2018.

Kate Markham, Managing Director Hiscox Direct in the UK, has been appointed to the new position of Chief Executive Officer of Hiscox London Market, where she will work closely with Chief Underwriting Officer Paul Lawrence.

Hiscox Re & ILS

Gross written premiums increased by 8.7% in constant currency to US$705.9 million (2016: US$649.2 million) driven by on-going growth in Hiscox Re ILS funds.

Property catastrophe reinsurance makes up over 60% of GWP for Hiscox Re & ILS where, following the Hurricane activity in Q3, we are seeing signs of material hardening of rates with some risks expected to rise by 30% in loss-affected areas. The wildfires in California are also putting upward pressure on US renewal rates.

In the third quarter, Hiscox Re launched FloodXtra, our new US flood product which reinsures personal lines carriers. FloodXtra complements FloodPlus, and helps insurers address the coverage gap in areas underserved by the NFIP.

Hiscox Re ILS funds reached $1.35 billion AUM in the period.


As we have said previously, Brexit is a structural rather than strategic event for Hiscox. Our new European insurance company, Hiscox S.A., has been formally incorporated in Luxembourg where we have started to build a small local team. Subject to final regulatory approval, we are on track to start writing into the new carrier from Q2 2018.

Proposed US Tax reform

Recently the US House Committee on Ways and Means released a tax reform bill which aims to lower business and individual tax rates and modernise US international tax rules. Among many measures, the draft bill seeks to levy a 20% excise tax on payments made to foreign affiliates. This measure could have an impact on our internal Group reinsurance arrangements. It is still early days in the legislative process and the final shape of the bill is far from clear. We are following that process through several of our trade association partners and will update the market in due course.

Functional and reporting currency change

The functional currency of our syndicates and the reporting currency of the Group will change to US dollars effective 1 January 2018. This change will significantly reduce the volatility of the Group’s earnings due to foreign exchange movements, in particular due to translation of foreign currency balances. Given that a significant majority of Group earnings are denominated in US dollars, we believe that this change will give investors and other stakeholders a clearer understanding of Hiscox’s performance over time.

We will report to the market on this new basis when disclosing the Q1 Interim Management Statement in May 2018. Ahead of our interim results we will publish comparative restated data for Hiscox’s final and interim results of 2017.


For further information:

Hiscox Ltd  
Marc Wetherhill, Group Company Secretary +1 441 278 8321
Kylie O’Connor, Head of Communications +44 (0) 20 7448 6656
Tom Burns +44 (0)20 7404 5959
Simone Selzer +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. It’s a long-standing strategy which in 2016 helped generate gross premiums written of £2,402.6 million and a record profit before tax of £354.5 million.

The Hiscox Group employs over 2,300 people in 13 countries, and has customers worldwide. Through the retail businesses in the UK, Europe, Asia and the US, we offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re and ILS.

Our values define our business, with a focus on people, quality, courage and excellence in execution. 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.

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