2017 Interim Results


"A good underwriting result despite on-going headwinds"

  H1 2017 H1 2016
Gross premiums written £1,459.6m £1,288.5m
Net premiums earned £936.6m £767.5m
Profit before tax £102.6m £206.0m
Profit before tax excluding FX £133.5m £118.7m
Earnings per share 34.9p 70.4p
Interim dividend per share 9.5p 8.5p
Net asset value per share 657.7p 591.7p
Group combined ratio 91.0% 80.7%
Group combined ratio excluding FX 89.9% 88.4%
Return on equity (annualised) 11.1% 28.3%
Investment return (annualised) 2.3% 2.3%
Foreign exchange (losses)/gains £(30.9)m £87.3m


  • Profits before tax up 12.5% excluding the impact of foreign exchange.
  • Hiscox Retail is the greatest contributor to profit in the first half, with Hiscox USA a stand-out performer, generating 31.1% premium growth in local currency.
  • Hiscox London Market reduced GWP by 8.2% in line with expectations, a disciplined response to challenging conditions.
  • In Hiscox Re and ILS, growth is coming from our ILS business, where assets under management have now reached US$1.35 billion.

Bronek Masojada, Chief Executive Officer, Hiscox Ltd, commented:

“We are managing the cycle and driving retail growth, as our long-held strategy of balancing the portfolio between volatile big-ticket business and steady retail business continues to deliver. Despite tough market conditions we are finding opportunities.”



Jeremy Pinchin, Company Secretary, Bermuda +1 441 278 8300
Kylie O'Connor, Head of Communications, London +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.

Chairman’s statement

It has been a good first half, with the Group delivering a pre-tax profit of £102.6 million (2016: £206.0 million) and growing gross written premium by 13.3% to £1,459.6 million (2016: £1,288.5 million). In contrast to the prior year, foreign exchange has moved against us with a £30.9m negative impact on the result. Excluding the impact of foreign exchange we have seen an increase of 12.5% of profits to £133.5 million (2016: £118.7 million). Across the Group we have seen a more normalised claims pattern return, although the environment is still largely benign.

The retail operations we have been diligently building for more than 20 years are offsetting on-going volatility in bigger ticket lines, and it is pleasing to see that Hiscox Retail has made the biggest contribution to the bottom line in the first half for the second consecutive year. We now have more than 750,000 retail customers.

Conditions in the London Market continue to test our mettle. We have trimmed back in some of the most affected areas – making difficult but necessary decisions to reduce our involvement or withdraw completely from some lines of business. In Hiscox Re and ILS, we are benefitting from strong underwriting heritage and product innovation.

We are pleased with this result, but as usual we look forward with caution to the second half of the year as the hurricane season approaches.


The half year result to 30 June 2017 was a pre-tax profit of £102.6 million (2016: £206.0 million), £133.5 million excluding foreign exchange gains/(losses) (2016: £118.7 million). Gross written premiums increased to £1,459.6 million (2016: £1,288.5 million) or 4.8% growth in constant currencies. Net earned premiums were £936.6 million (2016: £767.5 million). The impact of foreign exchange was a loss of £30.9 million (2016: gain of £87.3 million). The net combined ratio was 91.0% (2016: 80.7%) and was 89.9% (2016: 88.4%) excluding foreign exchange (losses)/gains. Earnings per share were 34.9p (2016: 70.4p) and net assets per share grew to 657.7p (2016: 591.7p). The annualised return on equity was 11.1% (2016: 28.3%).

Dividend, balance sheet and capital management

The Board of Hiscox Ltd has declared an interim dividend for 2017 of 9.5p per share (2016: 8.5p) reflecting the Group’s decision in February to announce a 15% step-up in the full year dividend and associated commitment to a progressive dividend policy. The record date for the dividend will be 11 August 2017 and the payment date will be 13 September 2017.

The Board proposes to offer a scrip dividend alternative subject to the terms and conditions of Hiscox Ltd's 2016 Scrip Dividend Scheme. The last date for receipt of scrip elections will be 18 August 2017 and the reference price will be announced on 30 August 2017. Details of how to elect for the Scrip Dividend are provided on the Company’s website.

We still see plenty of opportunities for profitable growth and will continue to deploy our capital to this end, As ever we will review our capital position at year end.


The rating environment for big ticket business has not improved but we remain agile, shrinking where rates have reduced and pursuing growth where margins have held up better. In our retail lines, rates are broadly stable.

In the London Market, rates are drifting down and stabilizing at a marginal level. As announced earlier in the year, we have exited political risks and materially reduced in other areas including aviation, extended warranty and big-ticket property.

In Hiscox Re and ILS, pressure on North American reinsurance rates was still evident during the important 1 June and 1 July renewal seasons but the rate of decline is slowing.


The weather has been good to us, and like others in the industry we have benefited from a benign catastrophe claims environment. We had minimal exposure to high-profile losses in the market, such as the tragic Grenfell Tower fire and Cyclone Debbie which hit parts of Australia and New Zealand in March. We have seen a more normalised loss environment across the Group.

Hiscox’s prudent approach to reserving is reflected in reserve releases for the first half of £96.1 million (2016: £96.1 million).


Our strong brand continues to differentiate us and is delivering good growth in key markets which is why we will be investing over £50 million in marketing during 2017 (2016: £42 million). To ensure we are managing this budget prudently around the globe, we have developed new econometric modeling to measure our marketing effectiveness.

The US and UK are the focus of most of our marketing investment. Our US small business brand continues to go from strength-to-strength, given this we have increased our marketing spend in this area by $12 million.

At the beginning of the year we launched a new brand campaign in the US which has delivered good results to date. I’mpossible highlights the courage of some of our small business customers with an advertising campaign telling their stories. In the UK in June we launched Ever Onwards a campaign with a rallying cry to consumers in pursuit of progress

Hiscox Retail

The Hiscox Retail segment comprises Hiscox UK and Europe, and Hiscox International.

Gross written premiums £739.6 million (2016: £581.1 million)
Profit before tax £73.4 million (2016: £92.3 million)
Profit before tax excluding FX £71.4 million (2016: £68.2 million)
Combined ratio 90.6% (2016: 84.1%)
Combined ratio excluding FX 90.9% (2016: 89.4%)

Hiscox UK and Europe

This division provides personal lines cover – from high-value household, fine art and collectibles to luxury motor – and commercial insurance for small and medium-sized businesses, typically operating in white collar industries. These products are distributed via brokers and through a growing network of partnerships. Our schemes business offers insurance solutions to customers with similar risk profiles for example sports clubs and niche industry associations. For some simple risks we distribute policies direct-to-consumer in the UK, France and Germany.

Gross written premiums £405.8 million (2016: £345.6 million)
Profit before tax £52.4 million (2016: £65.2 million)
Profit before tax excluding FX £47.7 million (2016: £47.5 million)
Combined ratio 86.6% (2016: 79.9%)
Combined ratio excluding FX 88.0% (2016: 86.6%)

Hiscox UK and Ireland

Gross written premium grew by 13.9% to £278.4 million (2016: £244.4 million), or 12.9% in constant currency, driven by strong new business and retention rates.

In the broker channel, schemes and specialty commercial were particularly strong performers. We are benefiting from our niche position of working with non-standard ‘specialist’ retailers, and our on-going focus on technology business is paying off. Underwriting partnerships also achieved good growth, albeit from a low base. The migration of our broker channel business to a new IT platform continues apace and we hope to reap the same benefits in terms of conversion, pricing and service that we have seen in our direct business.

In the direct-to-consumer channel, there is good growth in our core direct commercial and home business. Our direct home business has an exciting new partnership with Barclays where we are providing home insurance products to their Premier customers.

Hiscox Europe

Gross written premiums grew by 25.8% to £127.4 million (2016: £101.2 million), or 12.2% in constant currency. This growth was mainly driven by commercial lines business in Germany and Spain.

Much of the growth in Germany is coming from cyber and classic car, two specialty areas in which we are building a reputation. In Spain, we are growing thanks to the performance of our professional indemnity, directors and officers’ and management liability lines, and in partnerships with other financial service providers. We have also introduced a new commercial property product here, with promising early signs.

In France, growth in our professions book is pleasing, and a focus on specialty commercial schemes is paying off. Our Benelux business continues to focus on professionals and specialty commercial and we will consider adding to its product suite in time.

We continue to invest in digitising our business in every country across Europe, with broker extranet sites that enable us to distribute and service our products to brokers more efficiently. The ‘My Hiscox’ broker extranet site most recently launched in France, and has been well received.

Hiscox International

This division comprises Hiscox Special Risks, Hiscox USA and DirectAsia.

Gross written premiums £333.8 million (2016: £235.5 million)
Profit before tax £21.0 million (2016: £27.1 million)
Profit before tax excluding FX £23.7 million (2016: £20.7 million)
Combined ratio 95.3% (2016: 89.7%)
Combined ratio excluding FX 94.3% (2016: 93.3 %)

Hiscox Special Risks

Hiscox Special Risks underwrites kidnap and ransom, security risks, personal accident, classic car, jewellery and fine art risks. Hiscox Special Risks has teams in London, Guernsey, Cologne, Munich, Paris, New York, Los Angeles and Miami.

Gross written premiums increased by 17.0% to £52.5 million (2016: £44.9 million), or 13.6% in constant currency. Following an exceptionally benign claims experience in 2016, we have seen a return to a normal loss environment. Similar to other parts of the business, we have established an underwriting centre for Special Risks and it is an approach that is paying off, boosting both new business and retention.

The Security Incident Response product we launched in January in the UK has been well-received by the market. It gives us opportunities with a wider range of clients who are focused on broader security issues beyond kidnap exposure, using additional distribution channels such as directors and officers’ brokers. Building on this success, we have also recently launched the SIR product in Spain and the US.

Hiscox USA

Hiscox USA underwrites small-to-mid market commercial risks through brokers, other insurers and directly to businesses online and over the telephone.

Hiscox USA continues to be a major area of opportunity for the Group, with gross written premiums increasing by 50.3% to £275.6 million (2016: £183.4 million), or 31.1% in constant currency.

Our broker channel business and direct and partnerships division have both performed well. Good growth is coming from our professions, cyber and general liability lines.

Our small business operations continue to go from strength-to-strength and we now have more than 210,000 policies in force. We have introduced a new quote, bind and pay portal delivering Hiscox products to our distribution partners with their own branded interface. This system has already been adopted by a major online aggregator.

Work is well underway on the IT infrastructure changes we are undertaking to replace the existing policy and claims administration system in the US.


DirectAsia is a direct-to-consumer business in Singapore and Thailand that sells predominantly motor insurance. Hiscox acquired the business in April 2014.

DirectAsia achieved gross written premiums of £5.7 million (2016: £7.2 million). As we’ve said before, most of this reduction can be attributed to the sale of the Hong Kong business in the second quarter of 2016.

In Singapore, we have extended our distribution in conjunction with a local aggregator, and a new partnership with a vehicle inspection centre is helping us to grow reach and sales.

Hiscox London Market

This segment uses the global licences, distribution network and credit rating available through Lloyd’s to insure clients throughout the world.

Gross written premiums £314.6 million (2016: £342.7 million)
Profit before tax £17.2 million (2016: £37.1 million)
Profit before tax excluding FX £25.5 million (2016: £19.9 million)
Combined ratio 94.8% (2016: 85.3%)
Combined ratio excluding FX 91.0% (2016: 94.8%)

Gross written premiums in Hiscox London Market reduced by 8.2% to £314.6 million (2016: £342.7 million), or 16.9% in constant currency. This is in line with our previous guidance of reducing in areas under most pressure.

We are doing what we said we would do in our London Market business. We are reducing materially where margins are evaporating, such as aviation, big ticket property and London Market healthcare. We have not renewed the extended warranty business we wrote through White Oak and are writing a much reduced line on the physical damage portfolio. As announced earlier in the year, we have taken decisive action and exited political risks which has moved outside of our risk appetite.

We are holding our position in areas of strength and margin such as household and commercial property binders and terrorism.

We are investing where we see real opportunity; in US flood, where the market is deregulating, and good growth in cargo albeit from a low base. In casualty, our general liability team is bringing new business to London which previously would have been written elsewhere and we are benefiting from this.

Another significant area of opportunity of growth for Hiscox London Market is where we support other expert underwriters with capacity as well as our expertise in contracts, claims, wordings and pricing. For example, we are working with another Lloyd’s coverholder on a niche California earthquake product that, by combining both of our specific areas of expertise, enables us to bridge an existing gap in the market.

Hiscox MGA continues to perform well, boosted by strong renewals in the yacht account, new talent in the marine team and the addition of our space business which transferred into the MGA during the period.

The Hiscox London Market team received recognition at the Reactions London Market Awards 2017, where they were awarded Marketing Campaign of the Year for their cyber campaign.

Hiscox Re and ILS

The Hiscox Re segment comprises the Group’s reinsurance businesses in London, Paris and Bermuda and Insurance Linked Security (ILS) activity.

Gross written premiums £405.4 million (2016: £364.7 million)
Profit before tax £38.2 million (2016: £54.6 million)
Profit before tax excluding FX gains/losses £39.6 million (2016: £41.8 million)
Combined ratio 84.0% (2016: 56.0%)
Combined ratio excluding FX 81.8% (2016: 69.8%)

Gross written premiums grew by 11.2% to £405.4 million (2016: £364.7 million), or 4.3% in constant currency. This is the result of successful product innovation in Hiscox Re and on-going growth in the Hiscox ILS funds. At a net level, the top line has reduced by 8.7%, due to reductions in specialty and the closure of our healthcare business.

In Hiscox Re, a combination of disciplined underwriting, growth in key client partnerships and new opportunities to write well-rated business in areas such as Japan, US flood and cyber is paying off.

Assets under management in ILS funds and vehicles are now in excess of US$ 1.35 billion with continued demand from investors. The fully collateralized fund that launched at the start of the year has already fully deployed its assets under management. We were delighted that the ILS team was awarded ILS Fund Manager of the Year at the Reactions London Market Awards 2017.


The investment return for the first six months of the year is ahead of expectations, helped in part by the performance from our risk assets. The investment result before derivatives was £50.5 million (2016: £42.0 million), 2.3% on an annualised basis (2016: 2.3%). Assets under management at 30 June 2017 were £4,415 million (2016: £3,946 million).

In contrast to the corresponding period last year, market sentiment has been broadly positive with measures of volatility subdued at historically low levels. Equity markets have been strong and sector performance has been less diverse. The portfolio of risk assets has therefore made a good contribution in absolute and relative terms. Income from our bond portfolios overall is more in line with expectation and mainly derived from the US dollar allocation. Generating positive returns from sterling and euro bonds has been more challenging recently, with the marked increase in yields at the end of June.

Having largely ignored political outcomes, predicted or otherwise, investor attention has switched recently to the more hawkish rhetoric from a range of Central Banks as they prepare to join the Federal Reserve in gradually reducing their accommodative stance. Given valuations across asset classes and the likely moves towards normalising monetary policy, we remain cautious with the majority of our risk appetite focused on the exposure to risk assets which represents 7.4% of the portfolio.

The Board

Having served nine years on the Hiscox Ltd Board (at which point the UK Corporate Governance Code deems them not independent), Ernst Jansen and Gunnar Stokholm will retire from the Board with effect from 16 November 2017. Ernst and Gunnar have both provided a significant contribution to the Board over the years and I would like to thank them for their wisdom and insight which will be sorely missed.

I am delighted to say that we have appointed three new Board members; Michael Goodwin, Thomas Hüerlimann and Costas Miranthis. They will join the Hiscox Ltd Board as Independent Non Executive Directors from the same date.

Michael Goodwin has valuable experience from the Asia Pacific region, gained not only during his time as Asia Pacific CEO at QBE insurance but also as Vice President of the General Insurance Association of Singapore. Thomas Huerlimann brings important leadership experience, most recently as CEO of Zurich Global Corporate. Costas Miranthis is based in Bermuda and has extensive reinsurance experience from his time as President and CEO at Partner Re.

We will benefit from their impressive insurance industry experience, covering some of our key geographies (Bermuda, Asia and Europe) and I look forward to working with them alongside the rest of the Board.


Our strategy was designed for this climate; managing the insurance cycle and driving retail growth. Finding attractive bigger-ticket business remains challenging, and there is no indication that will change anytime soon, but we are not afraid to make tough decisions where necessary.

As we announced in May, we plan to establish a new EU subsidiary in Luxembourg in response to Brexit. We are now working closely with the Luxembourg regulator on license approval, and local recruitment as well as sourcing office space is underway. Our plan means we will be well placed to continue to serve our sizeable European customer base after 1 April 2019.

However, Brexit is just one example of the increasing number of Group projects we are undertaking. Regulatory obligations such as the implementation of GDPR in Europe and cyber security regulations from the New York Department of Financial Services all require financial and human resource. The critical infrastructure projects that I have spoken about previously, such as upgrading our financial processes and the IT platform changes in our UK and US retail businesses, are equally necessary. These will impact our expense ratio in the short-term, but in the long-term they will ensure we operate efficiently and effectively – matching our capabilities with our ambitions.

We continue to execute our plan successfully. We have plenty of room for growth in Hiscox Retail, and the selective approach we have taken within Hiscox London Market and Hiscox Re and ILS continues to yield opportunities.

Robert Childs
31 July 2017

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