2018 Interim Results

For the six months ended 30 June 2018

‘A good start’

  H1 2018 H1 2017
Gross premiums written $2,228.8m $1,836.2m
Net premiums earned $1,277.9m $1,178.3m
Profit before tax $163.6m $129.1m
Profit before tax excluding FX $172.1m $167.9m
Earnings per share ($) 54.0¢ 43.9¢
Earnings per share (£) 39.3p 34.9p
Interim dividend per share 13.25¢ 12.60¢
Net asset value per share ($) 853.1¢ 855.0¢
Net asset value per share (£) 648.4p 657.7p
Group combined ratio 87.9% 90.8%
Group combined ratio excluding FX 87.8% 89.7%
Return on equity (annualised) 13.5% 11.2%
Investment return (annualised) 0.7% 2.3%
Foreign exchange losses $8.5m $38.8m
Reserve releases $154m $121m


  • Strong growth in gross premiums written of 21%, with all segments contributing.
  • Good underwriting drives improved combined ratio of 88%.
  • Profit before tax up by 27% to $164 million with Hiscox Retail contributing over half.
  • Reducing loss estimates for 2017 catastrophes drive increase in reserve releases to $154 million, reflecting our prudent approach to reserving.
  • On track to exceed one million retail customers in 2018.
  • We continue to see strong demand for our ILS funds and now have assets under management of $1.6 billion.
  • Interim dividend up 5% to 13.25 cents.

Bronek Masojada, Chief Executive Officer, Hiscox Ltd, commented:
“It has been a good start to the year. Our investment across the business is driving strong profitable growth in all segments. We are on track to exceed one million retail customers in 2018.”

For further information

Hiscox Ltd
Marc Wetherhill, Group Company Secretary, Bermuda +1 441 278 8300
Kylie O’Connor, Head of Group 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 2017 saw the business deliver a profit before tax (excluding foreign exchange) of $120.6 million despite reserving net $225 million for claims in the most costly year ever for natural catastrophes.

The Hiscox Group employs over 2,700 people in 14 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 & 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

I am pleased to report that for the first six months of 2018, the Group delivered a pre-tax profit of $163.6 million (2017: $129.1 million) and has grown gross written premiums strongly by 21.4% to $2,228.8 million (2017: $1,836.2 million), with all areas of the business delivering. Our retail operations in their respective geographies continue to develop and grow and in big-ticket lines, we remain disciplined.

It was pleasing to see the business move quickly to capitalise on higher rates following the natural catastrophes of last year, and we will now maintain our underwriting discipline as rates in big-ticket lines flatten.

It has been a good start to the year, but hurricanes can blow us off course in the second half.


The half year result to 30 June 2018 was a pre-tax profit of $163.6 million (2017: $129.1 million), $172.1 million excluding foreign exchange losses (2017: $167.9 million). Gross written premiums increased by 21.4% to $2,228.8 million (2017: $1,836.2 million) or 16.4% growth in constant currency. Net earned premiums were $1,277.9 million (2017: $1,178.3 million). Following functional currency changes to US Dollars we have seen a reduced impact of foreign exchange resulting in a smaller loss of $8.5 million (2017: loss of $38.8 million). The net combined ratio was 87.9% (2017: 90.8%) or 87.8% (2017: 89.7%) excluding foreign exchange losses. Earnings per share were 54.0 cents (2017: 43.9 cents) or 39.3 pence (2017: 34.9 pence) and net assets per share reduced to 853.1 cents (2017: 855.0 cents) or 648.4 pence (2017: 657.7 pence) following last year’s catastrophes, but have improved since December. The annualised return on equity was 13.5% (2017: 11.2%).

We have had a more normal loss experience across the Group. Reserve releases for the first half were $154 million (2017: $121 million), reflecting our prudent approach to reserving.

Dividend, balance sheet and capital management

For the six months ended 30 June 2018 and beyond, dividends will be declared in US Dollars, aligning shareholder returns with the primary currency in which the Group generates cash flow. Dividends will be paid in Pounds Sterling unless shareholders elect to be paid in US Dollars. The foreign exchange rate at which future dividends declared in US Dollars will be converted into Pounds Sterling will be calculated based on the average exchange rate over the five business days prior to the Scrip Dividend price being determined. On this occasion the period will be between 20 August 2018 and 24 August 2018 inclusive.

In July 2018, the Board determined that future dividend growth, in line with our progressive dividend policy, would be calculated from the level of 39.8 cents per share for the year ended 31 December 2017 (H1 2017: 12.6 cents per share), which is equivalent to the total dividend payout of 29.0 pence per share for the year ended 31 December 2017 (H1 2017: 9.5 pence per share) at the foreign exchange conversion rate prevailing at the dividend declaration dates.

The Board is pleased to announce an interim dividend per share of 13.25 cents, representing a 5% increase over the 2017 interim dividend. The record date for the dividend will be 10 August 2018 and the payment date will be 11 September 2018.

The Board proposes to offer a scrip alternative subject to the terms and conditions of Hiscox Ltd's 2016 Scrip Dividend Scheme. The last date for receipt of Scrip along with the dividend currency elections will be 17 August 2018 and the reference price will be announced on 28 August 2018.

Further details on the dividend election process and Scrip alternative can be found on the investor relations section of the company's website.


We started the year well, capitalising on the improved conditions in Hiscox London Market and Hiscox Re & ILS, as we led the way in achieving necessary rate increases. We are seeing momentum behind rate increases begin to slow and we expect our rate of premium growth to decline correspondingly.

In our London Market business, rate improvement has been most pronounced in catastrophe-exposed and loss-affected lines such as major property (up 16% in aggregate) and US household and commercial property binders which have seen increases of up to 10%.

In our reinsurance business, rates were up on average 10% but have flattened during the year. Despite this, conditions have improved year-on-year and currently rates are at levels where our own and third-party capital can be put to good use.

The retail businesses have experienced a more stable rating environment and we have grown as a result.

Hiscox Retail

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

Gross written premiums $1,113.0 million (2017: $930.4 million)
Profit before tax $93.7 million (2017: $92.3 million)
Profit before tax excluding FX $95.8 million (2017: $89.8 million)
Combined ratio 90.7% (2017: 90.5%)
Combined ratio excluding FX 90.4% (2017: 90.8%)

As previously announced, we have appointed Ben Walter, formerly CEO Hiscox USA, to the newly created role of CEO Hiscox Global Retail. Ben has moved to the UK and is helping to sharpen the Group view of our retail operations, and harmonise the common challenges that our retail businesses face when it comes to driving product innovation, creating scale, and digitising for the modern age.

Hiscox UK & 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 $610.0 million (2017: $510.5 million)
Profit before tax $65.5 million (2017: $65.8 million)
Profit before tax excluding FX $68.9 million (2017: $60.0 million)
Combined ratio 87.5% (2017: 86.6%)
Combined ratio excluding FX 86.8% (2017: 88.0%)

Hiscox UK & Ireland

Gross written premium grew by 17.4% to $411.3 million (2017: $350.3 million), or 7.4% in constant currency. This is driven by a good performance in our home and direct small business lines, and in our partnerships such as with Barclays. It has also benefited from our events and contingency business moving from Hiscox London Market into Hiscox UK.

During the period UK Direct reached £100 million of premium. Building this business has taken time, but the brand we have established and expertise we have embedded is valuable not only to the UK but also to our other retail operations.

In the broker channel, our professions and specialty commercial and our art and private client businesses are now live on our new IT platform. As is necessary with any IT change of this scale, we have commenced a process of reviewing and refining the system and associated processes in order to realise the desired long-term benefits to our business. We are planning for growth in the broker channel to be muted as these changes take effect.

Escape of water claims remain a feature of the UK household market, but good claims performance in management liability, emerging professional indemnity, technology and cyber is helping to offset these losses. February’s ‘Beast from the East’ cold weather snap in the UK did generate a number of claims, but the event was well within our expected range for a UK weather event.

Hiscox Europe

Gross written premiums grew by 24.0% to $198.7 million (2017: $160.2 million), or 10.2% in constant currency driven by Germany and Spain.

Germany’s strong growth trajectory has continued, with our management liability, motor and cyber products proving popular. Our marketing focus on cyber is having a positive effect, with new business up significantly year-on-year. The Frankfurt branch we opened last year is performing well, with our sales team on-the-ground providing direct access to a valuable network of brokers in Germany’s financial capital.

In Spain, our management liability, cyber and directors and officers’ lines, and our partnership with a major financial service provider, continue to perform well. The CyberClear proposition we launched at the end of last year has proved particularly popular, with both brokers and partners. The roll-out of our new ‘My Hiscox’ broker extranet site has started in Spain and has attracted more than 650 registered users so far.

Our Benelux business is building on last year’s good momentum, with a focus on professions, cyber and specialty commercial lines. In France, where growth has been more muted, we see greatest potential in cyber, partnerships with financial institutions, and in motor where our good reputation in classic car is attracting new business.

Our preparations for Brexit are progressing well. The approval process for the proposed transfer of certain current and historical policies and associated liabilities from Hiscox Insurance Company Limited to our Luxembourg carrier, Hiscox S.A., using a Part VII legal process, is underway. We have been preparing for a worst-case scenario ‘hard Brexit’ and so, subject to court and regulatory approval, our subsidiary is anticipated to be up and running from 1 January 2019 and will ensure we can continue to serve our clients without interruption.

Hiscox International

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

Gross written premiums $503.0 million (2017: $419.9 million)
Profit before tax $28.2 million (2017: $26.5 million)
Profit before tax excluding FX $26.9 million (2017: $29.8 million)
Combined ratio 94.6% (2017: 95.3%)
Combined ratio excluding FX 94.9% (2017: 94.3%)

Hiscox Special Risks

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

Gross written premiums grew by 5.7% to $69.8 million (2017: $66.0 million) during the first half of the year.

In kidnap and ransom, we are maintaining our market-leading position despite increased competition and on-going challenges in the rating environment.

Our Security Incident Response product, which covers a range of security issues such as criminal threats, workplace violence, corporate espionage and cyber extortion, continues to perform well and was recently launched in The Netherlands. We see significant growth potential for this product, particularly in the US, and are deploying considerable resources to accelerate its growth globally with both existing and potential clients.

Hiscox USA

Hiscox USA underwrites small- to mid-market commercial risks through brokers, other insurers and directly to businesses online and over the telephone. The business continues to be a stand-out performer for the Group, with gross written premiums increasing by 22.3% to $423.9 million (2017: $346.8 million).

The direct and partnerships division continues to be the biggest driver of growth, and in the broker channel our healthcare, general liability and entertainment lines are performing particularly well. Our new US property MGA has now commenced trading, which as we mentioned in May enables us to increase our line size and make us a more material participant in the market. Moving this premium into the MGA will have a small impact on headline growth for the US business.

Our new offices in Las Vegas and Phoenix are now established and improving our capabilities to service our West Coast customers.

Steve Langan has now begun his new role as Hiscox USA CEO, as previously announced. He remains Chief Marketing Officer for the Group and our US business will benefit hugely from his experience in building strong brands, as the business moves into its next stage of growth.


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

DirectAsia achieved gross written premiums of $9.3 million (2017: $7.1 million) during the first half of the year. Both Singapore and Thailand remain competitive markets, so innovation is crucial. Through product and pricing enhancements we are growing in car, motorcycle and family travel, attracting and retaining more customers.

Our marketing and brand-building activities continue to perform well, and we have extended our distribution through commercial partnerships. The partnership we established last year with Shell in Singapore is already boosting reach and driving growth, and we are pleased to have now commenced commercial marketing partnerships in the Thai market. We are actively seeking other partnerships.

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 $458.7 million (2017: $395.8 million)
Profit before tax $41.9 million (2017: $21.7 million)
Profit before tax excluding FX $42.8 million (2017: $32.1 million)
Combined ratio 88.6% (2017: 94.6%)
Combined ratio excluding FX 88.4% (2017: 90.8%)

Gross written premiums in Hiscox London Market increased by 15.9% to $458.7 million (2017: $395.8 million), or 13.1% in constant currency.

Where we have seen rate improvements, in lines such as major property and US household and commercial property binders, we have grown significantly. We have also seen strong growth in general liability and cyber as the market develops in these two areas. In our core lines which include terrorism and flood, our product, distribution and service are differentiating us. We have also seen good growth opportunities in specialty lines like marine and energy construction, where we are benefiting from a rising oil price.

US flood remains an area of significant opportunity. Our FloodPlus products use proprietary technology and advanced analytics to provide better cover at a fairer price for customers, backed by capacity from the flood consortium we lead. Our recently launched FloodPlus Commercial product has been well received and we have seen a material uptick in interest for our FloodPlus household product, which is now generating 1,200 quotes per day. These products demonstrate the innovation and unique distribution capabilities of the London Market.

Our London Market business is a top quartile performer in Lloyd’s and maintaining that position requires active cycle management. The tough decisions we took in 2017 and earlier this year to reduce or exit in areas such as extended warranty, aviation hull and aviation liability, position us well against the on-going headwinds. We are also supportive of Lloyd’s as they continue to push for greater profitability in the market.

Our alternative risk team received recognition for their work at the Reactions London Market Awards 2018, where they were awarded Insurance Team of the Year.

Hiscox Re & ILS

The Hiscox Re & ILS segment comprises the Group’s reinsurance businesses in London, Paris and Bermuda and insurance linked security (ILS) activity.

Gross written premiums $655.6 million (2017: $510.0 million)
Profit before tax $57.1 million (2017: $48.0 million)
Profit before tax excluding FX $54.5 million (2017: $49.9 million)
Combined ratio 71.5% (2017: 83.4%)
Combined ratio excluding FX 72.3% (2017: 81.2%)

Gross written premiums grew by 28.5% to $655.6 million (2017: $510.0 million), or 25.4% in constant currency. This is driven by risk and specialist lines, the additional catastrophe risk we have taken and the business we write on behalf of our ILS and quota share partners.

The good growth we saw at the start of the year has slowed during the second quarter, and we have focused on areas where rate improvement has been most significant such as US property catastrophe risk and risk excess. We will retain our underwriting discipline, particularly if rates flatten further.

Our strategy of sharing the most volatile catastrophe-exposed risks with our quota share and ILS partners, in line with their risk appetite, protects us in heavy catastrophe years such as 2017, where we significantly outperformed the market and delivered an underwriting profit in reinsurance.

After a number of benign years we have seen some one-off losses in our risk excess book, where we still see good opportunities for profitability and growth. We continue to develop our risk and specialist lines where the market is evolving, for example in cyber, with products such as a first-of-its-kind cyber industry loss warranty. In Hiscox Re ILS, our funds and vehicles have performed well relative to the market and in aggregate we continue to see positive reserve development.

We are seeing strong demand for our ILS funds and now have assets under management of $1.6 billion.


The investment return for the first six months of 2018 is $19.7 million (2017: $58.5 million), 0.7% (2017: 2.3%) on an annualised basis before derivatives and fees. Assets under management at 30 June 2018 were $6,460 million (2017: $5,740 million).

Market sentiment this year is very different to last year. In 2017, inflation expectations rose, and with them, the risk that asset performance would be poor. These risks crystallised in the first quarter of the year, as volatility returned to the markets, interest rates rose and equity markets fell. The long period of low volatility finally came to an end, leading to a negative asset performance for the quarter. The second quarter brought some respite, with recovering equity markets and slower than expected interest rate rises more than recouping the losses of the first quarter for our asset portfolio.

While US interest rates have risen, aided by President Trump’s fiscal injection, UK and European economies have had no such stimulus and so interest rates have not kept up. The European Central Bank is now timetabling the removal of quantitative easing, based on better growth numbers, which should lead to interest rate rises in Europe in the next year or two.

We remain cautious on our expectations for investment return, with a modest exposure to risk assets of 6.7% and a relatively high allocation to cash at 24.8%. This leaves sufficient leeway to re-invest at higher yields as circumstances allow, and protects the balance sheet against rising interest rates.


We continue to invest significantly in our brand and it is paying off, creating crucial differentiation and helping to drive growth as we continue our march towards one million retail customers. This year we will spend over $75 million on marketing (2017: $69 million) and most of this investment is targeted at the UK and the US, where we see significant growth opportunity.

In the US, we launched the next evolution of our I’mpossible campaign, which celebrates entrepreneurship, with a new advert in honour of International Women’s Day. In the UK, our CyberLive digital poster campaign raised awareness of the threat that cyber crime poses to small businesses and boosted our exposure as cyber insurance experts.

Elsewhere, we have launched new brand-building campaigns in France and Germany to raise awareness of Hiscox amongst small business owners (whether they buy insurance via a broker or direct) and for DirectAsia both the new TV advertising in Thailand and new product campaigns in Singapore have driven growth.


Hiscox is in good shape. The London Market business is navigating the market and finding opportunities in areas such as flood, cyber and general liability. In reinsurance we have grown and are achieving good margins. The retail businesses, in their respective regions and product lines, continue their good momentum. The opportunities are legion.

The Group is also working hard to transform much of our underlying infrastructure. This includes the impact of Brexit, General Data Protection Regulation (GDPR), New York Cybersecurity Regulation, IFRS 17 accounting standards, the Insurance Distribution Directive (IDD) and the updated Senior Managers and Certification Regime (SMCR). The finance and IT infrastructure projects we are undertaking across the Group, especially in our retail businesses, position us favourably as we look to grow market share in key lines and geographies according to the size of the opportunity ahead of us.

My thanks to all employees for their efforts so far. It’s going to be a busy second half.

Robert Childs
30 July 2018

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