Hamilton, Bermuda (12 July 2019) - Hiscox Ltd, the international specialist insurer, provides an update on its financial performance for the first six months of 2019.
The Group expects to deliver a profit before tax for the six months ended 30 June 2019 in the range of $150 million to $170 million. This includes an estimated investment return of $150 million to the end of June, having benefited from further market movements in the second quarter.
The Group also expects Hiscox Retail's combined ratio to be within the normal range of 90-95% at the half year, with growth for the segment in line with the first quarter. As stated in the May trading statement, the Group expects growth for Hiscox Retail to trend towards the mid-point of the normal 5-15% target range in the second half.
The insurance market has seen continued deterioration from 2018 catastrophe events, including Typhoon Jebi in Japan and Hurricane Michael in Florida. The scale of deterioration has been significant, with industry loss estimates having increased materially since these events. As a result, and as previously announced in its first quarter trading statement, the Group has strengthened reserves for prior year claims from Typhoon Jebi, Hurricane Michael and for the risk excess book. The combined impact of reserve strengthening for these events is approximately $40 million net. The absence of prior year releases from Hurricanes Harvey, Irma and Maria, which totalled $25 million in the first six months of 2018, means that the Group expects reserve releases in the first half to be materially lower than last year.
Conditions are improving with good rate momentum for most lines in Hiscox London Market. Hiscox Re & ILS is finding opportunities in the retrocession market, where reduced capacity has significantly improved rates.
The Group expects to make an additional tax provision of up to $60 million for the half year. This will be presented as a prior year adjustment and will not affect the current year results. This additional tax provision includes a reappraisal of how Hiscox has invested in and classified marketing activity historically. The Group does not expect any further charges to arise and re-affirms its current guidance on its effective tax rate.
The Group remains strongly capitalised and committed to its progressive dividend policy and does not anticipate any impact on the interim or final dividend.
Hiscox will publish its Interim Results on Monday 29 July 2019.
The person responsible for making this announcement is Marc Wetherhill, Group Company Secretary for Hiscox Ltd.
Notes to editors
- Typhoon Jebi is the most powerful typhoon to hit Japan. Industry loss estimates for this event increased from $2 billion to $16 billion1, as severe winds impacted an area of high-value construction ahead of the upcoming Olympic Games and Rugby World Cup. This caused an unusually large number of claims and increased repair costs as demand surged.
- In the case of Hurricane Michael, industry loss estimates increased from $6 billion to $12 billion2. Claims inflation from Hurricane Michael has been impacted by Assignment of Benefits, where insureds pass on claims recovery rights to more aggressive third parties, which has become a feature of the Florida market.
- The risk excess book includes products that protect insurers against frequency of risk losses. The strengthened reserving relates to 2018 catastrophe losses and includes significant late developments on some risks.
- In the last 10 years the Group has invested approximately $500 million in marketing activities worldwide.
A conference call for analysts will take place at 8.00am on 12 July 2019. To join, please dial into the call at least 15 minutes before, using the dial in details below.
United Kingdom (Local): 020 3936 2999
All other locations: +44 20 3936 2999
Participant Access Code: 361263
A recording of the call is available via webcast here.
For further information please contact:
Marc Wetherhill, Group Company Secretary, Bermuda +1 441 278 8321
Kylie O'Connor, Head of Communications, London +44 (0)20 7448 6656
Ryan Thompson, Investor Relations Manager, London +44 (0)20 7448 6522
Tom Burns +44 (0)20 7404 5959
Simone Selzer +44 (0)20 7404 5959
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 2018 saw the business deliver a profit before tax of $137.4 million in a challenging year for insurers.
The Hiscox Group employs over 3,300 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.
1Source: AIR (September 2018), Swiss Re (May 2019)
2Source: AIR (December 2018), Florida Office Of Insurance Regulation (June 2019)
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