Hiscox expects $170m loss from California wildfires
Bermuda-based Hiscox expects to take a net loss of approximately $170 million from the California wildfires, with total insured losses reaching $40 billion—at the upper end of projections.
The company will absorb $150 million of the losses through its Bermuda-led Hiscox Re & ILS reinsurance division, while its Hiscox London Market and Hiscox Retail arms will each take on $10 million.
The estimates, which will be included in Hiscox's first-quarter 2025 results, includes reinstatement premiums and does not make any allowance for subrogation — recovering insurance payouts from a third party responsible for the loss.
In 2024, Hiscox set aside $1.6 billion for re/insurance claims, $117 million more than in 2023 due to more losses particularly impacting the London Market business.
Last year was a particularly active one for natural catastrophes, with five hurricanes making landfall in the USA; flooding in Spain, Germany and central Europe; and several weather events in Canada.
Natural catastrophe losses were within expectations, Hiscox said, with a reduction in its initial loss estimate from Hurricane Milton offset by an increase in the amounts reserved for certain other 2024 loss events.
Natural catastrophe losses were within expectations despite a high number of loss events, the company maintained.
Also, Hiscox was hit by a number of man-made losses, including a net loss of $28 million from the MV Dali collision in Baltimore last March.
In more positive news, Hiscox Re & ILS — which comprises the insurance giant's reinsurance businesses in London and Bermuda and insurance-linked securities (ILS) activity — became a billion-dollar business of its own in 2024, as premiums nudged up from $986.3 million in 2023 to $1.03 billion in 2024.
Its underwriting activity was up from $136.1 million in 2023 to $165.7 million in 2024, contributing to the reinsurance and ILS division making a $267.5 million pre-tax profit last year ($136.1 million in 2023).
Undiscounted combined ratio for Hiscox Re & ILS hovered at 69%, fractionally down from 2023.
“The market remained disciplined throughout 2024, with attachment points holding, terms and conditions stable rates broadly flat following cumulative rate increases of 90% since 2018," Hiscox said. "January 2025 renewals were more competitive as capital, typically in the form of retained earnings, pursued growth. This has had an impact on the market, with rates down 8% at the important 1 January renewals, although attachment points and terms and conditions have remained broadly stable. Market conditions, coming from the significant highs of 2023 and 2024, remain attractive and we have deployed additional capital into the opportunities that provide the best risk-adjusted returns for the portfolio."
ILS assets under management (AUM) as of January 1 2025 were $1.4 billion ($1.6 billion as of January 1 2024) following planned capital returns and new inflows of $460 million.
For the group, insurance contract written premium (ICWP) grew by 3.7% or $168.7 million to $4.8 billion ($4.6 billion in 2023), driven by retail premium growth of $147.3 million.
Group undiscounted combined ratio was a flat 89.2% in 2024, which Hiscox group CEO Aki Hussain said was “a testament to our disciplined underwriting”.
Overall, insurance services generated $553.5 million in 2024 compared with $492.3 million in 2023.
For the year, Hiscox — whose three divisions comprise Hiscox Retail, Hiscox London Market and Hiscox Re & ILS — made a record pre-tax profit of $685.4 million, up 9.5% year-on-year, the company crowed.
Aki Hussain (pictured), Hiscox group chief executive officer, said: “The Group has delivered another set of excellent results and a second consecutive year of record profits ... our big-ticket portfolio has again delivered an outstanding performance, leading to a strong return on equity in an active loss year.”
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