Hiscox’s profits dropped 31 percent in the first half of 2014 as a soft market environment, adverse foreign exchange movements and UK floods took their toll.
The company’s profits fell to £124.6 million, compared with £180.7 million in the first half of 2013. Gross written premiums (GWP) also dipped to £978.9 million, compared with £1,017.9 million in the prior year half.
The reinsurer’s combined ratio hit 82 percent, an increase of just over 7 percentage points, from 74.7 percent in 2013.
Net premiums written also fell to £732.6 million in the first-half of 2014, compared with £770 million in the first half of 2013.
Hiscox Re, the group’s reinsurance businesses in London, Paris and Bermuda, ILS activity and the Bermudian healthcare business, suffered a 22 percent fall in GWP to £271.5 million, compared with £346.3 million in the previous year. The reinsurer noted that it had predicted a fall in GPW due to the soft market and their “undisciplined response”.
Robert Childs, chairman of Hiscox, says: “Despite the early impact of the UK floods and storms the Group benefited from a benign global catastrophe claims environment. The top-line is up 4.6 percent in local currency but down 3.8 percent in Sterling following a substantial (21.6 percent) but expected, reduction in reinsurance income, much of which was offset by good growth through our regional distribution network in the USA, Europe and UK. It has been a strong start to the year, however we still have a hurricane season to face and earthquakes can happen at any time.”
Bronek Masojada, CEO of Hiscox, says: "It has been a great start – at constant exchange rates the group made a similar profit to last year. Falling rates and deteriorating terms and conditions are putting pressure on the market. We've seen this before, but our discipline and strategy of balance is designed to absorb these conditions. We will seize opportunities as they present themselves in our specialty lines and maintain our discipline in the face of increasingly strong headwinds."
Hiscox, results, UK floods, Robert Childs, Bronek Masojada