Hiscox Ltd. gives a sobering example of how damaging the ever-softening reinsurance market has become. The Lloyd’s of London specialist insurer said it has experienced double-digit drops in its portfolio internationally and in the U.S.
“We are experiencing the same environment as everyone else in reinsurance; our portfolio is down 15 percent in the U.S.A. and down 10 percent in international business,” Hiscox acknowledged in an interim management statement outlining preliminary results for the first 9 months of 2014.
At the same time, Hiscox said the soft market “contagion” hasn’t spread to all areas of coverage.
“The contagion has only spread into insurance on big ticket property and energy lines,” the Bermuda-based Hiscox said. “In other insurance lines, rates remain fairly flat with reasonable margins. We will walk away from business where rates and conditions are unhealthy.”
Here are some further interim results in detail:
- Hiscox’s Hiscox Re division reported a preliminary drop of nearly 12 percent drop in premium income over the first nine months of 2014. The number landed at $543 million, down from $615.6 million over the period last year. The results reflect Hiscox’s push to “continue its disciplined response to falling rates after increased competition and a benign period for catastrophes,” the company said.
- On the other hand, Hiscox USA said its premium income soared more than 24 percent through Sept. 30, 2014, coming in at $274.5 million, according to Hiscox’s interim results.
- Hiscox Europe said its gross written premiums grew to more than $242.6 million, an 8.8 percent increase.
- The Hiscox London Market reported premium income growth of $577.2 million, a 9.2 percent hike in local currency. While aviation rates remain flat, aviation war is seeing significant rate increases, Hiscox said.
CEO Bronek Masojada said in a statement that Hiscox’s focus on brand building and growing its retail business has paid off, particular in the U.S., London Market and Europe.
At the same time, executives are continuing to reduce Hiscox’s catastrophe reinsurance book, he said.
Source: Hiscox Ltd.