Q1 2019 Trading Statement
Gross written premiums grew by 3.3% in constant currency to
"In the London Market and in reinsurance, where conditions are improving, we are growing in the right areas and maintaining our focus on writing profitable business."
Gross Written Premiums for the period:https://www.hiscoxgroup.com/news/press-releases/2019/07-05-19
Rates
In Hiscox London Market, rates have increased across the portfolio by approximately 4% year to date, as the cumulative impact of two consecutive years of heavy market losses and the Lloyd's 'Decile 10' directive continues to drive rate improvement in the majority of classes. Cargo, marine hull and US public company directors and officers' (D&O) have seen the most significant rate rises, all up double digits, while pricing in property lines continues to firm. Pricing in cyber and terrorism remains competitive.
In reinsurance, where capacity is abundant, rate improvement has been more incremental. For Hiscox Re & ILS, rates are up by approximately 2% across the portfolio, with the retrocession and risk excess accounts achieving the highest increases. Rates in US catastrophe-exposed business are up low-single-digits, while pressure continues in the international book where rates are down slightly in aggregate, despite increases of more than 25% on loss-affected Japanese business at the April renewals.
In our retail businesses pricing is broadly flat, with claims trends in the market driving increases in
Claims
Hiscox Retail has seen a more normal claims experience compared to a very benign start to 2018.
Hiscox London Market has been impacted by a higher frequency of losses in the property book, including a single large household loss.
In line with the market, Hiscox Re & ILS has seen some deterioration on Typhoon Jebi and the risk excess book, where notifications continue to come in later than expected. As a result, our aggregate reserve development, whilst remaining positive, is expected to be at the lower end of the normal range.
Investments
The investment return for the first three months of 2019 was
Following a rocky end to 2018 caused by concerns over slowing global growth, financial markets have rebounded so far in 2019. Equity markets have recorded double-digit gains in some regions, and most bond markets have made positive returns. As a result, our year to date investment return is already well ahead of our position at the end of last year.
While our investment strategy remains broadly unchanged, we have benefited from our decision to increase exposure to short-duration corporate credit as spreads widened towards the end of 2018. However, with economic and political uncertainty an on-going feature in many parts of the world, it appears likely that bouts of market volatility will continue throughout the year, and we will remain conservatively positioned.
Hiscox Retail
Gross Written Premiums for the period:https://www.hiscoxgroup.com/news/press-releases/2019/07-05-19
Hiscox
Hiscox
In the broker channel, we have successfully piloted a new operating model which is now being rolled out across the
Our direct-to-consumer business has continued to deliver strong growth, however we are seeing increased competition in Direct Commercial. Our strong brand is key to differentiating us in this space and we will continue to invest significantly in marketing to boost our growth.
In March we launched our new CyberClear product in
Hiscox Europe
Hiscox Europe had a strong start to the year, growing gross written premiums by 16.8% in constant currency to
In January, Hiscox Ireland and a number of European underwriting partnerships transferred from Hiscox
We will be opening two new offices this year in
Our direct and partnerships division continues to deliver strong growth, with partnerships performing particularly well in the first quarter. Sustained investment in the brand is driving improved customer acquisition and the business will benefit further from the new policy administration system being implemented later this year. In the broker channel there has been strong growth in the professions book, as well as casualty, where rates are attractive.
We have launched our first fully-integrated media campaign in the US, featuring our first ever US TV advertisements, alongside partnerships with well-known media outlets and brands including
We expect growth for
Hiscox Special Risks
Gross written premiums for Hiscox Special Risks were down by 1.8% in constant currency to
Conditions in our core kidnap and ransom market, where we have a dominant position, remain challenging. We have renewed our focus on our strategic underwriting partnerships worldwide and we are seeing good progress.
We have seen an uptick in interest for our Security Incident Response (SIR) product, which has delivered good growth to start the year. We will continue to ramp up our investment in marketing and distribution, having recently expanded the business development team in the US.
Hiscox Asia
Hiscox Asia grew gross written premiums by 39.0% in constant currency to
In
Hiscox London Market
Gross written premiums in our London Market business grew by 5.3% in constant currency to
The market is still digesting two years of heavy losses in addition to the Lloyd's 'Decile 10' directive, and we are taking advantage of opportunities as they arise. Growth has been most significant in marine liability, product recall, cyber and general liability, where we have launched two innovative consortia. One offers protection against faults in advanced and emerging technology or hard-to-insure products; the other provides access to meaningful capacity for large corporations. The response from brokers has been overwhelmingly positive.
We are seeing substantial dislocation in the US public company D&O market, which is causing rates to rise. This market has different characteristics to the US private company market D&O written in
Hiscox Re & ILS
In Hiscox Re & ILS, gross written premiums decreased by 4.6% in constant currency to
Our teams in
An abundance of capacity in reinsurance, from traditional and alternative sources, continues to apply downward pressure on rate momentum. However, we are optimistic that sustainable rate rises will continue for the rest of the year as the market recognises significant deterioration on prior year losses and recent loss experience that requires an updated view of risk.
Due to heavy losses in the risk excess and the wildfire market over the last two years, we have taken action to adjust our view of risk, increase rates and reduce exposure on some business. Loss-affected business in
Performance of our ILS funds through 2017 and 2018 was in line with expectations and we are pleased that our investors remain committed. Since the launch of the funds in 2014, they have generated positive net returns for investors. ILS assets under management remain in excess of
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