Hiscox profit surges, says it's ready for Brexit

Hiscox posted a trebling of its full-year pre-tax profit on Monday despite a busy year for claims, as gross written premiums rose and the insurer said it was ready for Brexit.

In the year to 31 December 2018, pre-tax profit increased to $137.4m from $39.7m the year before, as gross premiums written pushed up 15% to $3.8bn, with double-digit growth in all segments. Analysts had pencilled in pre-tax profit of $129m.

The insurer said Hiscox London Market put in the best performance, returning to growth and profit after three years of disciplined cycle management. The segment saw gross premiums written rise by 17.1% to $877.7m.

Meanwhile, Hiscox Retail wrote more than $2bn of premiums and served one million customers for the first time. Premiums increased 14% $2.09bn.

At the company’s reinsurance and insurance business, gross premiums written grew 15.9% to $812m, with property catastrophe reinsurance and specialty reinsurance the key drivers of growth. Hiscox said a number of natural catastrophes and large claims impacted profits, which resulted in a loss of $23.2m for the year versus a profit of $25.5m in 2017.

Hiscox lifted its total dividend for 2018 by 5.3% to 41.9 cents from 39.8 cents the year before.

Chief executive Bronek Masojada said: "We have generated strong growth and good profits in a busy year for claims. The tough action we took in our London Market business is paying off, and we are seeing some positive momentum in big-ticket lines, where rates, terms and conditions are improving.

“We are growing well in our chosen retail segments, and our small market shares mean the size of the opportunity in retail remains immense. We will continue to invest in our people, infrastructure and brand and maintain our focus on disciplined growth."

Hiscox also said on Monday that its business is ready for Brexit, "even if British politicians are not".

"We have always said that, for Hiscox, Brexit is structural not strategic. We have built a profitable business in mainland Europe and Ireland over the past 25 years, which serves over 200,000 customers and employs 420 staff. We have put in place the structures needed to continue to serve these customers, as well as those of our customers from elsewhere in the world who have assets or exposures in these territories.

"We have created Hiscox SA, a new Luxembourg insurer to carry our retail risks, and will utilise Lloyd's Brussels to insure European Economic Area risks which were previously placed with Lloyd's of London. Adapting to Brexit cost Hiscox approximately $15m in one-off costs, the majority of which were incurred during 2018, and an expected ongoing cost of $2.4 million per annum."

At 0805 GMT, the shares were up 0.5% to 1,602p.