Hiscox navigating difficult environment, sets up EU subsidiary

Over the three months ending on 31 March, total gross written premiums grew by 5% at constant currencies to reach £751.2m, but in Sterling were higher by 17.3%.

Commenting on the results, the specialist insurer's chief Bronex Masojada highlighted the especially positive performance of its small business operations, while cautioning that the situation at Hiscox London continued to be challenging.

"We remain disciplined and are carefully navigating our way forward."

Trading in London Market was comparable to the 1990s, the company said in a statement.

"As we have said before, the current trading environment is reminiscent of the London Market of the 1990's, which calls for a very disciplined approach. We are shrinking across most lines where margins are evaporating and pulling back significantly in aviation, extended warranty and big-ticket property lines."

The company also announced it was opening a new European subsidiary in Luxembourg on the heels of Brexit.

As previously announced, during the quarter the insurer exited the political risks class, "as the growing length of cover, now regularly over five years, and greater role of credit has moved this class outside of our risk appetite."

Hiscox USA performing, drop in rates most severe in London Market

Hiscox Retail reported a 18.6% increase in gross premiums at constant currencies to £375.4m, with Hiscox USA delivering the best performance with a 33.5% rise in premiums to $164.0m.

At Hiscox London Market on the other hand, premiums declined by 8.6% at constant currencies to £157.7m but were up by 0.4% when converted into Sterling, as expected by analysts.

As for rates, management reported no improvement in the rating environment in big-ticket business, amid a contined dearth of major loss events, excess capital and strong competition.

In the London Market, the outfit saw double-digit declines rates in the marine, energy and US large property accounts.

Hiscox Re also witnessed a drop in premiums, which fell 3.5% to $269.3m.

Rates in Retail, in which Hiscox continues to invest, were described as flat.

Investment results to 31 March were 0.7% on an annualised basis.

"The group's focus on service, product and franchise leaves it as one of the quality plays in the sector in our view. The rating does not yet reflect the quality, scale and potential of the Retail operations across the UK, Europe, the US and Asia. There is so much more to come from this quality underwriter," ShoreCap's Eamonn Flanagan said, reiterating a 'Buy' recommendation.