Paul Cooper, Group Chief Financial Officer of Hiscox, has noted that in light of recent catastrophe activity, rates are expected to remain robust, creating “very attractive” conditions in the property cat market. As a result, the company plans to gradually deploy additional capital into this sector.
Speaking during an analyst call on Hiscox’s Q3 results, Cooper explained that the reinsurance market has remained disciplined throughout the year, with rates flat on average across the firm’s books and attachment points and T&C broadly holding firm.
Cooper continued, “The active natural catastrophe environment, including Helene and Milton, looks likely to arrest or slow the reduction of rates forecast for 1/1.
“If I talk about growth, with Hiscox Re and ILS, what you see, given the cat activity of Q3 and going into Q4 with Milton, is, I think rate was expected to come off a bit, sort of post-Monte Carlo, and then, essentially, since those events, we’ve seen the expectation that rates will remain firm, and that’s against the backdrop of 2023 being the best conditions in, you know, 10, 20 years, and 2024 being the second best.
“So, if that prevails into 2025 we see the conditions for property cat remaining very attractive and we expect to incrementally deploy capital into that space, consistent with what we’ve done over the past several years.”
Hiscox Re & ILS reported that insurance contract written premiums grew to $1.017 billion in the first nine months of 2024, up 4.3% from the same period of 2023.
According to the firm, most growth was achieved during the January renewals, when market conditions were most attractive.
At the same time, Hiscox London Market insurance contract written premiums for the first nine months of 2024 were $932.3 million, a decline of 2.9% year-on-year.
Overall, Hiscox London Market achieved rate increases of 3% year to date, with cumulative rate increases of 75% since 2018 and returns reportedly remaining attractive across many lines.
Adding more on this subject in the analyst call, Cooper said, “I think, for London market, the point to emphasise is that we do have a clear strategy of delivering sustainable, less-volatile returns, and against that backdrop, it is very much a focus on looking at opportunities that are attractive.
“So, property on the primary side in London Market continues to be so, we continue to grow property and household binders rates continue to be I’d say firm and attractive. Similarly, in crisis management, we have seen good growth in Q3 and that remains an attractive area.”
He went on, “I think there’s also a structural opportunity in energy construction. There is a significant multi-trillion dollar investment into the transition to net zero and although these projects don’t come along at regular intervals, there was a flurry of them in Q3 last year that we didn’t see to the same extent this year, but the long-run outlook for growth in energy construction is very compelling.
“That’s why we have invested in developing underwriting capability and also engineering expertise. So that’s an area that I’m excited by going into next year and beyond, but I would say, tempered by our cycle management.
“Where we see conditions evolving, such as D&O and cyber, we have seen rates continue to soften in those areas. That is off the back of what was a sort of increase from, say ’17 through to 2022, but we are managing exposure in that space.”
