Hiscox Group, the specialist insurance and reinsurance underwriter, has reported that its gross written premiums increased 6.3% to $1.26 billion during the first quarter of 2021, as strong growth in Hiscox London Market, Hiscox Europe and direct and partnerships business more than offset planned reductions in the US broker channel.
The company also reported no change to its previously disclosed estimates for claims related to COVID-19 for this year or 2020, which continue to total $475 million net of reinsurance.
Hiscox UK’s exposure to potential business interruption claims from the pandemic has been running off at approximately 8% per month since June 2020, and residual exposure is expected to be largely run-off by the end of June 2021.
“The year has got off to a good start as rates continue to strengthen in all areas,” said Hiscox Group CEO Bronek Masojada. “Our big-ticket businesses are benefitting from improved conditions and strong market positions. Our Retail businesses continue to benefit from the shift to digital trading.”
Hiscox London Market in particular achieved a further aggregate rate increase across the portfolio of 13% year-on-year, building on the significant rate increases over the past three years, while Hiscox Re & ILS also benefitted from average rate increases of 10% across the portfolio.
Hiscox Re & ILS also saw net written premiums grow 35.6% as the business retained more risk on its balance sheet to take advantage of the favourable rate environment and changed the mix of quota share and excess of loss reinsurance.
In Hiscox Retail, gross written premiums grew by 8.6% to $663.9 million despite a challenging operating environment as government
restrictions remained in the UK and across the European region throughout the quarter, in contrast to the comparable period in 2020
which was mainly unaffected by the pandemic.
This segment saw rates increase across all regions with professional indemnity and cyber delivering the strongest growth. Top line growth was particularly strong in the US at 30.1%, driven both by the boom in new business formation and by Hiscox’s investments in technology and marketing.
Hiscox Europe saw annual rate increase of 2%, with the strongest momentum in Ireland, France and Spain, while Hiscox USA benefitted from a 5% increase on Q1 2020 driven predominantly by the broker channel, as pricing in the US excess and surplus lines market continues to harden.
Claims in Q1 included a number of natural catastrophes and large man-made events, with Hiscox reserving $47 million for winter storm Uri alone, based on an industry loss pick of $15 billion. The majority of the exposure is in Hiscox Re & ILS with much smaller expected losses in Hiscox London Market and Hiscox USA.
Overall, Hiscox London Market has had limited large loss activity, with claims experience below expectation in both the UK and
European businesses, partly offset by a continued rise in US cyber claims.
Investment return for the first quarter was $20.7 million, compared to a loss of $78.9 million for the same period last year, and assets under management grew from $6.8 billion last year to $7.7 billion.