The insurer today announced record annual results, with profits soaring and its retail operations growing to represent half of the firm’s business.
Hiscox’s share price jumped 0.5 per cent in early trading.
The figures
Gross premiums written increased from £1.9bn to £2.4bn with net premiums earned increasing from £1.4bn to £1.7bn.
Profit before tax increased by 64 per cent from £216m to £355m.
Earnings per share were up to 119.8p from 72.8p with dividends rising 15 per cent from 24.0p to 27.5p.
Why it’s interesting
Historically seen as a Lloyd’s of London stalwart, half of Hiscox business now comes from its retail arm which has grown by double-digit percentages over recent years.
Repeating sentiment expressed last year, Hiscox said the London Market remained “challenging”.
The firm was given a considerable boost by currency tailwinds: FX gains topped £152m as compared with a £15m boost in 2015.
US operations are an area where Hiscox sees potential for expansion and this continued during 2016, meanwhile Europe was more of a mixed bag: Germany and Spain doing well, while France posted a “difficult year” after a number of key underwriters upped sticks and left.
Chief executive Bronek Masojada on…
Hiscox’s new EU base: “We’re looking at Luxembourg and Malta. The European legal entity will be based in one of those two countries.”
“This is a structural issue not a strategic issue. All we have to do is form a new insurance company. We’ve got two potential countries to do that in. That’s going ahead full steam.
“I don’t want to underestimate it but it’s a largely mechanical process with lawyers and accountants at work.”
On Lloyd’s: “I lie in my bath at night and think that one day the London Market business will reprice, because like it or not, it always does. At that point we need to step on the gas and have the London Market and the reinsurance market drive the business forward.”
The retail business: “It’s a business we’ve been building for 20 years and it’s clearly firing on all cylinders just at a time when from a group perspective it makes a really material difference.”
The future of European operations: “Europe’s been growing at 8-10 per cent. The British attitude to Europe is ‘it’s all terrible over there’. But I can tell you it’s very good.
“[Exit from European markets] is definitely not on the cards.”
The US: “The US has clearly got very strong growth possibilities… it’s really big numbers.”
The government’s change in the discount rate: “It’s material for the industry but not material for Hiscox”
Source: City A.M.