Specialist insurer Hiscox may set up an EU-based insurer to maintain its access to European markets from which it generates £260m ($340m) in annual gross premiums.
The London-listed and Bermuda-domiciled firm said it was preparing for a range of outcomes following the UK’s vote to leave the EU, “depending on whether we remain in the single market or need to navigate new trading arrangements.”
Hiscox is “well established” in Europe, where it employs 355 staff, and views the Brexit challenge as structural rather than strategic. Nonetheless, there may be opportunities from the market dislocation, such as supporting small managing agents by giving their clients access to the London market, said chairman Robert Childs.
The financial market volatility that followed the referendum boosted Hiscox’s profitability. The collapse of sterling against the US dollar meant its US income soared, and the decline in bond yields benefitted its investment portfolio. Gross premiums written in the first half of 2016 reached £1.29bn, up 17% on the same period last year.
Pre-tax profits for the first half were up 52% to £206m, but excluding FX gains profit would have dropped 21% year-on-year.
FX volatility also masked a worsening combined ratio, which reflected “a very tough trading environment”, Childs said.
Source: Insurance ERM