While net premium income for the 12 months to December rose slightly to $2.635bn, pre-tax profits were down by more than 60% for $135.6m to $53.1m due to large catastrophe events and lower commissions.
Hiscox’s London market business saw its underlying business improve, but Hurricane Dorian and Typhoons Faxai and Hagibis led to it putting aside $165m for catastrophe and property claims.
On the plus side insurance rates have risen for the third year running and typically this has led to better rates of return.
The recent floods in the UK have already led to a raft of claims although over half of these are re-insured with Flood Re, the government-backed insurance programme. The firm says that so far ‘net losses are well within our expected catastrophe loss budget for the quarter.’
Regarding coronavirus, the main areas of potential exposure for Hiscox are event cancellation, travel and personal accident cover. It has seen some small claims already but it is clearly too early to estimate the full impact should the virus spread further.
RETAIL MARKET GROWING
Offsetting its big-ticket insurance business, the retail arm continues to generate good profits, up 22% to $178.4m thanks to strong performances in the UK and Europe.
A net 180,000 customers were added last year, taking the total to 1.2m globally, and the firm expects growth to remain in the 5% to 15% range this year.
Claims inflation continues to be an issue for the industry, driven by genuine increased costs ‘but also by the ingenuity of lawyers to meet their budgets at the cost of ours’ according to chief executive Bronek Masojada.