- Hurricane losses seen at $135 million
- Insurance rates continue to increase
- Firm promises faster growth next year
Insurer Hiscox (HSX) was the top riser in the FTSE 250 mid-cap index after it revealed smaller-than-expected losses from recent natural disasters and promised an ‘acceleration of growth’ in 2023.
Shares in the Bermuda-based firm climbed 5.5% to 948p, although they still sit well below their pre-pandemic highs.
NOT AS BAD AS FEARED
Hiscox took a lower-than-forecast reserve of $135 million for damages due to Hurricane Ian, a Category Four storm which slammed into Florida in September devastating parts of the west coast of the state and in particular the town of Fort Myers.
The firm based its provision, which is net of reinsurance, on estimated insured losses across the market of $55 billion, although some recent estimates have put insured losses as high as $70 billion and the total cost including the clean-up operation at over $100 billion.
At the same time, unrealized nine-month mark-to-market losses on the company’s bond portfolio created a negative investment return of $293.9 million compared with a gain of $62.7 million last year although the firm insisted the losses should unwind as the bonds mature.
Gross premiums written were up 6.3% to just under $3.7 billion, slightly below some forecasts, as the firm exited certain business lines in the London market, while insurance rates continued to see ‘strong momentum across all segments’ with increases ahead of the company’s claims inflation assumptions.
STRONGER GROWTH OUTLOOK
Chief executive Aki Hussain said the group ‘has performed well in a complex underwriting environment’, adding: ‘Our Retail business is on track, with platform migration going well and we look forward to an acceleration of growth in 2023.’
Hiscox Re and ILS (insurance-linked strategies) generated gross written premiums of $1.07 billion in the first nine months, topping the $1 billion mark for the first time, and the rating outlook for January 2023 renewals was described as ‘excellent’.
The US DPD (direct and partnerships division) business delivered just under 10% growth while growth is seen accelerating to ‘in excess of 15%’ next year.
