Hiscox Ltd has reported ‘broadly stable’ gross written premiums at £1,361.3 million, and compared that to 2013 numbers of £1,370.5 million in their interim management statement for the first nine months of the year to September 30.

The international specialist reinsurer, attributed the numbers to a disciplined approach in reinsurance, offset by steady growth in insurance lines.

Bronek Masojada, Hiscox chief executive, was quoted saying: “Long term investment in our brand and in building our retail business has paid off as we continue to grow, particularly in USA, London market and Europe, while we sensibly reduce our catastrophe reinsurance book.”

Hiscox reported in their management statement that they are experiencing “the same environment as everyone else in reinsurance;” and went on to explain their portfolio is down 15 per cent in USA and down 10 per cent in international business. It stated: “The contagion has only spread into insurance on big ticket property and energy lines. In other insurance lines, rates remain fairly flat with reasonable margins.

“We will walk away from business where rates and conditions are unhealthy.

Hiscox investment return to 30 September 2014 was +1.3 per cent, or +1.7 per cent annualised, said the reinsurer. “Short term bond yields in the US and UK were little changed in the three months since June,” Hiscox reported.

“Euro yields, however, declined as the ECB announced various measures in response to the growing threat of deflation in the region. Our bond portfolios therefore delivered a small positive return during the third quarter as did our portfolio of risk assets despite the volatility that set in towards the end of the period. Invested assets at the end of September totalled £3.2 billion and asset allocation remains largely unchanged from the end of June.

“Market sentiment in October has seen yields across many government bond markets move lower and has delayed investor expectation of the timing and pace of rate rises in the US and the UK.

“It is also likely that further bouts of volatility will be an ongoing feature. We remain invested in the higher credit quality and relatively liquid areas of the bond market and as a result, continue to expect our bond portfolios to produce modest returns in the near future. We still favour equities as an area of reasonable value and to that end an additional small allocation was made in mid October.”

Hiscox said it had been a good year for claims across the group, and credited “a combination of good underwriting and a benign environment. As reported earlier in the year Hiscox has very manageable exposure to the UK floods and storms, the summer storms in Europe and the tragic aviation losses affecting the market.

“Hiscox has no material exposure to the April tornadoes in the US or the Napa Earthquake; however we had a net loss of $11 million from Hurricane Odile which hit the Mexican peninsula in September.

“In line with our standard practice, we will review our position on capital when the result for the year is known.”

Hiscox went on to report they increased their UK gross written premiums by 3.6 per cent to £324.0 million, compared to £312.8 million last year, where discipline in certain lines is masking stronger growth in their core UK lines.

“Growth is being driven by professions and speciality commercial lines, with all UK regions performing well,” they said.

Hiscox also stated the first phase of their new core underwriting and claims system has launched successfully with direct home insurance. “Hiscox UK returned to television last month with a home advertertisement that will be supported by a cinema, print and poster campaign aimed at driving brand affinity in target areas such as London and the South East. During the period we launched a series of new and refreshed products including home and contents, personal accident, cyber and data risks — the result of a sustained focus on product innovation.”

Hiscox also reported “We are disappointed by the Government’s haste and lack of consultation in imposing new terms,” in regard to the UK Government’s implementation of changes to Pool Re, the UK terrorism reinsurance company which is funded by insurers and underpinned by a Government loan in the event of extremely large losses. “Pool Re has been very successful in delivering certainty for the UK over the last 20 years, and the fund has built a substantial safety net the UK public can draw upon in the event of a terrorist attack.

Hiscox Europe said they grew gross written premiums by 8.8 per cent to €153.1 million, compared to €140.7 million last year. “Our European operations have performed well, benefiting from a focused business plan and improving expense management. Our multilingual, pan-European shared service centre in Lisbon continues to grow and deliver efficiencies. In Germany, we are seeing strong demand for our technology product. Spain’s focus on partnerships with banks and other financial service providers to improve distribution is also delivering good growth.”

Hiscox Guernsey reduced premium income by 2.5 per cent to US$82.3 million, compared to US$84.4 million last year.

The reinsurer said: “Despite competition, Hiscox Guernsey continues to perform well and is maintaining market share as clients value our expertise and relationship with security provider Control Risks.

“Hiscox USA continues its good performance, increasing premium income by 24.6 per cent to US$274.5 million, compared to US$220.3 million last year. The professions products are a key area of growth, particularly in allied healthcare and technology. We are seeing increased demand for our crime product and are developing new opportunities here. Commercial property continues to be under pressure, and we remain disciplined in this area.

“The direct to small business offering continues to do well with 75,000 policies now in force.

“Hiscox USA will roll out Hiscox Pro in Q4, a new overarching name for our suite of professions products. Hiscox Pro will give us a broader focus on liability products for the admitted market, with the aim to increase significantly distribution in this important market.

“Hiscox USA launched a brand building campaign in October under the theme of Encourage Courage which aims to differentiate Hiscox as an insurer that understands the challenges of building businesses and the value in taking risk.”

DirectAsia, Hiscox’ newly acquired insurer in Asia, is: “meeting our expectations, growing premium income to £9.2 million.”

Hiscox added their investment in marketing is “well underway” and in time will differentiate the business in a market where: “ ... agent-based channels with high distribution costs dominate.”

Hiscox London Market grew premium income by 3.4 per cent, or 9.2 per cent in local currency to £364.2 million, compared to £352.2 million last year.

“Our investment in casualty business is delivering double-digit premium income growth, as we find good opportunities despite flat rates. In speciality lines we have seen growth of six per cent. Our energy team is finding good opportunities despite pressure on rates,” said the reinsurer.

“In property lines, the picture is mixed. Big ticket business remains challenged and renewals competitive, so we are exercising caution in this space. Healthy rates within our binding authority business are pleasing and we are growing here.

“Despite numerous industry losses, rates in aviation remain broadly flat. In aviation war however, we are seeing large rate increases and we are writing more business as a result.

“We’ve bound our first risks under the Willis Global 360 facility. The process is running smoothly and we look forward to doing more business like this while maintaining our underwriting integrity.”

Hiscox Re stated they have: “ ... reduced premium income by 11.8 per cent to US$543.0 million, compared to US$615.6 million in 2013, as the team continues its disciplined response to falling rates after increased competition and a benign period for catastrophes. Successful product innovation is differentiating Hiscox in this soft market and bringing business back into the market. The team is getting a good response from products like RAP (Risk Aggregate Protection) and SECAT (Second Event Cat with Aggregate Trigger) which aim to provide clients with a tailored more responsive approach.”

The reinsurer concluded: “In healthcare and casualty reinsurance where rates are healthy, business is growing well. The team is responding to client needs with innovative products, recently launching Ebola Liability Wrap for the US Healthcare Industry, which aims to close gaps in cover clients may have.”

“We continue to make good progress with our Insurance Linked Securities (ILS) strategy.”