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Hiscox trims business but expects rates to rise

Bermuda-based re/insurer Hiscox Ltd wrote less business in the first nine months of the year than in the same period of last year as it walked away from inadequately priced business.

Hiscox said gross premiums written were £1.17 billion during the first three quarters of 2011, compared to $1.2 billion in the same period last year.

Losses from Hurricane Irene were estimated at less than £10 million. The company added it was too early to estimate the claims likely to emanate from the serious flooding in Thailand.

The company’s Bermuda reinsurance unit, based in Wessex House on Reid Street, wrote 10 percent less business during the first nine months, selling $265.9 million compared to the $295.5 million in the same period of 2010.

Hiscox chief executive officer Bronek Masojada said: “Hiscox is in good shape. Our strategy of balance and diversity gives us options in challenging times and the strength of our UK business is proof of this. Although the wider market is slow to turn, the cumulative effect of international catastrophes is pushing reinsurance rates upwards.

“As nearly a third of our income comes from reinsurance, we are ready to benefit at the January renewal season.”

In its third-quarter interim statement, Hiscox said the decline in premiums written was expected “as the Group maintained underwriting discipline and continues to walk away from poorly rated risks”.

Hiscox was upbeat about the prospects for its Bermuda unit, after this year’s reduction in premiums.

“Reinsurance rates declined at the beginning of the year and Hiscox Bermuda reduced income accordingly,” the company stated. “This business is now planning to take advantage of an improving market in catastrophe reinsurance during the January renewals.”

The severe market losses from a string of natural disasters this years, coupled with the squeezing of investment income by low interest rates and the updating of the RMS 11 catastrophe model, have combined to put upward pressure on rates for coverage of catastrophe-related risk, Hiscox stated.

“We have seen average rises of between five and ten percent in these areas so far this year, and we expect further increases during the January renewal season,” the statement added.

Hiscox said its investment return for the first nine months was 0.5 percent, after the value of the investment portfolio declined during the third quarter. The company added that it has no exposure to the sovereign debt of Greece, Ireland, Italy, Portugal or Spain.

Hiscox writes most of its business through the London market where it reduced premium income by 3.2 percent to £475.3 million. The company added that it intends to increase its Syndicate 33’s 2012 capacity to £950 million from £900 million last year. This marks a £50 million reduction from the $1 billion figure announced at the half year.

The retail business in the UK grew premium income by 13.4 percent to £280 million. This growth was driven by the Direct business and the new underwriting partnership with Dual.

Hiscox CEO Bronek Masojada

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Published November 09, 2011 at 1:00 am (Updated November 09, 2011 at 8:14 am)

Hiscox trims business but expects rates to rise

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