Lloyd's insurer Hiscox's combined ratio (of claims to premiums) slipped into heavily loss-making territory - to almost 117 per cent - at the half-year stage. That reflected a £210m hit arising from a string of big catastrophes, including the Japanese and New Zealand earthquakes, US tornadoes and Australia's floods.
Still, such events are pushing up premium rates - at least in business classes that are directly affected. Accordingly, Hiscox has seen catastrophe-related reinsurance rate increases that have averaged roughly 10 per cent, with some classes experiencing hikes of up to 50 per cent. Elsewhere, conditions are more mixed with with some upward pressure in the property and energy books and some small rate reductions in classes such as terrorism. Meanwhile, in the small ticket business - such as household insurance and luxury car cover - Hiscox continues to write decently profitable business.
An annualised investment return of 2 per cent isn't bad in today's low interest rate world, either - the book remains focused almost entirely on cash and decent looking bonds.
Numis Securities expects full-year pre-tax profits of £2m, EPS of 0.41p (2010: £211m/45.4p) and net tangible assets (NTA) of 297p.
HISCOX (HSX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 412p | MARKET VALUE: | £1.6bn | |
| TOUCH: | 411-412p | 12-MONTH HIGH: | 428p | LOW: 340p |
| DIVIDEND YIELD*: | 4.0% | PE RATIO: | 118 | |
| NET ASSET VALUE: | 296p | COMBINED RATIO: | 116.9% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 904 | 97.2 | 50.8 | 5.00 |
| 2011 | 847 | -85.6 | 25.5 | 5.10 |
| % change | -6 | - | -50 | +2 |
Ex-div: 10 Aug Payment: 21 Sep Capacity owned: 76% | ||||
