Hurricane Sandy and the Costa Concorida disaster did result in a combined £103m hit for Lloyd's insurer Hiscox (HSX). Overall, though, 2012 was a relatively benign year from a claims perspective. Add that to reasonable premium rate progress on some lines and Hiscox's combined ratio (of claims to premiums) improved from 2011's barely profitable 99.5 per cent to a solidly profitable 85.5 per cent in 2012.
Indeed, and reflecting heavy sectoral losses from catastrophe-exposed business classes during 2011, Hiscox's reinsurance businesses saw premium rates double for some loss-affected areas. Moreover, management reckons that reinsurance rates have remained "healthy" since January's renewal period - rates were flat to positive in its North American operations. That said, rates for non-catastrophe exposed lines aren't so robust with, for example, management pointing to challenging conditions for Hiscox's casualty and aviation accounts.
Meanwhile, the return on the investment portfolio improved from just 0.9 per cent in 2011 to a 3.1 per cent return - reflecting a much improved appetite for non-government bonds and equities. Nearly 94 per cent of the portfolio is in bonds and cash, with the remainder in equities and hedge funds.
Broker Oriel Securities expects current year adjusted pre-tax profit of £149m and EPS of 32.9p (50.9p in 2012) and net tangible assets (NTA) of 345p.
HISCOX (HSX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 511p | MARKET VALUE: | £2bn | |
| TOUCH: | 510-512p | 12-MONTH HIGH: | 517p | LOW: 370p |
| DIVIDEND YIELD: | 3.5%* | PE RATIO: | 10 | |
| NET ASSET VALUE: | 349p | COMBINED RATIO: | 85.5% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.15 | 105 | -28 | 12.8 |
| 2009 | 1.44 | 321 | 183 | 15.0 |
| 2010 | 1.43 | 211 | 100 | 16.5 |
| 2011 | 1.45 | 17 | 24 | 17.0 |
| 2012 | 1.57 | 217 | 92 | 18.0* |
| % change | +8 | +1154 | +277 | +6 |
Ex-div: 28 Mar Payment: 26 Apr *Excludes 38p a share special dividend via a 'B' share scheme Capacity owned: 72.5 per cent | ||||
