A sparkling performance from its retail insurance arm helped to offset a fall in reinsurance profits for Lloyd's insurer Hiscox (HSX) at the half-year stage. Notable successes on the retail side included luxury car insurance, which benefited from significant investment in marketing, while business volumes are expected to rise following the acquisition of RH Specialist Insurance, the classic car insurer formerly owned by insurer Willis.
On the reinsurance side, a benign claims environment and increased competition from pension funds seeking to invest in the market continued to drives rates lower, with rates on US property catastrophe business down 10 per cent, for example. Hiscox admitted that profitability here is being propped up by a lack of large catastrophe losses. However, these tend to happen in the second half of the year, and the hurricane season could yet supply some unpleasant surprises.
Prospects for another special dividend payment at the year-end also took a knock after the company warned that capital requirements would increase as a result of Solvency II, as well as growth in the long-tail casualty business. Specific losses in this area may not be known immediately, hence the need for greater capital reserves.
Numis is forecasting adjusted EPS of 59.1p for the full year and net tangible assets of 474.9p per share (from 73.4p and 419.2p in 2014).
| HISCOX (HSX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 918p | MARKET VALUE: | £2.61bn | |
| TOUCH: | 918-922.5p | 12-MONTH HIGH: | 935p | LOW: 649p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 506p | COMBINED RATIO: | 82.5% | |
| Half-year to 30 Jun | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 0.98 | 125 | 29.2 | 7.5 |
| 2015 | 1.10 | 135 | 29.4 | 8 |
| % change | +12 | +8 | +0 | +7 |
Ex-div: 6 Aug Payment: 16 Sep Capacity owned 72.5% | ||||
