With no repeat of 2011's painful stream of catastrophe-related losses, Lloyd’s of London insurer Hiscox's combined ratio (of claims to premiums) bounced back to a profitable 81.7 per cent from last year's heavily lossmaking 116.9 per cent. That was helped by robust premium rate increases - as insurers scrambled to rebuild their reserves - although the shares are rated at a premium to the sector and already factor in that progress.
Hiscox's US property reinsurance book saw rates rise by more than 10 per cent in the first quarter, and then by up to 5 per cent in the second. Japanese earthquake rates have doubled since 2011's earthquake there, while Japanese wind rates grew 10-30 per cent at renewal in April. Non-catastrophe business remains soft, with Hiscox's other speciality book having seen generally flat rates, while those at its large casualty account remain under pressure.
Meanwhile, the investment book delivered a decent-looking annualised 3.1 per cent return - up from 2 per cent last year. Yet it remains focused on safe-looking bonds and cash, with just 6.1 per cent of the book in equity-related investments.
Broker Peel Hunt expects adjusted full-year pre-tax profit of £204m, giving EPS of 45p (from £17m and 5p in 2011), with net tangible assets (NTA) of £332.2m.
HISCOX (HSX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 444p | MARKET VALUE: | £1.74bn | |
| TOUCH: | 443-444p | 12-MONTH HIGH: | 449p | LOW: 335p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 339p | COMBINED RATIO: | 81.7% | |
| Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 668 | -85.6 | 25.5 | 5.10 |
| 2012 | 702 | 126 | 44.7 | 6.00 |
| % change | +5 | - | +75 | +18 |
Ex-div: 8 Aug Payment: 19 Sep Capacity owned: 73 per cent | ||||
