A fairly benign claims experience, combined with still high premium rates, meant an impressive half-year performance for Lloyd's insurer, Hiscox (HSX). Indeed, the combined ratio (of claims to premiums) improved by seven percentage points in the period to a robustly profitable 74.7 per cent.
Although the year so far hasn't been entirely free of loss-inducing catastrophe events - indeed, the Oklahoma tornadoes and floods in Europe and Calgary have meant an industry-wide loss of about $11.5bn (£7.5bn). But Hiscox has escaped fairly lightly from these events, with a net loss of $22m. Moreover, the group's estimated loss from last year's Costa Concordia cruise ship disaster has actually fallen modestly, to $19m. But premium rates - while still high - are showing signs of softening. For example, Hiscox's US property catastrophe rates fell 15 per cent on average during June's renewal period, while international rates fell 5 per cent.
Hiscox's investment portfolio remains largely focused on safe-looking bonds and cash - just 6.7 per cent of the book is in equities and unit trusts. Although, in today's world of low investment yields, the portfolio's annualised return fell from last year's 3.1 per cent to 1.5 per cent.
Broker Numis Securities expects full-year pre-tax profit of £189.7m, giving EPS of 43.2p (from £217m and 57.2p in 2012) and net tangible assets (NTA) of 367p.
HISCOX (HSX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 641p | MARKET VALUE: | £2.3bn | |
| TOUCH: | 640-642p | 12-MONTH HIGH: | 650p | LOW: 445p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 393p | COMBINED RATIO: | 74.7% | |
| Half-year to 30 Jun | Net premiums (£m) | Pretax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 702 | 126 | 44.7 | 6.0 |
| 2013 | 770 | 181 | 25.1 | 7.0 |
| % change | +10 | +44 | -44 | +17 |
Ex-div: 7 Aug Payment:18 Sep Capacity owned: 72.5% | ||||
