Claims inflation within the US retail market and the impact of large catastrophe events caused pre-tax profits for Hiscox (HSX) to decline by more than half last year. The insurer reserved $165m (£127m) for Hurricane Dorian and Japanese Typhoons Faxai and Hagibis, pushing the combined ratio - calculated as claims costs as a proportion of premium income - up to almost 106 per cent.
An increase in claims costs for the employment practices liability area of cover within the US private company directors and officers market (D&O) and a longer timeframe to settle small business casualty claims in the US forced the combined operating ratio for the retail business up to 98.7 per cent, outside the 90-95 per cent target range.
However, the group has reduced its D&O book by more than three-quarters to under $20m and reported premium rate increases of 13 per cent in response to heightened claims. Rates have also been rising within the London market, with notable increases across property, cargo, hull and general liability.
Analysts at Peel Hunt forecast adjusted net tangible assets of 689¢ a share for the 2020 year-end, rising to 733¢ 12 months later.
| HISCOX (HSX) | ||||
| ORD PRICE: | 1,282p | MARKET VALUE: | £ 3.70bn | |
| TOUCH: | 1,281-1,284p | 12-MONTH HIGH: | 1,795p | LOW: 1,140p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 96 | |
| NET ASSET VALUE: | 758¢ | COMBINED RATIO: | 106% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Investment returns (£m) | Dividend per share (p) |
| 2015 | 1.94 | 216 | 35.4 | 24.0 |
| 2016 | 2.40 | 355 | 120 | 27.5 |
| ($bn) | ($m) | ($m) | (¢) | |
| 2017 | 3.29 | 39.7 | 105 | 39.8 |
| 2018 (re-stated) | 3.78 | 136 | 38.1 | 41.9 |
| 2019 | 4.03 | 53.1 | 223 | 43.4 |
| % change | +7 | -61 | +485 | +4 |
| Ex-div: | 14 May | |||
| Payment: | 10 Jun | |||
| £=$1.28 | ||||
