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Hiscox Ltd on Wednesday reported it swung to an interim loss in the first half of 2022, blaming the disappointing result on rising interest rates, widening credit spreads, and the equity market sell-off.
In the six months ended June 30, the Bermuda-based insurer swung to a pretax loss of $107.4 million from a profit of $133.4 million a year previous.
Gross premiums written increased by 9.2% in the half-year, despite headwinds from a strengthening dollar. Hiscox said that insurance rate momentum was continuing to keep pace with or exceed inflation expectations in all three of its divisions. Its combined ratio improved slightly to 91.3% from 93.1%. Any reading below 100% indicates profitable underwriting.
Offsetting this, the insurer posted an investment loss of $214.1 million, swinging from a profit of $61.9 million a year prior. This resulted in a negative return of 3.0% in the year-to-date, compared to a positive return of 0.8% a year ago.
At June 30, the company's assets under management totalled $7.1 billion, down 2.7% from $7.3 billion at December 31.
Annualised return on equity was negative 6.8% in the recent half, swinging from positive 10.4% a year before.
Looking forward, Hiscox said economic and political risks have been added to those of hurricanes. ‘In the second half, we face the usual uncertainties of the wind season in addition to a challenging macroeconomic and geopolitical environment, but our business is conservatively reserved, strongly capitalised and well funded,’ it said.
‘The group strategy of Retail growth, balanced portfolios and managed volatility in big-ticket, positions us well to deliver sustainable and attractive returns for shareholders.’
The firm anticipates a $48 million loss from its risk in Ukraine and Russia, net of reinsurance, with $34 million of this figure attributable to Hiscox London Market.
Hiscox declared an interim dividend of 12.0 US cents per share, up 4.3% from 11.5 cents the previous year.
Shares in Hiscox were down 4.9% at 832.80 pence on Wednesday morning in London.
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