Hiscox will focus on consolidating the sweeping changes it has made to its London market business for the year ahead as the insurer looks to target growth in cyber and other profitable specialty lines, the London blue chip insurer’s CEO has said.
Speaking to The Insurer, Hiscox CEO Bronek Masojada said: “2019 will be a consolidation year for us.
“I don’t expect us to grow another 15 percent. We’re cautious and think we’ll see a little growth beyond rate rises,” Masojada continued.
“The big push for us was last year.”
In its full year 2018 financial results released this morning (25 February), Hiscox’s London market business reported a profit of $78.2mn, up from a loss of $46.7mn in 2017, and reported an improved combined ratio of 89.3 percent.
“There’s been a huge turnaround in profitability thanks largely to the bottom quartile activity we started carrying out in 2016 - and it has paid off,” he said.
Following a tough year for Hiscox at Lloyd’s – which saw the insurer pull out of aviation hull and liability, and reshape its D&O exposure – Masojada said the remedial action saw Hiscox cut GWP in its London market business by $400mn from the $1.1bn it wrote back in 2016.
“We’re very happy with the result,” Masojada said. “It reinforces the need for on-going change and innovation. The actions were worth it not only in financial terms but also in terms of driving the business forward.”
Commenting on the sweeping Jon Hancock-led Decile 10 syndicate reviews, the executive said that he was “depressed” that such action had to be taken within Lloyd’s but emphasized the importance and the need for Lime Street to change.
“I was depressed about it,” he said. “The fact that the regulator had to tell commercial enterprises that losing money was not a long-term winning business strategy is a bit sad.”
Newly appointed Lloyd’s CEO John Neal is expected to unveil details of his plans to spur growth in the market in a prospectus in March.
Masojada said he welcomed Neal’s continued support of the Lloyd’s “digital agenda” and said he hopes the prospectus will continue the market modernisation strategy laid out by predecessor Inga Beale.
Hiscox saw group pre-tax profits increase threefold over 2018, a primary driver of this came from the rate increase the insurer experienced at renewals following the devastating HIM hurricanes in 2017.
Masojada, who remained an outspoken market voice about the need for rate increases following the costly 2017 cat year, said Hiscox was able to capitalise on pricing changes thanks to its “aggressive” strategy and speed to market against competitors.
“We had a plan and we had a level of aggression that allowed us to claim a disproportionate share of the rate increases,” he said.
“We claimed big lines on the coverholders we wanted to do business with and were able to grow the reinsurance top line with those who were nervous about pricing. Because we were honest in January, we got a bigger share of the uptick.
“Most of our competitors were sitting around debating whether they would go up or not.”
The executive said Hiscox has seen further rate increase across a broader swathe of activity but expects the uptick in rates to have as much of a material impact of results.
“The difference is that everyone can see it now. In order to win market share you have to be bold when others are nervous – we’re more cautious on our 2019 outlook.”