Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Hiscox ILS assets hit $1.3bn in Q1, continues to manage the cycle


Global insurance and reinsurance specialist Hiscox has reported that its insurance-linked securities (ILS) funds recorded increased assets under management (AuM) to $1.3 billion in the first-quarter of 2017, while the firm continues to manage the softening cycle by shifting its underwriting focus.

The re/insurance group reported earlier this year that Hiscox ILS had seen its AuM reach $1.25 billion across its funds and managed platforms, and the only reason this figure wasn’t higher was due to underwriting discipline in the current, challenging reinsurance market environment.

The firm has now reported its first-quarter 2017 financial results, which reveals AuM growth of 4%, to $1.3 billion within its ILS and reinsurance funds, which includes deals transacted through its recently launched fully collateralised ILS fund.

Group Chief Executive Officer (CEO), Bronek Masojada, commented; “Hiscox Re and ILS are finding opportunities. We remain disciplined and are carefully navigating our way forward.”

Hiscox Re and ILS reported gross written premiums (GWP) of $269.3 million, a decline in constant currency of 3.5% compared with the $279.2 million recorded a year earlier. While net premiums written decreased by just shy of 20% as the firm retained less risk in the quarter.

The company revealed that Hiscox Re and ILS expanded its U.S. catastrophe reinsurance in the quarter, but reduced in retrocession and casualty lines where it felt rates were under more pressure.

The growth in AuM across its ILS funds and the fact that the firm’s reinsurance and ILS segment retained less risk supports the group’s disciplined approach at navigating the softening reinsurance market cycle, while looking to take advantage of any opportunities using both traditional and third-party reinsurance capital.

Shifting its underwriting focus away from more pressured lines of business and looking to redeploy into more profitable areas, or simply retaining less risk where rates fail to meet return hurdles, is becoming an increasingly important practice as the marketplace remains under pressure and challenges intensify.

Hiscox said in its Q1 earnings statement that the reinsurance unit benefitted from good underwriting and a low loss environment in the quarter, while the firm’s “strategy of linking innovative products to diverse forms of capital remains a key source of opportunity.”

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