According to Hiscox Group’s interim statement this morning, the firm’s insurance-linked securities (ILS) fund management unit, Hiscox ILS, has delivered record fund performance so far in 2023, while maintaining stable assets under management (AUM) in the third-quarter.
Overall, Hiscox has been deploying capital through its Hiscox Re & ILS division, where reinsurance and ILS management takes place, capitalising on hard reinsurance market conditions.
Net premium growth has actually accelerate in the Hiscox Re & ILS division, to 23.6%, which the company said reflects “our cycle management and capital deployment strategy to maximise potential earnings.”
It reflects Hiscox maximising its capital deployment at the mid-year renewals, with Q3 growth outpacing reinsurance expansion for the rest of the year.
As Hiscox Re & ILS “deployed capital in the hard market”, lifting reinsurance premiums to $438.3 million, the company said that the “Hiscox ILS funds have delivered record performance, generating an increasing amount of fee income for the Group.”
At the same time, aggregate natural catastrophe losses fell within budget, which will have assisted the ILS fund returns secured for the Hiscox ILS investor base.
Aki Hussain, Group Chief Executive Officer, Hiscox Ltd, said, “I am pleased we have continued to deliver disciplined profitable growth across the Group. Through a combination of management actions to improve the quality of our portfolios, increased capital deployment in big-ticket and a focus on the quality of growth in Retail, we are in the best position for many years to grow and deliver strong risk-adjusted returns in each of our segments.
“As we look forward, market conditions remain positive across the Group and we see plenty of attractive opportunities ahead.”
The company further explained that the rate environment is helping drive this performance.
“Hiscox Re & ILS benefitted from an average rate increase of 32% on a risk adjusted basis and the cumulative rate increases now stand at 91% since 2018,” the company reported.
“In North American property reinsurance, demand for limit increased in July, as those who held off from purchasing earlier in the year, given the disruption seen at January renewals, returned to the market to top up their natural catastrophe programmes.
“Overall, the market was more orderly during the mid-year renewals. We grew gross shares with several core clients in property catastrophe, while at the same time improving our portfolio and materially increasing our attachment profile. We continued to significantly reduce property aggregate excess of loss business and moved capacity towards the occurrence programmes given the attractive market conditions.”
Hiscox ILS assets under management stood at $1.7 billion at the end of September 2023, which is unchanged from the half year position.
The company noted that this included net capital outflows of $294 million in the third quarter, which it explained have been largely offset by record returns generated by the ILS funds.
“With the majority of Hiscox Re & ILS’s business now written for 2023, we turn our attention to the January 2024 renewals. We anticipate that the market will remain disciplined and will continue to be very attractive,” Hiscox said.
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