Swiss Re Insurance-Linked Fund Management

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Hiscox ILS lifts assets to $1.6bn after $217m Jan 1 2022 raise


Hiscox ILS, the insurance-linked securities (ILS) and collateralised reinsurance underwriting unit of specialist underwriter Hiscox Group, raised $217 million in new assets in time for the January renewal season and started 2022 with an increased $1.6 billion in ILS assets under management.

hiscox-re-ils-logoFor 2021, the Hiscox Re & ILS unit, which includes the carriers reinsurance and third-party capital or ILS activities, increased its gross premiums written by 8.7%, while net premiums written soared 42.3%.

On the back of this, 2021 was a more profitable years as well, with profit reaching $98.5 million, far better than 2020’s loss of $35.1 million.

The Hiscox ILS proposition attracted new inflows of capital from investors and this supported the strong gross written premium growth that Hiscox experienced.

In total, new capital raising reached $190 million in 2021 and then the Hiscox ILS team added a further $217 million in January 2022.

As a result, assets Under Management (AUM) stood at $1.6 billion at January 2022, up from $1.4 billion at 31 December 2021.

Chairman Robert Childs commented this morning, “In Hiscox Re & ILS, our prudent approach to reserving and discipline in risk selection has delivered an excellent result in another year of higher than average natural catastrophes.”

Hiscox CEO Aki Hussain added, “The development of insurance-linked securities (ILS) platforms has resulted in new and efficient capital coming into the market. We have capitalised on this opportunity and Hiscox Re & ILS has built a successful ILS proposition, providing a mechanism for lowering the cost of capital for the business and providing a means of scale in specialist areas in which the business participates.”

Hussain continued, saying, “Market conditions have significantly improved, although further rate increases are necessary in some areas to genuinely achieve satisfactory returns through the cycle. We have used the last few years to refocus on business lines in which we have deep expertise, thereby creating a balance which is consistent with our underwriting expertise. This combined with improving market conditions is increasing the resilience of the portfolio and creates the capacity to grow in lines where the returns are stronger.

“Looking forward, the improved resilience in the portfolio, together with the growth of ILS AUM, is expected to drive much-improved generation of capital and profits through the cycle.”

Hiscox Re & ILS has been benefiting from improved rates and hardening reinsurance markets, but the company feels there is more rate needed.

While rates increased by 8% across the Hiscox Re & ILS business in 2021, the company has also pruned its book and looked to profitability of underwriting opportunities.

The result at the recent January 2022 reinsurance renewals was even more positive, but the hardening needs to persist, Hiscox believes.

“At the January 2022 renewals we saw 10% reinsurance rate growth, however, it is our view that further increases are necessary to achieve satisfactory returns through the cycle in all property lines. In light of this, Hiscox Re & ILS will continue to be disciplined to ensure the business we write is sufficiently rated to make a sustainable profit,” Hussain explained.

It’s a very positive start to 2021 for the Hiscox ILS unit, with more capital available and success in raising new assets, plus a much firmer reinsurance rate environment to grow into.

Watch our recent video interview with Vincent Prabis, Managing Principal, Hiscox ILS.

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