ILS inflows drove significant GWP increase: Hiscox’s Aki Hussain

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Incoming Hiscox CEO Aki Hussain explained that new capital raised by the group’s Hiscox ILS funds in the second-quarter translated into a significant increase in gross written premiums.

Hiscox logoAs we reported yesterday morning, insurance and reinsurance group Hiscox reported a return to profit for its reinsurance business, alongside revealing fresh inflows of ILS capital to the Hiscox ILS funds.

In total, Hiscox ILS raised $190 million of new capital during the second-quarter of 2021.

The new capital raised into its insurance-linked securities (ILS) funds comes on the heels of a period where ILS assets remained relatively flat, while deployable ILS capital had actually reduced for Hiscox, given the effects of trapped collateral after recent heavy catastrophe years.

The most recent quarter has seen a turn around, with the Hiscox ILS team able to attract new allocations from investors and this has had an immediate effect at the mid-year reinsurance renewal season.

Aki Hussain, current CFO and incoming CEO at Hiscox explained that, “This resulted in a significant increase in gross written premiums, as the new capital was deployed in June.”

Hiscox has in recent quarters been very focused on deploying more of its own capital and less third-party capital, as it sought to grow into the firmer reinsurance rate environment.

This continues, as the company has deployed more capital of its own again, saying that it has made a bigger catastrophe bet using its own capital around the renewals.

In addition to this, a lot of the ILS capital raised will also have been deployed into this catastrophe bet, so it seems Hiscox is now so positive on rates that it sees the opportunity to use complementary sources of capital to expand its reinsurance book further.

Hussain also explained that Hiscox has been able to fill some of the gaps in the reinsurance market where ILS capital has been seen to withdraw somewhat.

Hussain explained that in the improving reinsurance market environment, Hiscox has “closed some of the gap left by the pullback of third-party capital”, which enabled the company to make this larger catastrophe bet.

Also read: Hiscox ILS adds $190m of inflows, as reinsurance returns to profit.

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