Hiscox Ltd (LON:HSX) have seen their shares bounce despite the firm seeing drop in profits within their full year results.
The FTSE 250 listed firm reported that its pretax profit had sunk 61% to $53.1 million, compared to the $135.6 million figure a year ago.
Hiscox noted that its performance had been affected by ‘large catastrophes’ as the firm alluded to issues such as hurricane Dorian in the Bahamas and typhoons Faxai and Hagibis.
Notably, the firm also said that it had seen higher claims and claim adjustment expenses at $3.21 billion versus $2.33 billion.
In addition to this, expenses for the acquisition of insurance contracts totaled $944.9 million, seeing a significant rise from the $882 figure one year ago.
On a better note, Hiscox saw their total annual income grow by 9.4% to $2.91 billion from $2.66 billion the prior year. Net premiums earned also rose by 2.7% from $2.57 billion to $2.64 billion.
The firm is still assessing the impact of the current coronavirus, and added that its main area of exposure would be in event cancellations travel and personal accidents – however only small claims have been received.
Hiscox declared an annual dividend of 29.6 cents per share, giving a total of 43.35 cents – seeing a 3.6% jump from 41.85 cents across 2018.
Bronek Masojada, Chief Executive Officer, Hiscox Ltd, commented:
“Our strategy of balance, between big-ticket lines and our more steady retail earnings, provides resilience and opportunity. Our growing Retail profits and strong investment return has enabled us to weather a third consecutive year of storms. We are investing for growth as we look to capture the many opportunities we see ahead.”
Going forward, Robert Childs, Chairman added:
“We aim to balance Hiscox Retail with the higher-volatility big-ticket businesses. Looking forward, we expect our retail business to get back on track, with better growth this year than last and an improved combined ratio. We will trim the reinsurance business to suit conditions. The London Market is seeing improvements in rates and conditions. In the past these improvements have made it straight through to much better returns. We have the brand, talent and diversity of product and geography to make the most of the opportunities ahead.”
Hiscox suffer FTSE 100 demotion
In December, Hiscox looked likely to be relegated into the FTSE 250. The firm had seen a mixed period of trading over the last year, as reported in November.
For the nine months to 30th September, gross written premiums grew 5.6% to $3.21 billion from $3.04 billion a year prior.
Additionally, gross written premiums grew 7.3% on the year before showing strong ground made by the UK based insurance provider.
Hiscox came to the $165 million claims reserve after assessing the insured market loss for Hurricane Dorian in August, Typhoon Faxai in late August and early September, and Typhoon Hagibis in October.
Dorian struck Bermuda, Faxai affected Japan and Hagibis touched a number of countries including Japan and Russia.
For the full year, Hiscox expected its combined ratio of between 97% and 99%. Any combined ratio below 100% means an insurer made a profit from its underwriting, which is a positive note for investors.
Hiscox is targeted a combined ratio of between 90% and 95%, in the medium term and could be set to achieve this.
Shares in Hiscox trade at 1,285p (+4.81%). 2/3/20 10:55BST.
