(Alliance News) - Hiscox Ltd on Tuesday posted a return to first half profit and tipped this year's Covid-19 claims to be lower than expected.
The insurer does, however, foresee an "elevated" number of claims arising from the recent catastrophic flooding in Europe.
Hiscox shares were 3.9% higher at 899.60 pence each in London on Tuesday morning.
In the six months to June 30, gross written premiums rose 8.5% annually to USD2.43 billion from USD2.24 billion. Hiscox swung to a pretax profit of USD133.4 million from a USD138.9 million loss a year prior.
The Hamilton, Bermuda-based firm declared an 11.5 cents per share dividend, its first payout since the onset of the pandemic.
"This is a good result driven by strong performances across all our businesses. Our investments in digital trading continues to bear fruit, and market conditions are the best we have experienced for many years. Hiscox has the fire-power, new leadership and talent to capture the many opportunities ahead," outgoing Chief Executive Officer Bronek Masojada said.
Masojada will be replaced by Chief Financial Officer Aki Hussain effective January 2022, the company announced in July.
Hiscox's first half combined ratio improved to 93.1% from 114.6% a year earlier. Any ratio below 100% means a profit on underwriting.
Its Hiscox Retail arm, however, delivered a combined ratio of 100.7%, so fractionally over 100%.
"Adjusting the latter for the 2021 Covid-19 net loss estimate and loss portfolio transfer cost, the Retail business has delivered an underlying combined ratio of 96.7%, demonstrating progression from full year 2020. This reinforces our confidence in our ability to return to the 90%-95% combined ratio range by 2023," the FTSE 250 company commented.
Hiscox left its 2020 Covid-19 net claims estimates unchanged at USD475 million. However, its 2021 estimate will be lower than expected at USD17 million.
Looking ahead, however, it warned on "an elevated level of individual claims" following July flooding in the UK and continental Europe.
Hiscox added: "Other than the Winter Storm Uri in February, which resulted in an estimated net loss of USD47 million predominantly in Hiscox Re & ILS, there were no significant natural catastrophes or large man-made losses in the first half.
"We have turned a corner, our business performance is on track and the course correction actions will continue to earn through. While the recent extreme weather events, such as flash floods in Europe and wildfires in North America, are a stark reminder that climate change is driving increasing weather volatility, our business is strongly capitalised with financial flexibility as we enter the annual hurricane season."
In addition, Hiscox said the lines in its 2019 Syndicate 33 - which has a GBP1.40 billion capacity - are currently estimated at between a 9.0% loss and a 1.0% gain, improved from previous estimate of a 9.5% loss to a 0.5% gain.
The 2020 Syndicate 33 estimated range is now between a 7.5% loss to a 2.5% gain, versus the previous prediction of an 8.5% loss to a 1.5% gain. The 2020 lines have a capacity of GBP1.70 billion.
Hiscox owns 73% of the Lloyd's of London syndicate.
By Eric Cunha; ericcunha@alliancenews.com
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