Lloyd’s of London underwriter Hiscox Ltd said its gross written premiums for the first nine months jumped more than 14 percent in local currency, driven by strong performance across all its businesses.
Hiscox, which underwrites a range of risks from oil refineries to kidnappings, said gross written premiums rose to 1.86 billion pounds ($2.31 billion) in the nine months ended Sept. 30, from 1.54 billion pounds a year earlier.
The underwriter, which earns the bulk of its revenue overseas, benefited from the fall in the value of the pound against the dollar and the euro after Britain’s vote to leave the European Union, with gross written premiums in reported currency rising 20.9 percent.
Hiscox said a loss from Hurricane Matthew would be within its expected catastrophe loss budget for the year, adding that it had set aside $35 million to cover claims and reduced profit commissions from the event.
The underwriter’s London Market saw “intense” rating pressure in the aviation, marine and energy and US big-ticket property classes, with margins “evaporating” in some areas.
Over the past few years, insurance rates have either stagnated or fallen due to fierce competition. A slump in oil prices has also put pressure on the balance sheets of companies exposed to energy prices.
The London Market business, however, increased gross written premiums by 9.3 percent in local currency to 520.2 million pounds, with growth in product recall, general liability and marine cargo offsetting weaker areas.
Hiscox said it expected conditions in the London Market to remain difficult, adding the business would shrink materially in 2017.
“We expect that there will be some risks which we won’t renew, and then the business will shrink… Other people will be prepared to do that business at lower prices than we are…” CEO Bronek Masojada told Reuters.
“If prices go down a lot, we don’t want to keep on selling below what we think is the right price…”
Gross written premiums at the company’s reinsurance businesses, Hiscox Re, rose to 466.8 million pounds from 348.5 million pounds a year earlier, even though the division saw rate pressure in the period.
“Going forward we are cautiously hopeful of an end to rate reductions in reinsurance, given depleting reserves, poor investment returns and recent catastrophes including Hurricane Matthew,” Hiscox said.
Gross written premiums at Hiscox’s retail business rose 12.8 percent in local currency.
Masojada said Hiscox would provide an update at the time of full-year results on its plans to possibly set up a new EU arm to weather the possible impact of Brexit.