Hiscox Weathers Hurricanes, But 2005 Profits Decrease

Hiscox Plc, the U.K.-based Lloyd’s and specialty insurer, released its 2005 preliminary results on Monday, March 13. Although Hiscox was one of many companies whose earnings were adversely affected by last year’s hurricanes, it came through better than most, posting a £70.2 million ($122 million) pretax profit, compared to £89.5 million ($155.3 million) in 2004, a 22 percent decline. Hiscox’ estimated hurricane losses were £165 million ($286.3 million).

Other highlights cited in the earnings report, included the following:
— Final dividend increased 36 percent, making a total dividend of 7 pence (12 cents) per share (2004: 5 pence [8.6 cents]).
— Hiscox Global Markets business profitable at £20.7 million [$36 million] pre-tax (2004: £67.8 million [$117.6 million]) with a combined ratio of 100 percent (2004: 90.9 percent) despite hurricane loses.
— Hiscox UK and Hiscox Europe made a strong profit of £43.2 million [$75 million] pre-tax (2004: £18.9 million [$32.8 million]) with a combined ratio of 86.9 percent (2004: 98.0 percent)
— Hiscox International increased operating profit to £6.2 million [$10.7 million] (2004: £2.9 million [$ 5 million]) with a combined ratio of 91.3 percent (2004: 92.0 percent)
— Hiscox Bermuda formed, financed by successful £170 million [$295 million] rights issue (net of expenses).

The bulletin also noted that gross written premiums increased to £861.2 million ($1.5 billion) from £816.6 million ($1.417 billion) in 2004, while net earned premiums dropped from £714.9 million ($1.24 billion) in 2004 to £693.3 million ($1.2 billion) in 2005. Although Hiscox’ combined ratio remained under 100, it rose to 96 percent from 92.6 percent in 2004. Return on equity dropped from 20.6 percent in 2004 to 12.8 percent in 2005.

Chairman Robert Hiscox commented: “Our past investment in regional expansion has helped the Group make a very satisfactory profit despite the many catastrophes in 2005. Our new investments in Bermuda and the USA give us an even wider geographic spread, with growing books of regional specialist business to balance our internationally traded business. I am confident of further profitable growth.”

The full text of the release and further comments are available on the Company’s Website at: www.hiscox.com.