Hiscox Ltd · LSE:HSX
Hiscox — Investor Presentation (May 2020)
24 slides from Hiscox's investor presentation, May 2020
Slide 1: Hiscox Ltd Investor presentation
Hiscox Ltd Investor presentation May 2020
Slide 2: Disclaimer
Disclaimer This document is not for publication, release or distribution (in whole or in part), directly or indirectly in, into or from Australia, Canada, the Republic of South Africa, Japan, Jersey or any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdic
Slide 3: Key messages
Key messages Proactive and comprehensive response to COVID-19 • US wholesale and reinsurance markets expected to continue to harden • Moving to strengthen capital buffers amid unprecedented uncertainty • Placing of up to 19.99% headlines range of proactive capital and operational initiatives • UK bu
Slide 4: Q1 2020 trading update: A strong start to the year
Q1 2020 trading update A strong start to the year Year to 31 March 2020 Constant • Strong trading currency performance in Retail GWP GWP GWP – Europe the $m change change standout performer % % – USA momentum continues Hiscox Retail 635.1 7 8 – Commercial lines Hiscox UK 181.7 2 3 driving UK growth
Slide 5: Long-term diversified growth
Long-term diversified growth Total Group controlled income ($) Hiscox Re & ILS Hiscox UK Hiscox Special Risks Hiscox Asia Hiscox London Market Hiscox Europe Hiscox USA 5,000 4,500 Gross written premiums ($m) Hiscox London Market 4,000 Hiscox Re & ILS 3,500 3,000 2,500 2,000 Hiscox Retail* 1,500 1,00
Slide 6: Culture of discipline and cycle management
Culture of discipline and cycle management Active portfolio What drives us Long-term track record management • Diversified business model • Culture of underwriting • Diversification provides reduces risk profile discipline resilience • Investment and innovation − 10-year average – Weathered an Group
Slide 7: COVID-19 underwriting portfolio impacts
COVID-19 underwriting portfolio impacts Event cancellation, media Retail business Balance of portfolio and travel interruption • Actively settling claims for • Core UK property policies do not • No material exposure to lines covered losses cover business interruption (BI) such as trade credit which
Slide 8: UK business interruption risk scenario
UK business interruption risk scenario Background • Approximately 10% (33,000) of UK commercial customers purchase property insurance which includes an element of business interruption. • Like others in the industry, Hiscox UK’s property policies do not provide cover for business interruption as a r
Slide 9: Comprehensive view of capital
Comprehensive view of capital Proactive capital optimisation to achieve strong returns Capital actions Strong capital position Funding profitable growth • Accelerating operational • BSCR at 195% after • Track record of generating efficiencies (expected absorbing reserved returns materially above $60
Slide 10: Capital strength: Positioned to withstand stress scenarios
Capital strength Positioned to withstand stress scenarios Bermuda Solvency Capital Requirement (BSCR) 250% • Pre-equity raise capital position sufficiently robust 235% to withstand expected COVID-19 losses and #1 risk scenario, while maintaining capital consistent with 195% S&P A rating #1 + #2 • Eq
Slide 11: Strong rate momentum in big-ticket
Strong rate momentum in big-ticket Conditions expected to continue to improve Hiscox London Market • Third consecutive year of rate increases 11% 12% • Overall rates up 12% YTD 8% • Rates up in 15 of 16 lines 7% • Rates up double-digits in business contributing 70% of premium including: D&O (+85%),
Slide 12: Hiscox Retail: Significant long-term growth opportunity
Hiscox Retail Significant long-term growth opportunity Small market shares in large markets • Over $80bn GWP to play for, with 50m SMEs and growing • We have one million small business customers worldwide Fast growth in our sweet spot • Micro-SME insurance the largest and fastest growing segment1 •
Slide 13: Key messages
Key messages Proactive and comprehensive response to COVID-19 • US wholesale and reinsurance markets expected to continue to harden • Moving to strengthen capital buffers amid unprecedented uncertainty • Placing of up to 19.99% headlines range of proactive capital and operational initiatives • UK bu
Slide 14: Overview of the offering
Overview of the offering Placing size • Up to 57.7 million new shares (up to 19.99% of issued share capital) Placing structure • Primary Institutional Placing (‘Placing’) via a cashbox Lock-up • The Company will be subject to a 90 day lock-up arrangement Offer format • Reg S offering and private pla
Slide 15: Further information on Hiscox
Further information on Hiscox
Slide 16: Strategic focus
Strategic focus a HISCOX Total Group controlled income for 2019 $100% = $4,530 million Big-ticket business Retail business Small commercial 27% Tech and media 7% casualty 22% Reinsurance 8% Large property 6% Casualty 5% Specialty — terrorism, product recall 5% Marine and energy Art and private clien
Slide 17: A symbiotic relationship
A symbiotic relationship a HISCOX Big-ticket business Retail business ¢ Larger premium, globally traded, catastrophe-exposed business written mainly through Hiscox London Market and Hiscox Re & ILS ¢ Shrinks and expands according to pricing environment ¢ Excess profits allow further investment in re
Slide 18: An actively managed business
An actively managed business Total Group controlled premium 31 December 2019: $4,530 million Period-on-period in constant currency +10% $1,568m 2019 GWP Professional liability Errors and omissions Private +11% directors and officers’ liability $982m Cyber Property Commercial small package Marine +4%
Slide 19: An improving market
An improving market Core London Market All retail Catastrophe reinsurance 120 100 80 60 40 20 0 12-month rolling period ending 19
Slide 20: GWP geographical and currency split
GWP geographical and currency split 2019 geographical split – controlled income 2019 currency split – controlled income North America GBP Other USD Western Europe (excl. UK) CAD and other Worldwide EUR UK 10.1% 17.7% 20.1% 6.0% 11.9% 50.7% 11.6% 63.8% 8.1% 20
Slide 21: Robust capital position
Robust capital position 31 December 2019 • All capital bases satisfactorily capitalised $2.28bn available capital • BMA’s Bermuda Solvency Capital $2.19bn available capital (post-final dividend) Requirement (BSCR) is Economic Regulatory Solvency II equivalent • BSCR 205% (2018: 210%), equivalent to
Slide 22: Reserve resilience continues
Reserve resilience continues Loss development by accident year • Robust reserves 9.4% 2012 2013 2014 2015 2016 2017 2018 (2018: 11.0%) above actuarial estimate 1.05 • 2018 impacted by 1.00 deterioration on 0.95 catastrophes and 0.90 reserve caution 0.85 • 2016 and 2017 impacted 0.80 by strengthening
Slide 23: Hiscox ESG framework: A pragmatic approach
Hiscox ESG framework A pragmatic approach 23
Slide 24: Thank you
ale HISCOX Thank you