Hiscox Ltd · LSE:HSX
Hiscox — Hiscox Ltd Ord New — FY2024 Earnings Presentation
56 slides from Hiscox's earnings presentation, Feb 27, 2025
Slide 1: Hiscox Ltd Preliminary results
Hiscox Ltd Preliminary results For the year ended 31 December 2024
Slide 2: Strategy update
MN HISCOX Strategy update
Slide 3: 2024 results: second consecutive year of record profits
2024 results High quality growth underpins second consecutive year of record profits Sustained growth in ICWP ($m) Disciplined underwriting delivers Strong investment result ($m) ISR growth of 12% at an 89% COR1 4% ($m) 12% 0% 384 384 4,355 4,598 4,767 554 492 361 -187 2022 2023 2024 2022 2023 2024
Slide 4: Hiscox Retail: growth and earnings momentum
Hiscox Retail Growth and earnings momentum continuing to build ICWP (% of portfolio1 and growth2) US DPD 7.6% Europe 7.6% US DPD 22% Europe 27% COR3 US 93.6% broker 16% UK 35% -4.0% US broker UK 5.8% 1Percentages in pie chart are the percentage of the Retail ICWP excluding DirectAsia. 2Percentages i
Slide 5: Retail growth: actions driving momentum in all markets
Retail growth Actions driving momentum in all markets Hiscox UK Hiscox Europe Hiscox USA • Brand campaign wins • Multi-country deal with • 17 new digital partnerships 18 awards leading digital MGA • Workers’ compensation • Nine new • AI solution rolled out in partnership digital launch distribution
Slide 6: Hiscox London Market: proactive cycle management
Hiscox London Market Proactive cycle management delivers excellent underwriting results ICWP (% of portfolio1 and growth2) Commercial lines Terrorism Household Personal accident Major property Kidnap and ransom Crisis Alternative risk management Product recall Flood 19% Property 39% COR3 88.6% Marin
Slide 7: Hiscox Re & ILS: record fee income and profits
Hiscox Re & ILS Growth and excellent underwriting result drive record fee income and profits Net ICWP (% of portfolio1 and growth2) Property - Specialty, North America risk and marine Specialty, risk and Property - marine North 27% America COR3 41% 69.0% Retrocession 12% Property - International Pro
Slide 8: Capturing the structural retail opportunity
Capturing the structural retail opportunity Management action and powerful tailwinds driving momentum Retail premiums have more than doubled1 Powerful tailwinds +122% Management New actions leadership $2.5 billion Brand relaunch $1.1 billion Portfolio management 2014 2024 New products A growing SME
Slide 9: Managing big-ticket through the cycle
Managing big-ticket through the cycle Proactive actions to capture opportunities Growing into attractive opportunities1 +110% Management $1.4 actions Capture billion emerging opportunities $0.7 billion Deepen lead capabilities 2014 2024 Technology Managing the cycle innovation (Premiums2 indexed to
Slide 10: Progressive dividend step-up and $175m buyback
Earnings momentum, business mix and growth underpin progressive dividend step-up and $175m buyback Greater profit contribution from Retail leads to less ...and allows for a step-up of the progressive dividend2 volatile earnings for the Group1... ($m) Retail Big-ticket 14.9% 74% 483 4.2% 43.1 4.3% 27
Slide 11: Financial performance
MN HISCOX Financial performance
Slide 12: Group financial performance
Group financial performance Growth momentum building and strong profitability 31 December 31 December Year-on-year • ICWP increased $169m, 2024 2023 driven by accelerating $m $m growth momentum in Premiums Retail and hard market growth in Re & ILS Insurance contract written premium 4,766.9 4,598.2 3
Slide 13: Hiscox Retail: broad-based growth and strong profitability
Hiscox Retail Broad-based growth momentum and strong profitability 31 December 31 December Year-on-year • Retail ICWP growth of 2024 2023* 5.1% in constant currency, $m $m contributing $147m to Group ICWP growth Premiums • Strong growth in Europe and US DPD continues Insurance contract written premi
Slide 14: Hiscox London Market: excellent underwriting results continue
Hiscox London Market Excellent underwriting results continue 31 December 31 December Year-on-year • ICWP reflects pro-active 2024 2023* cycle management within $m $m casualty and exit from space market Premiums • Strong profitability in an active loss environment Insurance contract written premium 1
Slide 15: Hiscox Re & ILS: strong performance in an active loss year
Hiscox Re & ILS Strong performance in an active loss year 31 December 31 December Year-on-year • Strong net ICWP growth of 2024 2023 11.1% as additional capital $m $m deployed into attractive market conditions Premiums • Net premiums† up 159% since 2020, as business Insurance contract written premiu
Slide 16: Investment performance
Investment performance Coupon income and cash returns led to strong result Cash and bond income net of fees ($m) Gains/(losses) on debt and fixed • Investment result of income holdings ($m) $383.9m, return of 4.8%* • Cash and bond income increased 35% 65 • Reinvestment yield on 310 132 bond portfoli
Slide 17: Claims discounting impact on profit and COR
Claims discounting impact on profit and COR Net impact on profit is $16 million $162m ($154m)* $8m 2024: weighted 2024: in line 2024: on 2024 average of 4.6% with guidance average rates of $135m-$165m increased by $669m just 0.18% $685m Estimate using Expected unwind Sensitivity ($m) to weighted in
Slide 18: Reserves: balance sheet remains strong
Reserves Balance sheet remains strong $m • Prudent reserving Best estimate philosophy Events not in data remains unchanged Risk adjustment • Confidence level at 83rd percentile 83rd confidence – within target range of level percentile 75th-85th percentile 83rd confidence – demonstrates continued lev
Slide 19: Reserve releases
Reserve releases $146m positive reserve development with releases across all prior accident years Reserve releases as % of opening net reserves Net loss development† by accident year IFRS 4 IFRS 17* 2020 2021 2022 2023 1.05 5.5% 1.00 0.95 3.7% 3.7% 3.4% 0.90 0.85 0.80 1.0% 0.75 0.70 2020 2021 2022 2
Slide 20: Very strong capital generation
Very strong capital generation Balance sheet strength supporting growth and increased returns Estimated Bermuda solvency capital requirement (BSCR) • Deployed capital into 43% attractive market conditions -8% • Very strong net capital generation -8% 225% • Regulatory and ratings capital position 212
Slide 21: Strongly capitalised post returns
Strongly capitalised post returns Post-scenario comfortably within S&P ‘A’ rating Pro-forma Bermuda solvency capital requirement (BSCR) • Pro-forma BSCR is very strong • California wildfires manageable 225% -6% • Pro-forma post-scenario -10% position well in excess of -11% the level required for the
Slide 22: Underwriting
MN HISCOX Underwriting
Slide 23: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance 2024 Group ICWP (year-on-year in constant currency) • Retail growth momentum – Commercial continues +5% year-on-year $1,890m compound growth – UK household a Professional standout success in liability art and priva
Slide 24: Attractive rate environment sustained
Attractive rate environment sustained Majority of portfolio with substantial rate adequacy Compound rate change, indexed to 2018 2025 rate adequacy by business unit (% of ICWP) Core London Market Catastrophe reinsurance Retail 200 180 47% Adequate+ 160 83% 140 120 45% Adequate 100 17% 8% Low 80 2018
Slide 25: Active 2024 claims environment
Active 2024 claims environment Delivering resilience through active portfolio management Attritional loss Large risk loss Catastrophe loss Managing attritional frequency Many large risk losses $145bn of industry losses1 • Anticipate current and • Build a diversified and • Focus on changing nature of
Slide 26: 2025 Californian wildfires
2025 Californian wildfires Loss estimate, post event evaluation and market impact Exposure and loss estimate • Support customers • Run exposures, • Estimated net loss of and cedants stressing industry loss around $170m at an and damage factors industry loss of $40bn Post-event evaluation • Check los
Slide 27: Market-leading technology and expertise
A reminder – technology and Hiscox expertise Creating competitive advantage Hiscox technology Drivers of capabilities competitive advantage Ease and speed of Digital connectivity doing business Market-leading capabilities Deep customer Auto underwriting understanding Data and analytics Risk selectio
Slide 28: Future of underwriting: AI and technology
Future of underwriting Augmentation through AI and technology Submission and triage Risk selection and pricing Decision and issue Submission automation Exposure analysis Contract comparison Major All US Worldwide London Terrorism Re & ILS Big- property lines locations locations Market ticket Email g
Slide 29: Closing remarks
MN HISCOX Closing remarks
Slide 30: Concluding remarks: an excellent year
Concluding remarks An excellent year • Broad-based growth and earnings momentum building resulting in a 19.8% ROE • Momentum building in Retail • Excellent underwriting performance, 89% Group undiscounted combined ratio • Step-up in progressive dividend, total DPS + 15% • $175m share buyback • Signi
Slide 31: Outlook for 2025
Outlook for 2025 Hiscox Hiscox Hiscox Retail London Re & ILS Market To grow above Expected to Continue to deploy 6% in constant return to growth incremental capital currency. in 2025. into the attractive market conditions. 30
Slide 32: Positioned to deliver sustainable attractive returns
Positioned to deliver sustainable attractive returns A leading specialty Excellence in insurer with best-in-class Accelerating cycle management underwriting high-quality retail growth Positioned well to deliver sustained growth and excellent returns 31
Slide 33: The power of Hiscox Retail: capital markets day
Capital markets day The power of Hiscox Retail Aki Hussain Paul Cooper Shali Vasudeva Group Chief Executive Officer Group Chief Financial Officer Chief Operations and Technology Officer Mary Boyd Robert Dietrich Jon Dye Chief Executive Officer Chief Executive Officer Chief Executive Officer Hiscox U
Slide 34: Appendices
Appendices • Geographical reach • Portfolio – asset mix • Hiscox investment case • Portfolios – USD debt and fixed income holdings • Long-term growth • Portfolios – GBP and other currencies debt and • Power of an actively managed portfolio fixed income holdings • Hiscox sustainability strategy • Bus
Slide 35: Geographical reach
Geographical reach 32 offices in 13 countries UK Guernsey Birmingham Europe Colchester St Peter Port Amsterdam Glasgow Berlin London Bordeaux Maidenhead USA Bermuda Brussels Manchester Atlanta Hamilton Cologne York Chicago Latin American Dublin Los Angeles gateway Frankfurt New York City Miami Hambu
Slide 36: Hiscox investment case
Hiscox investment case Balanced portfolio of large and complex risks SME and personal lines Delivers profits and capital Significant structural generation for reinvestment growth opportunity Delivers underwriting profit Delivers stable profit and capital-light fee income generation and growth Attrac
Slide 37: Long-term growth
Long-term growth Group premium ($m) Hiscox Re & ILS Hiscox UK Hiscox Special Risks Hiscox Asia Hiscox London Market Hiscox Europe Hiscox USA 5,000 4,500 Hiscox London Market Hiscox Re & ILS Insurance contract written premiums ($m)† 4,000 3,500 3,000 2,500 2,000 Hiscox Retail 1,500 1,000 500 0- ‡ § 2
Slide 38: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance 2024 Group ICWP (year-on-year in constant currency) +5% $1,890m Professional liability Errors and omissions Private directors and officers’ liability +4% $1,057m Cyber Property Commercial small package Technology M
Slide 39: Hiscox sustainability strategy
Hiscox sustainability strategy We want to give people We aim to be a great place We are committed to doing We continually adapt We are committed and businesses the to work, attracting, business in the right to an evolving risk to having a positive confidence to realise their nurturing and retaining
Slide 40: Sustainability strategy in action
Sustainability strategy in action • During 2024, 1,066 • Hiscox has maintained • Developed our alignment • We continue to adapt our • We have reduced LeakBot devices were the same employee to CSRD in our EU underwriting portfolios: our Scope 1 and 2 installed for Hiscox engagement score as business.
Slide 41: Hiscox ESG materiality map
Hiscox ESG materiality map Key Monitor and manage: topics of relatively lower Ongoing importance: topics of ongoing Priority: current mission-critical sustainability topics impact at the point of assessment, but which are importance due to their influence on our strategy, due to their potential to i
Slide 42: Demonstrating capital resilience
Demonstrating capital resilience Strongly capitalised across all bases As at 31 December 2024 • Strongly capitalised above all regulatory, economic, $3.46bn available capital and management bases • BMA’s Bermuda Solvency Capital Economic Regulatory Requirement (BSCR) is Solvency II equivalent • BSCR
Slide 43: Group performance
Group performance Year to 31 December 2024 Constant currency ICWP ICWP change ICWP change $m % % Hiscox Retail 2,504.6 6.2 5.1 Hiscox UK 864.0 8.8 5.8 Hiscox Europe 656.5 8.2 7.6 Hiscox USA 920.9 2.5 2.5 Hiscox Asia 63.2 7.8 7.6 Hiscox London Market 1,229.5 (2.0) (2.2) Hiscox Re & ILS 1,032.8 4.7 4.
Slide 44: Segmental analysis
Segmental analysis 31 December 2024 31 December 2023 Hiscox Hiscox Hiscox London Hiscox Corporate Group Hiscox London Hiscox Corporate Group Retail Market Re & ILS Centre Total Retail* Market* Re & ILS Centre Total $m $m $m $m $m $m $m $m $m $m Insurance contract premium written 2,504.6 1,229.5 1,03
Slide 45: Hiscox Ltd results
Hiscox Ltd results $m 2024 2023 2022± 2021 2020 Insurance contract premiums written 4,766.9 4,598.2 4,355.4 Net insurance contract premiums written 3,675.6 3,555.8 3,225.5 Insurance service result 553.5 492.3 360.9 Investment return 383.9 384.4 (187.3) 51.2 197.5 Profit/(loss) before tax 685.4 625.9
Slide 46: Realistic disaster scenarios January 2025
Realistic disaster scenarios January 2025 Hiscox Group – losses shown as percentage of gross and net written premium Gross loss Industry loss Net loss return period Japanese windstorm 2% 5% $20bn 1 in 50 year Japanese earthquake 5% $50bn 1 in 400 year 15% Gulf of Mexico windstorm 15% $200bn 1 in 60
Slide 47: Non-natural catastrophe extreme loss scenarios
Non-natural catastrophe extreme loss scenarios Changing portfolios, changing risk – January 2025 • As our casualty businesses continue to grow, we develop extreme loss scenarios to better understand and manage the associated risks • We have included more loss scenarios to illustrate other non-natura
Slide 48: Boxplot and whisker diagram of modelled net loss
Boxplot and whisker diagram of modelled Hiscox Ltd net loss ($m) January 2025 Lower 5%- upper 2011 Tohoku Quake – $25bn market 95% range Superstorm Sandy – $20bn market Loma Prieta Quake – $6bn market Hurricane Andrew – $56bn market Northridge Quake – $24bn market Hurricane Katrina – $50bn market Mo
Slide 49: ICWP geographical and currency split
ICWP geographical and currency split FY 2024 geographical split FY 2024 currency split North America GBP Other USD Western Europe (excl. UK) CAD and other Worldwide EUR UK 17.5% 19.6% 21.4% 3.4% 5.9% 47.6% 17.0% 57.7% 9.9% 48
Slide 50: Group reinsurance security
Group reinsurance security Reinsurance assets at FY 2024 of $2.0bn 2024 reinsurance protections* (FY 2023: $2.1bn) First loss exposure by rating AAA and collateralised Collateralised AA AA range† A A range Other/non rated ILS 0.2% 0.4% 18.7% 25.7% 24.3% 42.3% 31.8% 56.6% *Reinsurance placements in f
Slide 51: Reinsurance
Reinsurance Ceded as a percentage of ICWP/GWP* Reinsurance receivables as a percentage of total assets* 28.2 27.0 26.3 33.5 24.3 31.8 31.7 30.8 22.6 26.9 25.9 25.6 19.0 18.8 23.5 17.6 22.9 22.7 21.7 21.0 19.4 19.3 19.2 19.0 19.0 13.4 12.3 12.1 11.7 11.6 11.0 10.6 10.3 10.2 *2008-2021 under IFRS 4; 2
Slide 52: Investment result
Investment result Return of $383.9m (2023: $384.4m) 31 December 2024 31 December 2023 Asset Asset allocation Return Return allocation Return Return % % $m % % $m Debt and fixed income holdings and private credit funds £ 10.3 12.1 $ 62.1 57.3 Other 10.2 10.0 Total 82.6 5.1 330.7 79.4 5.4 317.9 Equity
Slide 53: Portfolio – asset mix
Portfolio – asset mix High quality, short duration portfolio Investment portfolio $8.2bn as at 31 December 2024 Asset allocation Debt and fixed income Debt and fixed income holdings and private holdings and private credit Debt and fixed income holdings credit funds credit quality funds credit curren
Slide 54: Portfolio – USD debt and fixed income holdings
Portfolio – USD debt and fixed income holdings As at 31 December 2024 Portfolios: $5.0billion BB and AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 14.9 0.1 0.5 1.2 16.7 1.5 Government supported* 0.1 1.0 0.1 0.2 0.1 1.5 2.1 Asset backed 9.6 9.6 1.3 Mortgage backed
Slide 55: Portfolio – GBP and other currencies holdings
Portfolio – GBP and other currencies debt and fixed income holdings As at 31 December 2024 GBP portfolios: BB and $835 million AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 27.1 27.1 2.5 Government supported* 0.8 1.4 2.2 1.3 Corporates 8.3 2.5 26.8 31.5 0.4 69.5 1
Slide 56: Business segments
Business segments Hiscox Retail Hiscox Re & ILS Hiscox Retail brings together the results of the Group’s Hiscox Re & ILS is the reinsurance division of the Hiscox retail business divisions in the UK, Europe, USA and Group, combining the underwriting platforms in Bermuda Asia. Hiscox UK and Hiscox Eu