Fires, storms and floods are the everyday in other territories. The team delivered
Chief Executive’s experience of insurance companies.
2011 was exceptional in its severity so in
a very strong result despite the impact
of Superstorm Sandy which we reserved
report comparison 2012 felt like a more normal loss for the Group as a whole at a net £90 million.
experience, despite it being the third most
expensive year on record for major We continue to underwrite catastrophe
catastrophes. We dealt with record flood business in London and Bermuda on behalf
activity in the UK, Superstorm Sandy in the of third-parties. It is a profitable use of our
US, fine art thefts in Europe, fires in substantial expertise and gives our partners valuable
diversification. For several years we have
been underwriting a book on behalf of Aviva
and this quota share arrangement came
to an end in 2012. Aviva has been a good
partner, and whilst we are sorry to see the
end of the relationship, we have more than
replaced their support with capital from
other sources – a testament to our team’s
reputation and track record.
Market conditions remained attractive
at the important 1 January renewals,
with rates flat to positive in the key North
American territories and softening in
international markets. Overall reinsurance
rates are still healthy.
Property: Our property division delivered
a good profit. It grew strongly in US small
commercial, personal and onshore energy
lines and was only marginally affected
by Superstorm Sandy. The fire, theft and
collision insurance book performed less well.
properties across the world and the sinking This business tends to be less catastrophe
of Costa Concordia. A profit of £217.1 million exposed and so should be a source of stable
(2011: £17.3 million) and return on equity of profits within the division. We will be working
16.9% (2011: 1.7%) is therefore a good result hard to achieve this in 2013.
and was driven by a combination of good
underwriting performance and an excellent Global response: The global response team
Bronek Masojada (for current market conditions) investment serves clients around the world, covering
Chief Executive return. Our aim is to make good profits in personnel and property for kidnap and
years such as 2012, small profits in poor years ransom, terrorism, war and political violence
(as we saw in 2011) and exceptional profits risks. 2012 proved to be calmer than
in very low loss frequency years. 2011 and this has produced a strong result.
The market in which we operate requires
Our strategy remains to build balance and a high degree of service and responsiveness,
diversification within the business. We saw good and our team continues to deliver to the
growth in the London Market, Bermuda and highest standards, maintaining our market-
particularly the United States. Profits flowed from leading position. The world remains a volatile
our London Market, UK, Bermuda and Guernsey place, and companies are increasingly
businesses, offsetting the ongoing investment looking to protect their assets. We have
in the United States. the expertise and are well placed to help.
Hiscox London Market Marine and energy: The team had a good
Hiscox London Market business remains a year with profits and growth in offshore
powerhouse. Exceptional underwriting and energy more than offsetting the Costa
a well-diversified portfolio have delivered a profit Concordia loss which is expected to settle
of £121.9 million (2011: £57.6 million) with every at net $20 million. To the wider industry this
division contributing. Gross premium income loss has deteriorated, mainly due to the rising
grew by 9.3% to £640.0 million (2011: £585.4 costs of removing the wreck. As the world
million). The business achieved a combined ratio becomes more environmentally conscious
of 75.5% (2011: 89.1%) despite Superstorm Sandy this type of expense will continue to increase,
and some large individual claims such as Costa and we expect this to be reflected in future
Concordia. I review each division in turn below. premiums for marine liability and related
risks. In addition our offshore energy team
Reinsurance: The many catastrophes has performed exceptionally well.
of 2011 provided significant opportunities
in 2012 as rates doubled in some loss Marine liability insurance is one of the oldest
affected areas. We increased market share risks in the London Market and is proving
in Japan and maintained a good position to be at the cutting edge of modernisation
Chief Executive’s report Hiscox Ltd Report and Accounts 2012 7