Hiscox Re & ILS reports top-line growth but LA wildfires dent H1’25 underwriting result

Hiscox Re & ILS, which comprises the global insurer’s reinsurance businesses in London and Bermuda and insurance-linked securities (ILS) activity, posted a 7% rise in insurance contract written premium (ICWP) for the first half of 2025 to $887.3 million, although the combined ratio increased to 95.1% as a result of the California wildfires.

At Hiscox Re & ILS, net ICWP increased to $411.4 million in H1’25 from $381.2 million in H1’24, driven by growth in specialty and pro-rata lines of business, while the aforementioned gross premium growth also reflects increased third-party capital support in the form of both quota share partners and alternative capital investors.

The business recorded an insurance service result of $8.5 million for the first half of 2025, which is down considerably on the prior year’s $43.5 million, as the undiscounted combined ratio deteriorated to 99.5% from 77.3%.

Hiscox notes that its Re & ILS business was hit by the Los Angeles, California wildfires in H1 2025, with the Group’s initial wildfire loss estimate of $170 million developing favourably.

“The Group’s loss experience has otherwise been within expectations, despite a number of man-made events within Hiscox London Market’s marine, energy and specialty division,” says the firm.

Rates in the Hiscox Re & ILS business reduced by 6% in the period, but the carrier notes that the portfolio remains very well rated, having experienced cumulative rate increase of 81% since 2018.

“Consequently, there remain satisfactory technical margin and selective opportunities to deploy modest amounts of additional capital. We are seeing a bifurcation in pricing, with very substantial rate increases on loss-impacted business, and a continuing decline in ‘clean’ business as capital in the market remains more than adequate to meet rising demand. Despite pressure on pricing, terms and conditions have continued to broadly hold,” explains Hiscox.

The firm’s ILS assets under management decreased to $1.4 billion as at June 30th, 2025, from $1.5 billion at the end of December 2024, which reflects the impact of planned returns of capital to ongoing investors and the California wildfires.

All in all, Hiscox Re & ILS recorded profit before tax of $54 million in H1’25 compared with $86.5 million in H1’24, and adjusted operating profit before tax of $45.8 million, compared with $84.9 million in H1’24.

In Hiscox London Market, ICWP increased by 3% year-on-year to $667.7 million and net ICWP increased by 2% to $448.4 million. Within this business, rates are down 4% in aggregate, but again, Hiscox stresses that the portfolio remains well rated, with cumulative rate up 67% since 2018.

The business recorded an insurance service result of $61.8 million, down on last year’s $74.2 million. Profit before tax fell from $108.1 million to $106.9 million, and adjusted operating profit before tax decreased to $98.5 million from $102.8 million.

Hiscox London Market’s combined ratio moved from 81.5% in H1’24 to 83.7% in H1’25, and the undiscounted combined ratio moved from 86.9% to 87.9%.

At Hiscox USA, Hiscox Europe, and Hiscox UK ICWP expanded year-on-year, totalling $496 million, $472.2 million and $463.4 million, respectively, in H1’25. Hiscox Retail also reported top-line growth of 6% to $1.4 billion, as well as higher profit before tax of $180.7 million, compared with $151.4 million in H1’24.

Group-wide, Hiscox has reported ICWP of $2.9 billion for the first half of 2025 compared with $2.8 billion last year, as net ICWP increased to $2.1 billion from $2 billion.

The insurance service result decreased from $240.7 million in H1’24 to $196.2 million in H1’25, as the investment result increased to $234.9 million from $152.4 million. Profit before tax amounted to $276.6 million in H1’25, compared with $283.5 million in H1’24.

The Group undiscounted combined ratio deteriorated slightly, from 90.4% in H1’24 to 92.6% in H1’25.

“We have delivered a strong performance in the first half with profitable growth in each of our businesses. In Retail, growth momentum has continued in line with our expectations and we are expanding margins. The benefits of our diversified business model and the quality of our underwriting ecosystem are reflected in our Group results. The industry experienced the largest wildfire insurance event in history, despite this we achieved a strong operating ROTE of 14.5%,” said Aki Hussain, Group Chief Executive Officer.

“Hiscox is successfully executing on strategy. Growth and earnings momentum continues to build in Retail as we capture the vast structural opportunities, and we are selectively deploying capital into attractive opportunities across our diverse big-ticket businesses.

“Our balance sheet remains strong, and we are achieving sustained and strong capital formation which underpins our increased return of capital to shareholders, through step-ups in ordinary dividends and buybacks, over the last two years. In addition, following strong organic capital generation and capital management actions in the first half, we have the flexibility to take further steps to improve our balance sheet efficiency and reward shareholders immediately through an increase of $100 million to our ongoing share buyback, taking it from $175 million to $275 million. And our balance sheet remains in great shape, enabling us to keep investing to capture the opportunities ahead and accelerate Retail growth,” he added.

Today, Hiscox has also announced that it is increasing the quantum of the buyback of its ordinary shares of 6.5 pence each that was announced in February from a maximum aggregate consideration of up to $175 million to a maximum aggregate consideration of up to $275 million, in order to return additional capital to shareholders.