Large spread of price movements at the mid-year, Hiscox Re & ILS portfolio well rated: Group CUO

Joanne Musselle, Group Chief Underwriting Officer (CUO) of specialist insurer and reinsurer Hiscox, has explained that although the Hiscox Re & ILS business saw aggregate rates decline 6% in the first half of the year, the firm did see a “relatively large spread at the mid-year renewals.”

During Hiscox’s recently held first half 2025 earnings presentation with analysts, which , including at Hiscox Re & ILS operations, executives were questioned on rates and capital efficiency within reinsurance.

“In our reinsurance account, I talked about the aggregate rate at 6% across, but what we saw at the mid-years was the two ends of that. We had loss affected accounts, so accounts that had losses of either Milton or Helene or indeed the wildfire, they were seeing significant price increase. But then, obviously, there were clean accounts that were going through at a reduction. So, obviously, what I showed you was the aggregate, but we did see a relatively large spread at the mid-year renewals,” said Group CUO Musselle.

In her opening remarks, Musselle highlighted the 6% rate decrease in the business so far in 2025, a dip that isn’t surprising given the softening of rates in certain lines of business from the highs of 2023 and 2024.

She explained that at the January 1st, 2025, reinsurance renewals, the firm saw property cat reinsurance rates decline by 8%, but noted that this has moderated somewhat throughout the year and as Hiscox Re & ILS went through the mid-year renewals, where the company achieved rate, particularly on loss impacted accounts.

“And across the whole of Re & ILS, rates are down 6%. But cumulatively they’re up 81% since 2018, and we believe the portfolio is well rated to deliver good returns in a mean loss environment,” said Musselle.

During the Q&A, the global re/insurer was also asked about efforts to improve capital efficiency in the second half of 2025, with one analyst wondering whether this would include de-risking within Hiscox Re & ILS, specifically reducing exposure to catastrophe risks and growing in specialty.

“In terms of the sort of options that we’ve got, you’ll see from the strength of the balance sheet and the way that we’ve managed that, as Aki has highlighted, very proactive. I’m very pleased with the position that we have going into the second half of the year,” said Paul Cooper, Group Chief Financial Officer.

“Now, of course, we’ve always got active mechanisms to control volatility and manage that. So, you would see that we issued the cat bond at the start of the year. That’s one of the means that we had available, for example,” he added.

with a $200 million transaction covering named storms and earthquakes in the US and Canada, its second under the Ocelot Re Ltd. special purpose insurer (SPI), which provides the firm with multi-year retrocession reinsurance protection.

Cooper continued: “I think in terms of the overall positioning of the portfolio, that goes back to that first aspect of the Capital Management Framework I mentioned. It depends on what we see ahead of us in terms of capital deployment… So, essentially, ’23, ’24 were exceptional times. The best two years in 10, 20 years, in terms of rate environment, and we leant into that heavily. You can see that in more recent times we’ve come off modestly and controlling our PMLs as a consequence.

“Now, looking forward, it will depend on where we are in the cycle and what we see once we get through wind season, and I think that will dictate our appetite. On the current trajectory, we don’t expect to lean heavily into 1.1, but it will depend on conditions once we get through it.”

Despite the impacts of the California wildfires in Q1’25, Hiscox Re & ILS had a solid first six months, with an undiscounted combined ratio of 99.5%, so in profitable territory. 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.