Hiscox share price down as insurance company slashes special dividend after profits fall for the year ended December 2015

 
Hayley Kirton
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Despite positive words from brokers, the market did not react well to the results (Source: Getty)

Share price in Hiscox fell today as the insurance company revealed a drop in its profits before tax and announced that it would be reducing its special dividend.

The insurer reported profits before tax of £216.1m for its year ended December 2015, down 6.5 per cent compared with £231.1m the year before, while gross premiums written grew to £1.9bn, up 10.7 per cent from £1.8bn in 2014.

The company also revealed that it would be paying out a special dividend of 16p per share, which is a sharp drop from 45p per share in 2014. It did, however, raise its ordinary dividend from 22.5p in 2014 to 24p.

Share price in the FTSE 250 company fell throughout the day, trading down five per cent at 1,007p just after 2:30pm London time.

"Our strategy continues to deliver good growth with our retail businesses contributing 50 per cent of income," said Hiscox chief executive Bronek Masojada. "We have established profitable operations in everything from direct-to-consumer small business insurance to insurance linked securities fund management. This diversity sets us apart and gives us options."

Analysts at Shore Capital were also positive about the results, calling them a "strong set". The broker also pointed out to investors who may have been disappointed to see their special dividend for the year slashed that the company was now more likely to be focusing on delivering value over the longer term.

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