Hiscox share price drops as profits dive after "historic" year for natural catastrophes

Caitlin Morrison
Follow Caitlin
A number of hurricanes in 2017 led to massive losses (Source: Getty)

Hiscox has reported reduced profits for what it described as "an historic year for catastrophes".

The figures

Gross written premiums rose to £2.55bn in 2017, up from £2.4bn the year before, while net premiums earned hit £1.88bn, compared with £1.68bn in 2016.

Pre-tax profit was £30.8m, down from £354.5m, while pre-tax profit excluding the effects of foreign exchange rates was £93.6m, down from £202.1m.

Earnings per share dropped to 9.3p from 119.8p.

The group's combined ratio deteriorated to 99.9 per cent from 84.2 per cent.

Shares were down 5.9 per cent in early trading.

Why it's interesting

The company said profits were dented because it had reserved $225m (£160m) for claims in "an historic year for natural catastrophes", which included the impact of hurricanes Harvey and Irma.

While investors' displeasure at the dip in profits was evident in morning trades, analysts praised the fact that Hiscox had increased its dividend by 5.5 per cent, which Eamonn Flanagan at Shore Capital said was "testimony to the strength of Hiscox’s capital base which remains resilient".

What Hiscox said

"Our long-held strategy of balance has served us well this year. The strong growth and profits in retail countered the volatility felt in our big-ticket businesses which were impacted by an historic year for natural catastrophes," said Hiscox chief executive Bronek Masojada.

"We have made significant investments in infrastructure and brand both of which will continue. Market pricing has improved and as a consequence we have growth ambitions for every part of our business."

Related articles