INSURERS must concentrate on their core business and ignore investment income if they want to make a profit, the chairman of Hiscox said yesterday.
“The investment area is going to remain turbulent,” Robert Childs told City A.M. “No insurer or reinsurer should be looking to rely on anything but underwriting profit at the moment.”
Insurers invest premiums in the hope of producing long-term income. But returns have dropped during recent years and last month’s turbulence in the bond market has hammered figures for insurers reporting this quarter.
Hiscox yesterday said its investment income halved to £23.3m during the first half of 2013, echoing similar results from rivals such as Beazley and Lancashire.
Childs was speaking as Hiscox smashed expectations to record a 44 per cent rise in pre-tax profits to £180.7m for the period, thanks to what he termed a combination of “good luck and good underwriting”.
The insurer paid out a mere £14m for catastrophe claims during the period.