Lloyd’s of London insurer Hiscox is set to reward shareholders with a $150m (£118m) buyback after posting its highest-ever annual profit on the back of higher interest rates and a strong performance from its commercial business.
The firm reported a pre-tax profit of $625.9m (£493.8m) last year, up from $275.6m (£217.4m) in 2022.
Earnings were boosted by a 36 per cent rise in profit from underwriting, which came in at $492.3m (£388m), as well as a record net investment income of $384.4m (£303m). The latter figure is up from a $187.3m (£148m) loss in 2022.
The strong performance in both areas offset the impact of claims inflation and currency volatility.
Hiscox’s board has recommended a $150m share buyback to reward investors, as well as a final dividend of 25 cents per share.
The firm’s net insurance contract written premium grew 10.7 per cent to $3.56bn (£2.8bn) in 2023, compared with $3.23bn (£2.5bn) the previous year.
Hiscox’s return on equity of 21.8 per cent was the highest it has posted in seven years.
Chief executive Aki Hussain said Hiscox expected “favourable market conditions in many of our big-ticket lines of business to continue into 2024, most recently evidenced by the strong January renewals”.
He added that the firm saw an “immensely attractive” growth opportunity in its retail business, boosting its investment in marketing by 29 per cent last year.
Hiscox reported that its fourth-quarter growth “fell short” of expectations as it exited some non-core underwriting partnerships in the UK and faced “ongoing competitiveness of cyber pricing” in the US.
It added that both issues were “transient”, with its adjusted retail growth still falling within the five per cent to 15 per cent target range last year.
“The group’s approach to capital management ensures that it can invest in the many attractive growth opportunities available and maintain its balance sheet strength and financial flexibility,” Hussain said.
Hiscox’s assets under management swelled to $8bn (£6.3bn) from $7.1bn (£5.6bn) year-on-year.