HCXLY - Hiscox Ltd (HCXLF) Q4 2023 Earnings Call Transcript
2024-03-05 16:29:09 ET
Hiscox Ltd (HCXLF)
Q4 2023 Results Conference Call
March 05, 2024 5:00 AM ET
Company Participants
Hamayou Hussain - Group CEO & Executive Director
Paul Cooper - Group CFO & Executive Director
Joanne Musselle - Group Chief Underwriting Officer & Executive Director
Conference Call Participants
Andrew Ritchie - Bernstein
William Hardcastle - UBS
Kamran Hossain - JPMorgan
Abid Hussain - Panmure
Andreas van Embden - Peel Hunt
Ashik Musaddi - Morgan Stanley
Freya Kong - BofA
Tryfonas Spyrou - Berenberg
Darius Satkauskas - Keefe, Bruyette, & Woods
Nicholas Johnson - Numis
Qifan Yang - Goldman Sachs
Presentation
Hamayou Hussain
Good morning, everyone. It's great to see you here, and thank you for joining us. As you'll hear of the next 45 minutes or so, our strategy is delivering growth and profits in every part of our business. And of course, I'm delighted to announce a record profit before tax of $626 million at a return on equity of 22%. Now our business has powerful profit and capital generation dynamics. And this is enabling us to do 3 things: Firstly, we've put more of that capital to work in our big-ticket businesses to capture the cyclical growth opportunity. And in parallel, we've continued to invest in our retail businesses to support structural growth.
Secondly, we've strengthened our already prudent reserves, materially increasing the quality of those reserves and reducing the risk to any -- to future profitability. And finally, we're announcing a 4.2% increase to our progressive dividend and an additional return of capital of $150 million through a share buyback. The significant and positive momentum our business has achieved in 2023 is continuing into 2024.
Now let's turn to some of the components of our business performance. As you can see here on the chart on the top left, our net premiums increased by 11% on a constant currency basis that a key driver of earnings power of our work. And we've improved at a reducing combined ratio, reflecting the discipline that we've had in the business and the fact that we grew profitably.
This has enabled us to increase our insurance result by 36%, taking it close to $0.5 billion. And we've achieved a record investment result as our book yield continued to increase off the back of rising interest rates. Now as these factors combined that have enabled us to report a record profit at the highest return on equity for many, many years. And in total, returned $280 million to our shareholders through a combination of our total ordinary dividend and the share buyback.
Now I'll look to spend a moment explaining our capital allocation philosophy. The 2 primary determinants underpinning capital allocation at Hiscox are, firstly, the pursuit of profitable growth; and secondly, the maintenance of financial strength.
Now turning first to growth. Here, we maintain a disciplined approach, allocating capital where we see the possibility of attractive returns. And that's why we found ourselves at the start of 2023. So we put more of that capital to work in our big-ticket businesses, most notably in the property lines, and we increased our marketing expenditure in retail by 29%. We will continue to deploy more of our financial resources to drive profitable growth whilst maintaining a disciplined approach to cost management across the group....
Hiscox Ltd (HCXLF) Q4 2023 Earnings Call Transcript