Hiscox Ltd (HCXLF) Q4 2024 Earnings Call Transcript

2025-02-28 14:49:34 ET

Hiscox Ltd (HCXLF)

Q4 2024 Earnings Call

February 27, 2025 05:30 ET

Company Participants

Aki Hussain - Chief Executive Officer

Paul Cooper - Chief Financial Officer

Joanne Musselle - Chief Underwriting Officer

Conference Call Participants

Ivan Bokhmat - Barclays

Kamran Hossain - JPMorgan

Andreas Van Embden - Peel Hunt

Will Hardcastle - UBS

Abid Hussain - Panmure Gordon

Faizan Lakhani - HSBC

Derald Goh - RBC

Presentation

Aki Hussain

Good morning, everyone. It’s nice to see you all, and thank you for joining us here. 2024 has been another strong year of delivery from Hiscox. We are achieving broad-based growth and positive earnings momentum across the group. We have increased our revenues by around $170 million in the year, of which about $150 million has come from our retail business and the quality of this growth is reflected in the undiscounted combined ratio at 93.6% and retail profits of around $300 million. Our effective cycle management in big ticket means we’ve been able to achieve an excellent undiscounted combined ratio of 81.6% in an active loss year. With each of our segments delivering strong results, our group for the second year in a row is reporting record profits at $685 million and an excellent return on equity of 19.8%.

With the strength of our business performance and in particular, the accelerating momentum and improved confidence in the retail business, this creates the flexibility to pursue multiple growth opportunities and to step up our progressive dividend. We’re increasing our final dividend by 20%, which means a full year 15% increase to our EPS. And we’re also announcing a further substantial special return of capital of $175 million through a share buyback, reflecting the strength of the capital generated in the year, the robustness of our balance sheet and the confidence we have in the quality of our underwriting. So taking all of this together, our business performance is such that we can pursue an ambitious growth plan and return 10% of Hiscox’s equity to our shareholders.

Now as usual, I’ll go through each of our business segments, beginning with retail. We’re achieving growth and earnings momentum across our retail business, as the management actions we have deployed over recent years are now beginning to show up in the P&L. For example, our U.K. business is now growing at its fastest rate since 2018 as management actions on brand, technology and distribution are building momentum. Our European business has once again delivered strong growth with a further pickup expected in 2025 as new distribution partnerships come online, including a new bancassurance relationship in Spain.

In U.S. DPD, we’ve once again delivered strong double-digit growth in our direct-to-consumer business as our customer acquisition and cross-sell initiatives take effect. In digital partnerships, we’ve delivered robust growth albeit at a more moderate pace as due to one or two of our more established partners lowering their production. The vast majority of our partners are growing strongly with us, and we continue to broaden and diversify our partnership network. In U.S. broker, the business has contracted in 2024, all based on an improving trend, and I expect the business will return to growth in 2025....

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