Market forces pressured the Hiscox Re & ILS division of the international specialist insurer Hiscox Ltd, according to a trading statement for the first three months of the year to March 31.

Favourable rate increases otherwise left Hiscox Ltd with a rosy outlook for the first half of the year.

Still, there were net outflows of $148.4 million from ILS funds, and group assets under management fell to $1.8 billion.

The organisation said it remains well capitalised, enabling the continued capital deployment into the highly attractive re/insurance markets.

Insurance contract written premiums for Hiscox Retail are up, as they are for the regional divisions of Britain, the United States, Europe and Asia. The Hiscox London market also returned to good growth for the quarter.

But Hiscox Re & ILS experienced reduced capacity.

The attractive rate and underwriting environment and the group’s subsequent increased appetite for catastrophe risk drove net insurance contract written premiums growth of 37.6 per cent, Hiscox said.

Insurance contract written premiums grew 5.0 per cent to $418.1 million (2022: $398.2 million), at a lower rate than net, mainly because of the marketwide subdued ILS capital appetite.

With regard to the April 1 Japanese renewals, Hiscox already has an attractive market share in Japan, so the business took the benefit of the rate increases without growing exposure.

June and July renewals have every potential to be extremely attractive, hence the outlook for net growth in the first half is positive.

Historically, Re & ILS premium has earned equally over the course of the year.

The group said: “Consistent with our expectations of a general trend in the sector, the first quarter saw net outflows of $148.4 million from our ILS funds, reflecting reduced appetite from third-party capital providers across the sector, and, our assets under management reduced to $1.8 billion (December 31, 2022: $1.9 billion).

“The combination of scarcity of new capital coming into the ILS market and continuing uncertainty around when it will return in any meaningful way has contributed to an ongoing positive rating environment.

“The ILS asset class and other similar vehicles will remain a continuing feature of our market and we are actively engaging with potential investors to ensure that when their capacity does return, we are well placed to support this renewed demand.“

Aki Hussain, chief executive, Hiscox Ltd, commented: “We are seeing positive momentum across the group. For our retail businesses, growth momentum in the UK and US is accelerating in line with expectations, and Europe continues to deliver strong double-digit increases.

“Hiscox London Market and Hiscox Re & ILS continue to thrive in very favourable market conditions, growing top line and materially increasing net retained premium, as we deploy our own capital to make the most of the opportunity.

“This, combined with a much improved investment result, means the outlook for the half year is positive.”