Hiscox Re & ILS has reported a first-half 2024 profit before tax of $86.5 million, a 57 per cent improvement on the 2023 figure of $55.1 million.

The division includes the group’s reinsurance businesses in London and Bermuda and insurance-linked securities activity written through Hiscox ILS.

Hiscox Re & ILS grew net insurance contract written premium by 10.5 per cent to $381.2 million (H1 2023: $345.1 million) as the business deployed additional capital early to successfully capture the attractive market conditions.

ICWP grew by 3.9 per cent to $829.3 million in the first half (H1 2023: $797.9 million), with a majority of the growth achieved during the January renewals when market conditions were most attractive.

Hiscox said the overall growth rate had reduced at subsequent renewal periods, as additional quota share capacity and own capital deployed were offset by a reduction in ILS capital.

The company said: “The market has remained disciplined at mid-year renewals, with attachment points and terms and conditions broadly holding firm. While market capacity has increased, this has been largely offset by growth in demand from cedants.

“As anticipated, there have been some rate reductions in the upper layers of structures and on higher-quality business. However, these were from generationally high levels.

“Overall, rate is flat for the first six months of the year with the market remaining attractive, after cumulative rate increases of 90 per cent since 2018.”

It added: “As a result of gross capital inflows of $300 million into our side car and ILS funds from a number of new and existing investors in the first six months of the year, Hiscox ILS assets under management were $1.7 billion as at June 30, 2024 (December 31, 2023: $1.8 billion). Following a planned return of capital to investors, these reduced to $1.4 billion at July 1, 2024.

“The third-party capital strategy we have executed in Re & ILS over many years adds scale to the business, enabling more meaningful relationships with our cedants and allowing Hiscox to manage net retentions within volatility parameters consistent with our ambitions. It also creates a fee-based income stream for risk origination and subsequent profit commissions.”

In the first six months of this year, the company said, fee income increased by 57.7 per cent to $44.3 million (H1 2023: $28.1 million) owing to a rise in performance fees reflecting underwriting performance.

Hiscox Re & ILS delivered a strong insurance service result of $43.5 million (H1 2023: $32.7 million) at an undiscounted combined ratio of 77.3 per cent (H1 2023: 81.2 per cent).

Because of the seasonal nature of the risks underwritten by Hiscox Re & ILS, the company added, the majority of premium was earned in the second half of the year.