Hiscox 2025 Preliminary
Results
Wednesday, 25th February 2026
Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
Strategy Update
Aki Hussain
Group CEO, Hiscox
Welcome
Good morning, everyone. It is wonderful to see you all. Thank you for joining us.
2025 Results
Growth and earnings momentum with compounding book value
2025 has been a pivotal year for Hiscox. In May, we set out our strategy going deeper into
our retail business and making several important commitments.
We are executing on that
strategy and delivering on those commitments with pace and energy.
Our diversified portfolio is built for this market.
Growth is accelerating with premiums up
$275 million or 6% year-over-year. This is high-quality, profitable growth across each of our
businesses, driven by:
•
Product innovation;
•
Expanded distribution; and
•
Customer growth built on our specialty expertise and technology capabilities.
We are expanding our margins. Our undiscounted combined ratio of 87.8% is the best in a
decade, and our record insurance service result is the fifth consecutive year of underwriting
earnings growth.
Growth is translating into a larger asset base, underpinning a record investment result and
contributing to a third consecutive year of record profit before tax.
We are delivering excellent returns with a 12% growth in book value per share and an
operating ROTE of 21%, materially above our target.
This strong performance, continuing
momentum and execution of our strategy enables us to reward shareholders through a new
$300 million share buyback and a further 20% step-up in the final dividend per share as we
announced at the CMD last year.
Excellent capital generation underpins capital returns
Investing in long term growth while rewarding shareholders with $1.1bn of returns in
last three years
This excellent performance, combined with our diversified portfolio makes our business
strongly capital-generative. Indeed, over the last three years, we have organically generated
over 100 points of regulatory capital, enabling us to deploy capital in an unconstrained way to
pursue profitable growth in each of our businesses and reward our shareholders with returns
of $1.1 billion over the last three years.
Now turning to our results by segment.
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Profitable growth across the Group
Balanced across the segments
Retail added almost $200 million of premium as the pace of growth increased to 6.3%, a
continuation of our multi-year acceleration. This growth is broad-based across each of our
retail businesses, driven by strong customer growth of 7.5% and crucially not rate dependent.
Most importantly, this is profitable growth. The retail undiscounted combined ratio at 92.6%
is the strongest since 2016.
In London Market, we are successfully navigating a competitive environment, returning to
growth through product and distribution innovation, while delivering a combined ratio in the
80s for the sixth consecutive year.
In Reinsurance, we selectively deployed additional capital to support 6% growth, mostly in
specialty lines. The quality of our reinsurance business is demonstrated by a combined ratio
in the 60s for the third consecutive year.
Now let us take a look at how we delivered that growth.
Retail-led growth through the cycle
Strong new business expansion
Frankly, the pace, energy and innovation of our colleagues has resulted in premiums from
growth initiatives increasing fivefold in 2025 compared to the previous year, supported by the
launch of more new products than in the last five years and expansion of distribution.
As we set out at the CMD, there is a huge structural growth opportunity in Retail. We are
capturing this through:
•
Entering more segments;
•
Launching more products;
•
Expanding distribution and more markets.
Retail is on a multi-year growth acceleration journey. We grew 4% in 2023, 5% in 2024 and
over 6% in 2025 and plan to step-up growth to 8% for the full year 2026. We have set the
course to achieve double-digit growth in 2028.
In London Market, we are leveraging our deep underwriting expertise to expand into new
adjacencies, while deploying AI augmented technology platforms to access new markets.
In Reinsurance, we have captured the opportunities of the hard market, increasing our net
premium by 180% since 2020.
Now the ability to innovate is a crucial part of our Hiscox DNA. It has and will continue to
open up new growth opportunities in every part of our business.
Now let us take a look at innovation in action at Hiscox.
Growth initiatives
Innovating and executing with energy and pace
Now what you can see here is a sample of the initiatives we have taken in the last year to
expand our business and drive growth.
We are executing on these with pace and energy,
launching new products at an excellent rate.
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Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
Some of these you may remember as work in progress at the half year.
These have now
been launched, and we have refilled the pipeline with new products and opportunities that will
begin production in 2026.
For instance, in the US, one of our largest DPD partners has expanded our access to their
agent network.
In the UK, we followed up on the signing of one of our largest ever
distribution deals in 2025, with an even larger opportunity that will begin producing premium
in the first half of this year.
In France, we successfully launched our new cyber product in the fourth quarter. This will be
rolled out across all of retail in due course.
These actions and many more are accelerating Retail growth and enabling us to capture more
of the $317 billion target addressable market.
In Big-ticket, our innovation is moderating the impact of cycle management in certain lines.
During the year, we leveraged our existing technologies to grow into SME cargo and US
middle market property. In addition, using our underwriting expertise, we expanded into new
adjacencies such as tech E&O and financial institutions.
The blend of technology and underwriting expertise gives us the confidence to pursue new
opportunities with more initiatives set to appear on this list over the coming periods.
Now let us turn to the transformative force that is beginning to reshape our industry.
Hiscox Retail well-positioned to win in the age of agentic e-commerce
Taking action to capture the opportunity
Now with the advent of generative artificial intelligence, we are seeing the beginnings of
profound changes in society and our market. The way consumers and small businesses are
buying insurance is beginning to evolve. Large language models, LLMs, are increasingly a key
part of the buying process.
Now with our decades experience of providing specialist insurance directly to customers, we
have an established competitive advantage from our trusted and distinctive brand to our
leading Net Promoter Scores and high quality service. These objective strengths stand out
even more in the world of AI, where AI agents can evaluate a policy quickly on more than just
price.
We have been investing in technology for many years, building out our core systems and
improving data quality.
We have a leading global digital platform for small commercial
insurance, now approaching $900 million of premium at almost 900,000 customers.
These investments enable us to implement AI tools relatively quickly at a modest cost. We
are excited about the efficiency and growth opportunities that AI brings.
And we are not standing still.
This year, we will begin to roll out new, more powerful
customer and broker portals in the US and in Europe. These will enable us to personalise the
purchasing journey and help customers identify their insurance needs and simplify and speed
up processes for brokers.
As of this month, in fact, I think it is today, we are deploying AI agents into our US customer
contact centres to create real-time feedback loop for our operations and marketing teams on
customer experience and sentiment. If a customer wants to make a claim, an AI agent will
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Hiscox 2025 Preliminary Results
be there to help.
Wednesday, 25th February 2026
We are embracing generative AI for the benefit of our customers, our
colleagues and our shareholders, and I believe Hiscox is well positioned to win.
Now turning back to today's results.
Our commitments
Delivering as we execute our strategy
We have delivered on our promises in 2025.
Retail has grown 6.3%.
This growth will
accelerate in 2026, building to 8% for the year before reaching double digits in 2028.
Our operating ROTE of 21% is materially above our mid-teens through the cycle target. The
change programme has delivered a P&L benefit in the year of $29 million and is on track to
deliver $75 million of benefit in 2026. Paul will provide further details on this.
Our shareholders benefit from our growth and earnings with a 20% increase in the final
dividend per share and a new $300 million share buyback.
With that, I will now hand over to Paul.
Financial Performance
Paul Cooper
Group CFO, Hiscox
Welcome
Thanks, Aki, and good morning. It is great to be here with you all today presenting another
strong set of results.
Group financial performance
Underwriting quality and increasing operating leverage underpin profitability
We have achieved high-quality growth across each of our segments with ICWP up $275
million or 5.9% against the backdrop of falling rates, demonstrating the strength of our
diversified growth.
Importantly,
we
have
delivered
excellent
profitability
alongside
this
growth.
The
undiscounted combined ratio of 87.8% drove a record insurance service result of $614
million.
The Group's profit is supported by the record investment result of $443 million,
underpinned by increased AUM following stronger premium growth.
Our superb underwriting and investment results have translated into a record profit before tax
of $733 million, up 6.9% and delivered an attractive ROTE of 20.9%. This is despite a 2.5%
drag from the increase in the effective tax rate. The Group's excellent profitability has driven
substantial capital generation with a year-end estimated BSCR of 233%.
This is after
returning over $400 million of capital over the course of 2025.
As a result of our strong capital generation and balance sheet, the Board has ratified the 20%
step-up in the final dividend per share announced at the CMD.
In addition, we will be
returning $300 million to shareholders through a new buyback, resulting in total returns of
over $450 million in respect of 2025.
Delving into these results a little further, starting with our Retail segment.
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Hiscox Retail
Continued growth acceleration and margin expansion
In line with guidance, Retail ICWP grew by 6.3% in constant currency to over $2.6 billion.
This growth has been broad-based across all markets, as management actions delivered
results.
Growth has been accompanied by an improvement in the undiscounted combined ratio to
92.6%, partially due to early benefits from the change programme.
Importantly, Retail
growth is transforming the shape of the Group's earnings profile with Retail representing
nearly half of the Group's PBT, up from just over 40% in 2023.
Moving on to London Market.
Hiscox London Market
Innovation and effective cycle management
London Market returned to growth with ICWP increasing by 1.6%. In a competitive market,
the business benefited from product innovation and opportunities arising from London
Market's diverse portfolio.
Profitability continues to be strong with an undiscounted combined ratio of 85.9%.
This is
testament to our underwriting discipline, risk selection and pricing as we navigate the
market's micro cycles.
Turning to Reinsurance.
Hiscox Re
Quality of risk selection supports strong earnings
Net ICWP grew by 7.9%, driven by growth in pro rata and specialty lines, including our
climate resilience portfolio, mortgage and surety.
The quality of our risk selection is
demonstrated by an insurance service result of $189 million and an undiscounted combined
ratio of 67.4%.
Fee income of $109 million is very healthy, above $100 million for the third consecutive year.
We continue to see strong interest in our ILS funds with more than $330 million raised in the
last year and a robust pipeline for 2026. ILS AUM on 1st January 2026 is $1.5 billion.
As we continue to see strong capital inflows from third parties, while managing our own net
exposure to property cat perils, the earnings mix between fee income and underwriting will
continue to evolve.
Moving on to our change programme.
Change fuels operational tailwinds
Execution on track
We are making strong progress. On this slide, you can see examples of achievements against
our ambition and some of the actions that will deliver benefits in 2026.
We have significantly increased fraud detection rates through new capabilities, representing a
real cash saving in 2025. However, given our conservative reserving philosophy, much of the
benefit is yet to be recognised in the P&L. We have in-sourced over 100 roles in our Lisbon
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Tech Hub, enhancing the capabilities that drive our competitive advantage while leveraging
the use of a lower cost location.
In 2026, we will build on this, rolling out more centres of excellence and further extending the
scope of outsourcing where we benefit from the greater scale that specialist providers,
partners provide.
In procurement, we have reduced our property footprint and continue to consolidate our
suppliers, enabling us to negotiate better terms. Over the coming year, we will double down
on this, increasing the number of strategic partnerships and preferred suppliers while better
managing demand within the Group through improved cost governance.
Finally, in technology, we decommissioned 20% of our applications in 2025 while launching
new automation tools across the value chain, which will help to drive scale into the business.
This will continue in 2026 as we launch new automation tools that will deliver efficiency
benefits alongside driving revenue growth.
Looking at the benefits.
Change programme on track
$29m P&L benefit realised in 2025, on track for $200m in 2028
We are on track with our change programme and we have achieved a benefit of $29 million at
a cost of $24 million. While we are slightly ahead of our 2025 benefit guidance, there is no
change to our targets.
We remain on track to deliver a $75 million benefit in 2026 as we optimise processes,
sourcing and procurement, fraud detection and recoveries. We expect the cost to achieve to
be $75 million, which includes costs associated with in-sourcing and outsourcing, legal
expenses and tech implementation costs, including some of the exciting new capabilities that
Aki referred to earlier. These will help to deliver a $200 million P&L benefit in 2028.
Let us look at how this is impacting the P&L.
Operating jaws widening
Top line growing ahead of underlying expenses with admin expense ratio reducing to
17.1%
Disciplined cost management and savings from our change programme means that our
underlying expense base has increased by just $6 million.
This is despite inflation and
changes in variable comp and the investment in growth and technology initiatives highlighted
by Aki. This, in turn, is driving improvement in our operating jaws with a 0.8% increase in
underlying expenses comparing favourably to a 5% growth in premium in constant currency.
Overall, this is very pleasing progress.
Now turning to investments.
Investment performance
Cash and coupon income drive record result
Our record investment result benefited from strong yields and increasing assets under
management as growth in the business translated into more assets on the balance sheet. As
we go forward, that increase in AUM will help to offset the small reduction in the reinvestment
yield to 4%. As such, strong investment returns should continue to provide a tailwind for the
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Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
Group. The quality of the fixed income portfolio remains high with an average credit rating of
A, and the business is conservatively positioned on the asset side.
Looking at reserves.
Reserves
Further increase in balance sheet strength
Our conservative reserving philosophy is unchanged with a risk adjustment of $345 million,
representing an increase in the confidence level to 86%, slightly above our target range. This
is despite a healthy level of prior year releases and reflects the point where we are in the
cycle, the quality of our underwriting and the conservatism of our reserves. Over time, we
expect the confidence level to return to within the 75% to 85% range.
Reserve releases continue
$293m positive reserve development with all years trending positively
The conservative nature of our reserving has enabled us to release $293 million or 7.2% of
opening reserves for 2025, continuing our long history of an uninterrupted positive reserve
development.
All accident years are below the initial estimate and continue to run off
favourably.
Finally, an update on capital.
Very strong capital position
Excellent capital generation drives growth and returns
The Group has delivered outstanding organic capital generation of 34 points.
This has
supported both investment in the business and returns to shareholders of 22 points of capital,
resulting in a year-end BSCR of 233%.
Following the payment of our final 2025 dividend and our new $300 million share buyback, we
have a pro forma BSCR of 211. This compares favourably to our through-the-cycle operating
range of 190 to 200, providing us with the flexibility to capture opportunities as they arise in
a rapidly changing market.
Thanks for listening.
With that, I will now hand over to Jo, who will provide you with an
update on underwriting.
Underwriting
Joanne Musselle
Group Chief Underwriting Officer, Hiscox
Introduction
Thank you, Paul, and good morning, all.
Our underwriting results reflect disciplined cycle
management, profitable expansion and a strategic investment in both data and capability to
continue to build a balanced and diversified portfolio, which you can see on this next slide.
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Power of an actively managed portfolio
Retail compounder and navigating big-ticket micro-cycles
Our retail compound growth is anchored in profitable underwriting, delivering a core of
92.6%.
In the UK, Private Client is up double digits, as we continue to benefit from our
market-leading expertise.
Commercial growth is due to an expanded customer base and a sharper sector focus.
In
Europe, France and Germany are leading the charge as we continue to go deeper into our
chosen segments and deliver new products tailor-made to our customer needs. In the US,
Digital Direct is continuing its excellent growth.
Momentum in partnership is building and
brokers once again expanding as we have delivered improved service delivery and a slightly
broader appetite.
Turning to the London Market, where our ability to manage those micro cycles has remained a
key differentiator, and we have once again delivered a combined operating ratio in the 80s.
Property has seen some growth fuelled by a US high net worth portfolio and the tech-enabled
expansion into mid-market. This is offsetting some intentional cycle management in major
property and commercial lines.
We have seen some modest growth in Casualty. We have had some rate tailwinds in General
Liability and a successful launch of Financial Institutions and Technology E&O.
This is
mitigating some declines in Cyber and D&O as those markets continue to soften.
Then lastly, Reinsurance, a slightly softer market in 2025 but still a really favourable market.
Despite another year of over $100 billion in industry losses, our risk selection, our robust
reserves and a benign second half has enabled us to deliver a COR in the 60s.
Where are we in the cycle and how favourable is the market? This next slide, hopefully, a
familiar slide to you.
Attractive rate environment sustained
Majority of portfolio with good rate adequacy
The chart on the left is our rates indexed back to 2018 for our segments. The purple line,
which is Retail, is just less sensitive when it comes to the rate cycle.
Rates were up in
aggregate 2% and pricing across UK, Europe and the US remains strong.
In 2025 for the first year in many saw aggregate rate declines for both London Market and
Reinsurance, although we remained in an attractive market. The blue line is our property cat
reinsurance, rates come down 4%. This moderated as we went through the year as our midyear renewals, particularly those loss affected, attracted some rate increases.
Across the
whole of the Reinsurance segment, rates were down about 5%, but still up 83% since 2018.
We saw a similar story in London Market, a 4% dip in 2025, but still at 67% since 2018. That
softening has continued in 2026.
Our January renewals saw London Market come down
another 4% and Reinsurance down 13%, particularly in the areas of property, cat and retro.
The chart on the right gives you an indication of what we believe that does to the rate
adequacy of our portfolios. As a reminder, Adequate means we believe it is adequately priced
to deliver a good return in a mean loss environment. Adequate+ means we have got margin
in addition, and Low, still profitable, but just below our target underwriting returns.
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You can see, despite the softening, we believe that much of the portfolio is still really well
positioned to deliver a good return.
We benefited from some tailwinds in our own outwards reinsurance purchasing.
Mastering changing markets and managing micro cycles is not new to us, and we continue to
have many different portfolios in many different parts of the markets. You can see this on the
next slide.
Big ticket – cycle management
Expertise and diligence drive underwriting outcomes
The London Market rate environment is highly nuanced both at a line and a divisional level.
You can see the divisional picture on the right-hand side is quite different to the London
Market headline.
During this period, casualty rates have declined, whilst property rates have seen significant
gains, and we have acted decisively.
During the same period, our average exposure per
policy in casualty has reduced by 20%. More recently, we have added over $100 million of
property premium.
This laser focus on exposure management and profitable expansion has been the key to that
consistency in that combined operating ratio. We have learned from lessons of the past and
our enhanced cycle management is really focused on four things.
Firstly, a forward-looking view of risk, really understanding those inflationary trends, whether
they be economic, societal or climate.
A market in transition framework. This is a framework that is honed to capture the position
of each one of our lines in the market and proactively respond to evolving conditions.
Exposure management. We absolutely need to know when to trim when we do not believe
we are getting paid to take that risk, but also when to expand when we believe the expected
returns justify the exposure.
Lastly, new. Of course, we want to actively manage the portfolio that we have and seize new
opportunities for profitable growth.
Big ticket – market in transition framework
Proactive response to evolving conditions
This next slide gives you a little bit more information on our market in transition framework.
What you can see here, each bubble represents a line of business in London Market. This is a
proprietary framework. We built it around 10 quantitative type metrics, things like technical
index, exposure, deductible.
We add to that five more subjective metrics on the market.
These could be things like broker interaction or terms and conditions.
For London Market, we are monitoring 285 metrics on a quarterly basis, and we have a very
similar framework for our Reinsurance business.
Now each metric has an expectation or a tolerance and flags for investigation if it is outside of
that. Now not all investigations will result in underwriting action. Most often when we look,
the underwriting action has actually already been taken. But when it is required, responding
really quickly is key, and that could be reducing your line size as an example.
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In summary, a transitioning market, but a largely attractive market.
Hiscox Retail – customer long-term value
Consistently strong underwriting
Unlike our big-ticket businesses that flex with the cycle, in Retail, we are looking for
compound growth through-the-cycle, all anchored in consistent profitable loss ratios, and you
can see that from the chart on the left-hand side.
We have built out a specialist underwriting ecosystem from risk selection through to claims
management, all underpinned by investment in brand, technology and capability. Our focus
is squarely on customer value. We invest in our segments for the long term. We maximise
value through market-leading retention and product penetration.
After decades of investments, the majority of our retail customers already benefit from being
auto underwritten, but we have ambition to go much further.
Lastly, new. We want to deliver new products and services to existing customers, go deeper
into our segments to attract new customers and boldly go into new markets.
2026 CUO area of focus
As I look forward to 2026, my three priorities are clear. Firstly, a relentless focus on
managing our portfolio, knowing when to trim, but also knowing when to expand when the
outlook is compelling.
Turbocharge innovation. We want to find quicker ways to bring new products, new services
and expanded appetite to market.
Lastly, capability. We want to blend the best humans with advanced technology to really
amplify our specialist underwriting expertise. We want to train our underwriters for skills for
the future so they have got data fluency and AI-practitioner at their core.
Thanks very much. I will now hand back to Aki.
Closing Remarks
Aki Hussain
Group CEO, Hiscox
Outlook
Momentum to continue in 2026
Thank you very much, Jo. Looking ahead to this year, as a result of the pace, energy and
innovation we have generated, this year is positioned to be another really exciting year for
Hiscox.
Retail growth momentum will continue into 2026, building to 8% for the full year and on track
for double digits in 2028. In Big-ticket, we expect innovation and new opportunities will
moderate the impact on growth from our disciplined cycle management activities.
In Reinsurance, following strong growth in recent years, in 2026, we expect to maintain our
natural catastrophe exposures broadly flat on a net basis, while we are continuing to seek out
growth opportunities in specialty classes.
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Finally, as you have heard from Paul, our change programme remains on track to deliver $75
million of P&L benefit this year.
Record results as we deliver on our commitments
Momentum set to continue
In closing, 2025 has been a pivotal year, a year of record underwriting results, record
investment results, record profits, and momentum has been building over the last few years
and is set to continue.
The Group's combined ratio is the best in the decade. Retail's margin continues to expand.
London Market has delivered a combined ratio in the 80s for the sixth consecutive year, and
Reinsurance in the 60s for the third consecutive year.
In our change programme, we are delivering expense efficiency and a significant build-out of
capabilities with more to come. Our operating ROTE of 21% is materially above our throughthe-cycle target. Our capital generation has been strong, enabling us to deploy capital in an
unconstrained way to pursue high-quality growth in each of our businesses and to reward our
shareholders with capital returns of $1.1 billion over the last three years.
We look forward with confidence and optimism. These are exciting times at Hiscox.
Thank you for listening. Now we will take questions.
Q&A
Shanti Kang (Bank of America): The first question was just on the Retail growth outlook,
that step-up to 8% in 2026. Where is that really being driven from by region? A walk of how
to get there from the 6% that you have done this year would be quite helpful.
Then I was just looking at the claims ratio in Retail this year, and it looked like that
deteriorated a little bit year-on-year based on the restatement. Is there any reason for that
deterioration? Is that really on more conservative initial loss picks?
That would just be
helpful.
Aki Hussain: Okay. So taking each of those in turn. In terms of the growth outlook, look,
context is important as well. We have already taken the business from what was 4% growth
in 2023 to 5% and then over 6%. As you say, we are guiding to 8%. This is broad-based
growth. There is no one single action that is driving this. It ranges from the effectiveness of
our distribution teams and our distribution functions.
As you have heard me say many times before, we are increasingly winning positions on
broker panels. We are winning new opportunities, new distribution deals. In fact, the UK has
been leading the charge across the Group on that.
In our US business, we are adding more partners. This year, or in 2025, we added a further
23 partners. As those gain traction and build production as well as growth from our existing
partners. We are continuing to invest in marketing.
In 2025, we increased the investment by 9%. We are now at about $109 million. You can
expect that to go up by a further 10%. This is a great investment. We get very good returns
from the step-up.
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We have stepped up our product innovation and expansion into adjacencies. You can see that
reflected in the 5x growth from new initiatives. We have turned around the US broker
business. That is now growing. It is a range of different factors that are achieving that
growth, as I mentioned earlier, and this is not rate dependent. In fact, rates have been going
the other way.
We have now come off the rate step-up that we were seeing in the Retail business as a result
of inflation, as inflation has abated. If you go back to 2023, the rate increase was about 7%.
Now the rate increase is 2%. At the same time, the growth has grown from 4% to 6%. You
can see what the underlying is doing here. This is a volume-driven growth story here, and it is
largely about the effectiveness of the management actions we have deployed over the years.
In terms of loss ratio, look, we do not land this on the head of a pin. That is a market-leading
loss ratio for the Retail business. We are very pleased with it.
Andreas?
Andreas van Embden (Peel Hunt): Just on cycle management. It sounds like we are going
to continue growing exposures into a softening cycle in the next few years. I just wonder if
you take a three-year view through this planning cycle, what are your assumptions about the
increases in capital requirements across the business? Is that going to be a gentle rise over
time as you grow exposures? Or will you, at some point, de-risk that property cat book and
will capital requirements come down again? That is the first question.
The second question is on your reserve buffer. You are now at the top end or slightly above
the top end of the range. Is this something that will be released in the future? Are you being
extra cautious or will inflation eat into those buffers, so it will naturally erode within that
75%-85% range?
Aki Hussain: Okay. Thank you, Andreas. There are a number of parts to that question. In
terms of how we expect the Big-ticket business to evolve over the next period, we have
spoken about the fact that our product innovation and expansion into adjacencies will
moderate the cycle management activities. Jo can provide a little bit more detail on that.
In terms of capital requirements, as we expect them to evolve and the reserve buffer, Paul
will address that.
Joanne Musselle: Yes. Thanks, Aki. As I said, we are a disciplined underwriter, you can
see that in terms of our track record. What we did not say was we are looking to grow
exposures. There is lots of lines where actually we have actively and decisively shrunk
exposures. We talked about some of the casualty lines where the rate has been decreasing.
We have been actively reducing our exposure during that time.
As we look forward, we are seeing some softening in our property lines. Clearly, if that
continues, we will trim. First and foremost, we are a disciplined cycle manager in our Bigticket businesses, albeit we are still in an attractive market today. Obviously, the rate
adequacy slide show that in the majority of the portfolios, we still have rate adequacy.
What we did say is what we have managed to do, particularly in 2025, is we have just
mitigated some of that intentional cycle management action by some of the new things that
we have been doing. That is the launches of adjacencies. We mentioned a couple in casualty.
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I mentioned the mid-market property expansion as an example.
That is offsetting some
intentional reduction elsewhere.
In casualty, we launched technology E&O. Now we have been a tech E&O writer for a couple
of decades across all of our Retail business. It is a real heartland for us. We launched a new
product in our London Market business. This is to capture the slightly larger customers, that
find their way to London, written on a subscription basis. That is what we are talking about in
terms of that cycle management.
Of course, we are a disciplined writer. I always say our job is to make money in the market
that is in front of us, not the market that we would like to have in front of us. We will react
accordingly, and we are looking for new opportunities to profitably grow. It is the combination
of those two things. It is actually really underpinned that consistency you see particularly in
the London Market with an 80s combined ratio for the last few years.
Paul Cooper: Yes. Building on that and how that translates into capital. There is three
drivers. One is market conditions looking ahead of us. The second is the Retail business. The
third is cat P&L. If you look at consumption over the last two years, it started to moderate.
Now the reason that started to moderate is we have really held our cat PMLs constant, and
that is off of obviously a very high base as rates of strength. You heard that we have
increased our premium in Re 180% from a capital perspective over the last five years. We
hold that constant.
What you have seen is the Retail business accelerate in terms of its momentum.
forward, we have talked about 8% in 2026 and double-digit for 2028.
requires more capital.
Looking
Now clearly, that
Retail is the least capital-intensive part of the business, but it still
requires some capital on the balance sheet to grow.
So what I would expect is that degree of moderation looking ahead.
Now, clearly, the third dynamic is, what happens with market conditions and also what
happens about these opportunities that Jo has talked to around innovation? That will dictate
whether we need less capital and reduce exposure or actually need more because we are
taking advantage of these opportunities. That is the outlook ahead of us from a capital
perspective.
From a reserving perspective, the important aspect around inflation is it is built into our loss
picks. We do have a cautious approach to reserving. We have a cautious approach to our loss
picks, and that does obviously generate redundancy coming forward.
Now our positioning at 2025 from a year-end perspective has been quite deliberate. We
obviously have built on that conservatism that we have talked about by increasing the
confidence level. We are at 86% from 83% but we have also increased the level of margin in
the reserves. That puts us in a great position in terms of where we are at this point in the
cycle.
You are absolutely right, Andreas, that looking prospectively, we have got a range of 75% to
85%. I would expect us to trend back within that range. I do not think inflation, as we
currently see, is an issue because it is already built into the loss picks.
Aki Hussain: Will?
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William Hardcastle (UBS): If I can try and pin you down slightly on one of those answers,
Paul. You mentioned the capital consumption. It was 13 points in that solvency bridge last
year. Just linking it with Andreas's question, is that likely to be a relatively stable number? I
know there is a bit of a range around that? Or is it likely to go more likely down than up next
year?
Then on the LLM impact into the SME distribution. I guess you touched on it in the
conversation, Aki, but I am really trying to understand what are the risks, what are the
threats and what are the opportunities for Hiscox to really take advantage and why?
It is
really thinking about broker disintermediation by the LLMs.
Aki Hussain: Okay. Paul, if you address the capital point. Let me cover the LLM point first.
I guess, first and foremost, we are pretty excited about the ability and the prospect of using
LLMs and, frankly, the emerging world, which is not quite here yet of agentic e-commerce.
We have a long track record of investing in technology and being on the front foot,
particularly when it comes to that small commercial business segment, which is a heartland
for the retail business.
Again, if you look at the context, we have been investing in that business in terms of
technology, etc., for decades. We have a market-leading global platform now that covers 12
countries, UK, US and Europe, with $900 million of premium flowing through it and serving
900,000 customers roughly, which is highly automated with all the underwriting automated.
In excess of 99% of the risks that flow through that platform are auto underwritten.
We have invested in the technology. We have been ripping out core systems and replacing
them with new. We have been cleaning up the data for many years. Actually, that puts us
into a fantastic position now that with the advent of GenAI, we can actually build our own or
adopt rather the AI tooling relatively quickly and for a relatively modest cost. That is exactly
what we have been doing across the business.
We are excited about the efficiencies that this will bring, but we are also really excited about
the growth opportunity, the expansion of our reach into our prospective customer base and
also the opportunity to develop new products that, frankly, just did not exist before, and that
is going to be a real opportunity for us as well.
I mentioned earlier that we are deploying AI today, right? There is things that we have just
done. There are things that are in development that we are doing. What we have done, we
are already using AI agents in our marketing analytics.
We are using it to triage broker
submissions in the UK, and that is going to be rolled out across the whole of the Group.
We were first to launch an AI augmented lead underwriting platform in London Market. That
was the first for Lloyd's. Again, we were able to do that because we have already invested in
the tech and the data.
The emerging things that we are doing, which are really going to open up the funnel for
growth. It will take a bit of time because it does require customer adoption as well. It is
today or yesterday, we have launched AI agents into our US call centres. That will give us as
I mentioned earlier, real-time feedback, immediate feedback to our operations teams on
customer sentiment and experience and also feed directly into our ads platform, which then
dictates how we then market back to those customers.
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If you think about the strength that we have built up over the last decade, which is having a
trusted and distinctive brand, market-leading claims service. We have an NPS score, which is
in the 70s and 80s. The market average is materially lower than that.
Our world-class customer service, the tailored coverage that we provide, these are all
objective strengths, which in the world of AI agents and agentic e-commerce stand out, right?
In the current world, really, if you go online, the only thing you can really compare on is
price. We do not trade on price.
In the prospective world, as a new person who is buying insurance for their small business,
you can get much more information. In that world, we open up the platform. We will stand
out much more, and we are readying our platform for the world of agentic e-commerce. As I
said, we are in the process of building for deployment later on this year, new, much more
powerful portals.
These will sit alongside. If you think back about the strategy that we have had, we have an
omnichannel distribution approach. We are building leading platforms to enable us to access
and trade with brokers. We trade with partners and we go direct.
This agentic e-commerce channel as it were, certainly for the moment, will just sit alongside
depending on customers' preference. We are pretty excited about it. A lot of the hard work
has been done, and now it is about implementing these new tools and seeing how they are
adopted, both internally and externally.
Paul Cooper: Just on consumption, yes, to knock that one off.
Yes, so based on the
conditions we see ahead of us today, consumption will be lower.
Aki Hussain: Ivan?
Ivan Bokhmat (Barclays): I have got one big AI question and two small finance questions,
please.
On the big AI question, I will start with that.
There is a perception that for
reinsurers, the underwriting edge is essentially the moat that can protect you from being
disrupted. I was just wondering if you could maybe provide some of your views on this. If
you think about your data and what is out there in the market for available for underwriting,
how much of it is publicly available, like cat models or cyber models or whatever it might be?
How much of it is proprietary? How much of it is unstructured proprietary that you could still
tap on, but maybe where you are in that journey versus peers? That is question one.
Then question two. I have noticed that across your growth initiatives, and this has been a
trend for a little while now, you do not really have like AI CAPEX, data centres and all that. I
was just wondering what your thoughts on that might be? Is it the next leg for you to expand
then? Or is there a reason why you have not really been pushing there?
The third question is on the capital ratio. Obviously, you have to 2 11% now, 31% stress. It
gives us 180% post-stress ratio, which I think in the past was like a good guide for how you
would manage your capital. Is this still the case or any developments there?
Aki Hussain: Okay. Thank you for those questions, Ivan. What is our underwriting edge in
reinsurance?
That is one for Jo.
In terms of underwriting appetite, then in terms of data
centres, etc., again, another one for Jo. And Paul, if you want to address the question on
capital and how we manage that within the ranges?
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Joanne Musselle: Yes. Thanks, Aki. In answer to the question, it is a combination. What
we rely on is, of course, and I talked about it, we, of course, rely on in that reinsurance world,
the best external models as an example. We take what is available, but then we blend and
we overlay what we call a Hiscox view of risk. We do that across both our Reinsurance and,
indeed, all of our other insurances. That is really important, and that is proprietary, where we
are utilizing our own proprietary information, our own bespoke data sets, building in things
like that forward-looking view of inflation. It is really important for us to get ahead of some
of these trends and price forward.
I would say in terms of the edge, it is a combination. We are utilising the best external data,
but also blending that with our own internal data. Of course, we are using technology, have
been for many years in that underwriting process to do one of three things, either to make us
easier to do business with. Take the reinsurance example, how can we consume submissions
quicker. Clearly, the advance of technology enables us to consume more submissions in a
much shorter time, much better in terms of response time back to, in that instance, brokers
or indeed, more broadly, customers. We are utilising it there.
Absolutely utilising it to make better decisions.
Whether that is ingesting third-party data,
make better underwriting decisions, underwriting of pricing decisions, that is the second area
that we are utilising and clearly making us more efficient.
So I would say it is a combination. It definitely is looking outside and taking the best external
information that exists and then blend into our own proprietary data sets.
With regard to data centres, yes, absolutely. I mean, data centres is definitely becoming a
significant area. There is a lot of talk about it being a structural growth opportunity, and it
really is underpinning that digital economy.
We are really thoughtful.
We are really
thoughtful. We have lent into that. We are curious. We have deployed some capacity in
both our primary and our London Market business and in our Reinsurance business.
At the moment, we are thoughtful because one of the significant areas that we need to get a
head around is accumulation. We are also investing at the same time, deploying a little bit of
capacity. We are also investing in building our own accumulation model. We are really clear
around where these accumulations lie, and we can actually managing them ourselves. Yes,
watching it, deploying some capacity, but also thoughtful in terms of accumulation.
Paul Cooper: On capital.
At the CMD, we announced that our target operating range
through the cycle of 190% to 200%. You would see the 211% on a pro-forma basis is a bit
outside that. Sometimes you can expect through-the-cycle we will be outside it. It is a small
amount above.
We have struck the right balance between the increased share buyback that we have
announced today of $300 million and retaining the optionality for further opportunities for
growth. We are a growth business. If you look at our capital management framework, the
first priority is growing the business.
Aki Hussain: Okay. Let us keep going along. Abid?
Abid Hussain (Panmure Liberum): I have got three questions.
The first one is on the
pricing cycle. Just wondering if you could talk to your past experience on previous soft cycles
and that move from adequate pricing to inadequate pricing.
Is that typically gradual?
Or
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does it happen in a cliff edge moment? If so, looking forward, are you seeing potentially any
cliff edges on any key lines of business? That is the first question.
The second one, just coming back on the reserving philosophy.
You are reserving now at
86% above the 75% to 85% confidence interval that you set yourself as a target. It sounds
like you are saying you are just being conservative because pricing is softening.
Just
wondering if there were indeed any areas where you saw loss picks deteriorating, any
concerns at all? Or is it just genuinely just being conservative?
Then just how quickly would you expect yourselves to trend back to around 80%. That is the
second one.
Then just finally, very quickly, the final question on M&A.
Are there any areas where you
benefit from participating in M&A? I am thinking really adding new capability, new product
sets in adjacent areas to help you accelerate growth in adjacent areas.
Aki Hussain: Okay. Thank you, Abid. In terms of the evolution of the pricing cycle, Jo will
take that. In terms of reserving, Paul will provide commentary.
In terms of M&A, the first thing to say, for our business, as you can see from the results
today and from previous years and the diversification within our portfolio is we do not need
M&A for growth.
We have a fantastic retail franchise, where last year we set out the
extraordinary growth opportunity. What you can see is over the years, we are accelerating
the pace at which we are capturing that opportunity, and we are very confident and
optimistic, frankly, about getting to 8% in 2026 and extending that up to double digits in
2028.
In our Big-ticket business, again, we have demonstrated we are leading class in terms of
cycle management. At the same time, we have stepped up the product innovation and we
are expanding into adjacent classes to moderate the impact of cycle management.
Now, again, if you look at the history, we are approaching $5 billion of premium.
almost exclusively organic growth.
That is
That is the predominant form of growth that we will
achieve. What you also saw from 2025 is where there is a strong strategic rationale and the
financial metrics make sense, we will consider small bolt-ons.
Of course, we purchased a very small entity called Lokky in Italy, which we closed in the
second half of last year. That gave us a toehold into the country. Frankly, no premium, but it
gave us a system and it has given us 23 people who understand the local market. It was a
pretty new start-up.
We are now consolidating that and that we will move forward from
there. Pleasingly, we are getting premium in 2026.
Then we also deepened our presence in the US, where we made, again, a very small
acquisition. Just building on your point, Abid, that did give us access to a couple of classes of
business that were on our to-do list, but it has given us quality underwriters, some
engineering capability and access to life sciences and tech start-ups. It has also given us the
beginnings of a tech platform for our broker intermediated channel as well.
Over to Jo on the pricing cycle.
Joanne Musselle: Thanks, Aki. Maybe if we can just bring up that pricing chart because I
think it is a helpful backdrop.
I am not going to give any predictions on the pricing cycle
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going forward, but just maybe just some observations on the cycle that we have already been
in.
This has been a very different hard market or hardening market than we have had
historically. If you look at that slide, we have had gradual increases over many years across
different lines. That is because it has been driven by lots of different things. It is not just
been driven by significant cat activity. It has been driven by lots of things, whether it be low
interest rates, whether it is high inflation, geopolitical uncertainty, emerging risk, climate
change. There have been so many different factors that have driven this current cycle that it
has been really prolonged.
It is difficult to see one thing disappearing and the market
changing overnight.
The other thing about this cycle, which has been very unusual, is it was actually primary
insurance-led.
Normally, cycles are reinsurance rates-led, reinsurance rates go up and
therefore you have to put your primary rates up. Actually, you can see that red line, which is
our London Market lines.
They moved significantly quicker than the blue line, which is
property. Actually, during that early period, 2018, 2019, 2020, we were calling for a harder
market in reinsurance because we just did not believe we were getting paid to take the risk.
So we were actually very vocal in terms of that.
The other thing on the red line, and I showed you with the underneath is that is an aggregate
view. What actually was happening with those early rate rises was casualty. Casualty was
the early rate rises. Casualty has now softened, but rates went up 200%, 300% for some
lines, and now they are moderating. Property lines really started to move in 2023.
The other really important thing about rating is what you cannot see on this slide is terms and
conditions. We all talk about the rates going up or down. We talk about rate adequacy, but
actually terms and conditions are really significant. The biggest driver of the 2023 blue line,
yes, of course, rates went up 30%, 40%.
But actually, terms and conditions materially
changed, particularly attachment points in reinsurance and terms and conditions tighter
around the coverage. Those have largely been maintained.
When we look back at this softer part of the cycle, as in 2026, where rates have come off,
actually, it was a price-led softening. Terms and conditions, attachment points have largely
maintained, which is why there is a vast majority of that.
I talked about it being a really
active year, over $100 billion, $120 billion of industry losses in 2025, but a lot of them did not
make their way to the reinsurance because of that attachment point.
Yes, no predictions for the future other than to say it is difficult because it is being driven by
so many different things. I can't think of if one thing changed overnight that, obviously, the
cycle would dramatically change in one go.
Paul Cooper: It is a good segue across to the reserving. What I would say and what we said
consistently is our conservative reserving approach remains the same. It is unchanged. We
have a prudent best estimate, and we have built upon it.
The important point for 2025 is we are coming at this from a position of strength, the
increase in the margin and the increase in the confidence level to 86%. That really builds on
what Jo has just said. We are coming at this from a point where we have got high-quality
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Hiscox 2025 Preliminary Results
underwriting.
Wednesday, 25th February 2026
Look at the loss ratios that we have delivered across each of our business
segments.
The quality of the underwriting, the diversity of the portfolio enables us to do what we have
done in 2025. In terms of the pace of getting back within the range, I am not going to guide
to that, but we will be back within it.
Aki Hussain: Just to add to Paul's point, if you flip back to the slide which shows the reserve
releases, where you can see we are in a fantastic position where you have seen stronger
reserve releases predicated on, frankly, every accident year seeing a positive trend, and at
the same time, increasing reserve redundancy.
That is something just to factor in as a
package. That is what you are seeing here. Daniel?
Daniel Wilson-Omordia (Morgan Stanley): Encouraging to see the change programme
coming through as expected this year. I am just wondering the actions you put through this
year, do you see them as quick wins or easier than the actions to follow from here?
Or
another way to phrase the question, is there anything that is been harder to achieve this year
than you expected or anything that is coming up that you think will be harder to achieve than
what you have put through this year?
Aki Hussain: Paul will cover the detail of that. Let me just give you overarching comment.
The overall programme, we laid out the categories last year, is tech rationalisation, capability
buildup, procurement and operational excellence. The programme is underpinned by tens of
initiatives. There is no one single initiative that is going to drive the savings.
Reality is not everything is going to work. That is factored into the number of initiatives we
have, which, if they all worked, the savings will be a little bit more than what we set out.
There is some contingency built into that. But I will let Paul get to the meat of the issue.
Paul Cooper: Yes, absolutely. Thanks. The important thing to bear in mind is what we are
trying to achieve.
It is all about really driving scale, improving productivity across the
business and the $200 million falls out of the back of that. If you look at what we have done
for 2025, the $29 million gives us a really good baseline going into 2026, and we have got a
clear line of sight of that $75 million that we will deliver by the end of this year.
There are, of course, some quick wins within this. Setting up a procurement function is one
aspect where you can renegotiate some contracts. I say it is easy, but there is obviously a lot
of work in understanding how you get to that point.
I would say, to Aki's point, the number of initiatives that we have got on and the strong
sponsorship and the programme management around this gives us strong confidence in those
areas. We talked about the benefits and the visibility that we are seeing around, say, fraud
and recovery, we have in-sourced, as you can see there, more than 100 roles to Lisbon that is
at a lower cost.
That is already underway.
We are in the middle of outsourcing certain
components. Again, good line of sight on track in terms of that component.
I would say the programme is well established. You can see the areas that we are tackling.
It will give us a business that is much more scalable than it is today.
Aki Hussain: James?
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James Shuck (Citi): I just wanted to ask about the Google Cloud relationship. It is a multiyear relationship.
Up to this point, it has really been focused on efficiency gains and
underwriting. With the pace of change that we are seeing, it is not clear to me what else they
can bring to the table, the larger language models that are emerging, whether it is agentic AI.
Since you started that agreement, what are your views on how far that relationship can
develop and what else can they bring to the table?
We start to use unstructured external
data? Where else can it be applied to? That is the first question.
Secondly, probably the only accounting question today.
on slide 51, just interested in the
reinsurance receivables, which remain very elevated.
I presume some of that is COVID-
related, in which case, I am wondering at this point why we have not reverted back down to
the 10% average that we have seen prior to COVID?
If we did see that 15% reinsurance
recoverable come back down to the 10%, does that have any implications for the solvency?
Aki Hussain: Okay. The accounting one is directed to you, Paul. In terms of Google Cloud,
etc., look, we have strong and deep relationships with a number of leading software and cloud
companies, including Microsoft and Google. Those partnerships extend to a range of different
factors.
Firstly, we have a lot of our applications and software on the cloud. With the advent of GenAI
and agentic e-commerce, etc., I do not think that is going to change.
Those are facilities
that, frankly, those two companies and others invest billions and billions of dollars in, in terms
of making sure they are hi-tech secure, etc.
Where else do we use the skills of those companies?
Those organisations have tens of
thousands, if not hundreds of thousand software engineers.
What they can help us do is
accelerate the journey that we are on.
Now what do we bring to the party? The thing that we bring to the party are three things.
One, we have invested significantly in our technology over the years. This is not something
new to us.
It is already within the P&L.
You can see it.
We have spent years gradually
cleaning up our data. It is never perfect, but it is in pretty good condition.
The third thing is ambition and culture. We have a culture that is a business builder culture.
We are looking for new opportunities. We are continuously experimenting. We use the stateof-the-art AI tooling these days that they are bringing, but we already have a system where
we can integrate it and build it and start to develop real use cases within our business.
For instance, in our London Market business, they are using, was it Google X, which is, again,
one of the divisions within the Google business. We are using some of the technology there
to help us underwrite some of the risks in the US and the property risks in the US, with some
really, what we think is high quality, very granular data with a very long history.
We are using these organisations to help build some of the base technology for the new
powerful portals.
Now once we build those, we can do a lot of things ourselves.
That
partnership will continue. The shape of it, of course, evolves over time. The key thing they
bring to us is capability and acceleration of our own ambitions, which we can then amplify
with our own capabilities.
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Hiscox 2025 Preliminary Results
Paul Cooper: Yes.
Then on reinsurance recoveries.
Wednesday, 25th February 2026
It is multifaceted.
The first point is
around actual reinsurance collections that are COVID-related have gone very well. We are
very happy with that perspective.
What is happening and what you can see in terms of the recovery is versus 10 years ago is
book mix. One is it is going to be much more shorter tail business 10 years ago than it is
today. Also think about the Re mix. So the third-party capital is obviously greater than it
was 10 years ago.
Therefore, you have got a natural level of additional recoveries on the
balance sheet that you would have a decade ago. That is that.
In terms of implications for solvency, as that comes down, obviously, the credit risk charge
comes down. It is pretty modest in terms of our overall capital. It is not a big driver at all,
but clearly, there will be a modest benefit as that comes down.
Aki Hussain: Okay. Vash?
Vash Gosalia (Goldman Sachs): I have two questions. One on the Retail business. You
have delivered 6.3% constant currency growth in 2025.
At the same time, you have had
benefit on the rate 2% and then policy count of growth of 7.5%. I am guessing the difference
comes from mix shift. Could you just help us square those numbers, as to where exactly or
which product line is it that you grew in or what geography and maybe how are each different
from the other? That is the first one.
The second one, just on reserves again. Honestly, we were a bit surprised by the reserve
release that we saw in the second half. Could you unpack as to where those reserve release
have come from, either accident years or any particular events that you saw improve?
Aki Hussain: Okay. Paul will comment on the reserve releases. In terms of Retail, you hit
the nail on the head. It is entirely mix. Yes, we did see a 2% rate accretion across the Retail
portfolio and 7.5% increase in policy count within the two big segments are the digitally
traded business, so largely direct and through partners.
There, the average premium is
$1,000 or slightly less. That is simply growing faster. Therefore, adding more policy count
than the broker business.
As you would expect, healthy growth in both, but the digital
platform is growing a little bit faster.
Paul Cooper: Yes. Just in terms of reserving H2, it was basically all years, you could see
actually on the chart, all years and all segments. So really across the business. It comes
back and we cannot state enough that this is a manifestation of conservative loss picks. If
you are strong on the way in, clearly, you are going to be strong on the way out from a
redundancy perspective, and you can see that in all of those years trending down.
Aki is right, you bear in mind that point about strong releases are a manifestation of
increasing redundancy.
Aki Hussain: Okay. Ben and then Kamran.
Ben Cohen (RBC Capital Markets): I had two related questions. Firstly, could you say how
much good fortune was in the result in the second half of the year, because that is quite hard
to unpack?
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Wednesday, 25th February 2026
Secondly, when we look at the rate declines that you have announced for January renewals,
how should we think about that in terms of how that is likely to feed through into the
combined ratio over the next couple of years?
Aki Hussain: Okay. In terms of good fortune, well, we all need some I think. Jo will provide
a bit of commentary on that. I guess my overarching comment is we have not received any
more good fortune than anybody else, so we are very pleased with the outcome, but Jo will
comment on that.
In terms of rate declines and how that might impact combined ratios and so on. Let me deal
with that. Again, just for completeness, retail business, we continue to forecast 8% growth
and a combined ratio within the 89% to 94% range and with a gradual improvement within
that range as operating leverage and the efficiency programme continues to deliver.
In terms of our Big-ticket business, the eventual combined ratio will be a factor of many
things. The key thing I would ask you to bear in mind is if you go back to Jo's slide on rates
and the quality of the portfolio, the majority of the portfolio, both for Reinsurance and London
Market is in a very good place.
Therefore, the potential for strong earnings growth or
earnings in 2026 remains pretty high.
Joanne Musselle: Yes. Thanks, Aki. Absolutely, when we look at the year as a whole, there
was still $120 billion of industry losses. We started January with the really tragic events in
California. We ourselves reserved $170 million for that event. Majority of that was in our
reinsurance.
Of course, when we talk about the benign second half, yes, absolutely,
particularly the North American wind season was more benign.
Looking at the totality of the year, it was still a pretty active year. The thing that I always
look at, though, is the underlying because the wind can blow or not. Clearly, we respond.
But actually, it is the underlying health of the portfolio. So looking at the attritional loss ratio,
looking at the risk loss ratio.
Across all of our segments, whether that is London Market,
Reinsurance and indeed, Retail, all within expectation. That for me is the real health of the
portfolio is that attritional loss ratio.
So yes, pretty pleased with that underlying claims
performance being within expectation.
Aki Hussain: Thank you, Jo. Kamran?
Kamran Hossain (JP Morgan): First question is on Retail.
Clearly, nine months into the
new strategy, the new plan, things seem to be going very well.
Just trying to work out
whether actually your historic retail combined ratio range now probably looks quite
conservative. If I think of the tailwinds you have got, this year seems to have gone quite
well. You are clearly very excited about the potential benefits from AI. You probably should
have taken a point off that range anyway for DirectAsia last year. If I assume a lot of the
expense savings come into that, it feels like the historic range seems a little bit cautious. You
are nine months in, so I understand that. Just interested in whether you feel more or less
confident on delivering maybe outperforming that number at some stage.
The second question is on share buyback versus dividend.
Clearly, the step-up in the
buyback was great. It reflects the confidence you have in the business. At some stage, do
you expect to change the mix between dividend and buyback? It is not unlike peers, but at
the moment, the buyback is quite a lot bigger than the dividend.
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Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
One last question. I know we talked about AI and data centres. We did not talk about data
centres in space, but that is probably for another day. There is clearly going to be product
demand for AI errors, omissions, hallucinations. What are you seeing in the market for that
at the moment?
Aki Hussain: Okay. Very good. Thank you, Kamran. In terms of underwriting data centres
in space and AI hallucinations, etc., and how we deal with it from an underwriting
perspective, Jo will cover that. In terms of share buybacks versus dividend, Paul will cover
some of the detail.
Suffice to say, certainly for the moment, we are very happy. This is all about balance. We
are striking the right balance in the form and quantum of capital return that we are providing
to shareholders and balancing that against also the investment that we are putting into the
business for both near and long-term growth.
In terms of the Retail COR, the guidance is 89% to 94%. We expect to improve within that
range. We have ideas where we have been at the upper end of that range. We are providing
guidance that we expect over the next few years that we will edge towards the lower end of
that range as the business continues to grow and deliver operating leverage and the expense
efficiency programme and the build out of capabilities that Paul has laid out delivers.
Why do not we go to Jo first on data centres in space. Then Paul, any more colour you want
to add to that.
Joanne Musselle: Yes, absolutely. I will focus on the AI part.
Aki Hussain: Well, that was the core of the question.
Joanne Musselle: Look, we talked a lot today about our own use of AI and maybe our
customers' use of AI.
Just to be clear, we have just as much thought going into how our
customers are using AI and that is going to change the nature of the risks that we insure.
This absolutely is an emerging risk. There is going to be some areas of risk that actually gets
better because some of it is still driven by fat-finger and actually with an AI there is more
consistent in terms of decision-making, maybe some of those errors and emissions actually
improve. There is definitely new areas of risk for sure. We are being really thoughtful about
that.
Certainly, from our point of view, we are not going down the route of blanket exclusions. We
are being really thoughtful around the risks that they present, understanding those risks and
then indeed accommodating those risks, either pricing for them or providing affirmative
coverage. A good example would be in our UK portfolio and our technology. We were one of
the first to confirm affirmative AI coverage within that policy.
The other area that we think about is not just the risk, but actually the opportunity. We are a
specialty insurer for emerging economies, for new economies. There is a lot of people. There
is a lot of investment in AI and data centres and that attached to this digital world that all
need insurance. We are really well placed to be able to provide insurance for the consultant
who happens to be in that AI world. We are also thinking about it from an opportunity point
of view.
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Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
How do we understand the risk, how do we develop our own products and services to help our
customers with that risk and then also how do we broaden our appetite to capture some of
this more new economy in terms of their own insurance needs. But yes, a lot going on, on
that space internally.
Paul Cooper: Thanks, Jo. The nature form structure of capital returns fits squarely within
the capital management framework.
balance sheet.
We will prioritise growth.
We will have a progressive dividend.
We will maintain a strong
Now you have seen that we have
increased our final dividend per share 20% in each of the last two years and then have a
progressive dividend thereafter. When we have done all of that, then the surplus that is left
after that will be returned to shareholders, and that remains the condition.
Aki Hussain: Okay. Chris?
Chris Hartwell (Autonomous): Just two very quick questions, hopefully. First of all, just
on the recent reorganisation within Hiscox Re. I was wondering if you can talk about what
advantages you think that brings? In particular, on Hiscox Capital Partners, where would you
like to see the fee element of Re going over the next few years, and particularly if it is a good
time in the cycle to be doing that?
Then it is probably my lack of understanding or lack of knowledge rather, just on tax and
Bermuda. A lot of your Bermuda peers have been talking about the tax credits that they will
accrue from the recent tax reforms in Bermuda. I guess, two parts to the question. First of
all, if you could help me understand what is your on island expenses or headcount or
something where I could think about that? And if there is anything you can do to really take
advantage of that?
Aki Hussain: Okay. In terms of Bermuda tax, Paul will cover that. In terms of Hiscox Re
and the reorganisation to create Hiscox Capital Partners. Look, as you know, we have had a
long-term strategy using third-party capital that wants to access, frankly, the fantastic
underwriting capability of our Hiscox Reinsurance business.
We have had a number of different verticals. We have had traditional capital in the form of
quota share providers, partners rather. We created ILS funds just over 10 years ago, and
those have evolved. We have a number of ILS funds with different risk levels. We have an
SPV. We have sidecars. We have also then expanded into cat bond fund capabilities.
Frankly, the Re and ILS was a nomenclature, which no longer describes what we actually do.
It is much more mature and much more sophisticated in terms of the different capital basis
that we are managing. That is a first reason for using the new nomenclature.
At this point in the cycle, frankly, last year and this year, we have seen increased interest in
third-party capital coming in to benefit from our underwriting. You heard from Paul earlier,
the AUM, which is the one thing we quote, which is ILS AUM has increased from $1.4 billion at
the start of last year to $1.5 billion at the start of this year, albeit that deployable capital has
gone up a little bit more because we had some outflows and then some new money coming
in.
In terms of fees, again, as you heard from Paul, the last three years of fees have been in
excess of $100 million. So a nice contributor to the Reinsurance business and to the overall
Group. The fees are structured essentially, as you can imagine, two-fold. You have a fixed
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Hiscox 2025 Preliminary Results
Wednesday, 25th February 2026
component and you have a profit commission component. Over the last few years, because
of
the
underwriting
results,
the
profit
commission
component
has
increased
quite
significantly, getting us to over $100 million.
What we have done actually over the last couple of years is also gradually restructured some
of those fees. Now the majority are fixed. In terms of where that fee income will go, well,
there is two major drivers.
One is the quantum of third-party capital that we are able to
deploy. That is going to grow. That will push the fee income up, but then it is down to the
actual results.
Whilst the majority is now fixed versus PC, profit commission.
The PC is still pretty
significant, and that will be determined by the outcome of in-year results. Paul?
Paul Cooper: Tax.
Aki Hussain: Yes. Go for your topic.
Paul Cooper: Yes, the Bermuda-based tax credits, they are small.
millions.
They are single-digit
They are absolutely dwarfed by the introduction of the global minimum tax this
year. You can see that our tax rate has gone from 8.5% to like 17.6%, so that is a big uplift.
What can we do more in order to maximise that benefit? Essentially employ more people on
island that do not need a work permit. That is the driver that will trigger more benefits.
The reality of it is, it is caped at around 150 people. There is a limit to how much additional
benefit you can get out of that. That is the biggest driver for it.
Aki Hussain: Okay. I think we are done. Guys, thank you very much. This is a time of
change, right?
It is time for the nimble and the bold and those who can really turn
imaginative ideas into operational reality.
That describes the culture and capabilities at
Hiscox. These are really exciting times for us. Thank you very much.
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