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Hiscox Group had a particularly busy year in the insurance-linked securities (ILS) space with the launch of a new collateralized reinsurance sidecar and its first catastrophe bond fund. He also raised an additional $140 million for the Hiscox ILS Fund Management Division. He put money into the January update and his fee income doubled.
Insurance-linked securities (ILS) were therefore particularly active during this period for Hiscox, as it sought to deepen investor relationships and build new reinsurance product offerings for third-party capital providers. It was a great time.
The performance achieved by the reinsurance division Hiscox Re & ILS on the underwriting side has enabled the ILS division to almost double its annual ILS fee income in 2023.
At the same time, however, Hiscox expects third-party assets under management to be $1.8 billion through 2023, down slightly from $1.9 billion in the year-ago period.
On January 1, 2024, ILS assets were expected to decrease further to a capital gain of $270 million.
However, this was offset by raising $140 million in new capital in time for the January 2024 reinsurance renewal, including capital from new ILS investors and newly launched Hiscox explained this morning that this included a collateralized reinsurance sidecar vehicle.
As a result, Hiscox ILS segment reported assets under management of $1.6 billion as of January 1, 2024.
Hiscox said the impact of ILS net outflows in 2023 was offset by a combination of increased Hiscox’s own capital allocation and a significant increase in ceded quota share capacity.
“As a result, gross margins were maintained, net income increased significantly, and strong underwriting results resulted in an undiscounted combined ratio of 69.8%, as well as fee income that nearly doubled year over year. “The company explained.
Hiscox ILS will also launch its first disaster-specific bond fund for early 2024, which will “diversify our ILS fund product offering,” Hiscox said.
“All of this will contribute to revenue through fee income earned from 2024 onwards,” Hiscox further said.
For the Hiscox ILS division, the parent company foresees a strong pipeline of further opportunities from 2024 onwards.
Hiscox explained the strategy and reported: “The Hiscox Re & ILS business model provides access to a variety of funding sources, from Hiscox’s own capital to third-party capital, through strategic allocation share partnerships, ILS funds, and more recently through various mechanisms. and disaster bond funds. This strategy enables companies to compete effectively in our area of expertise by increasing scale and reducing the cost of capital, while providing valuable fee income for risk creation and performance-based performance. You can also earn commission on profits.
This strategy is clearly working, and thanks to strong underwriting results, fee income from Hiscox ILS and third-party reinsurance capital business is now ¥5,110, with “significant profit commissions” generated in 2023. It reported an increase from $10,000 to $101.7 million.
With ILS assets under management now likely to stabilize further following the planned capital withdrawal, Hiscox ILS division plans to grow with a broad range of strategies to offer investors and strong performance to attract investors. can.
Mr. Hiscox also commented on the successful issuance of the Ocelot Re Cat bond in late 2023.
“A notable development in the reinsurance market in 2023 is the boom in the natural catastrophe bond market. We issue dollar natural disaster bonds that provide multi-year protection against certain North American storms and earthquakes. Due to strong demand, we have expanded our issue and now offer attractive pricing.
“At Hiscox Re & ILS, we have launched a new disaster bond fund scheme to complement our ILS offering for the January renewal.”
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