UPDATE 2-Insurer Hiscox plans 200 mln stg capital return

Mon Feb 25, 2013 9:58am GMT

Quotes

   

* Plans 200 mln stg capital return

* FY pretax jumps to 217.1 mln vs 17.3 mln

* Chairman calls for united trade body to fight regulation

* Shares up 2.5 percent to new record high

By Sinead Cruise

LONDON, Feb 25 (Reuters) - Insurer Hiscox Ltd plans to return 200 million pounds ($305.3 million) to investors after Superstorm Sandy failed to derail a bumper year of growth in its global underwriting business.

Bermuda-based Hiscox, whose policies cover everything from oil refineries to fine art, posted a more than 10-fold rise in pretax profit to 217.1 million pounds in the year to Dec. 31 from 17.3 million a year earlier and said it would share much of the sum with investors via a special dividend and share scheme.

Its shares climbed 2.5 percent to an all-time high of 510.75 pence after Chief Executive Bronek Masojada said his team's solid underwriting performance ensured 2012 felt like a more "normal" year, despite being the third-most expensive year on record for major catastrophes.

"We dealt with record flood activity in the UK, Superstorm Sandy in the U.S., fine art thefts in Europe, fires in substantial properties across the world and the sinking of Costa Concordia," Masojada said.

"A return on equity of 16.9 percent is therefore a good result".

Hiscox's London Market arm reported profit of 121.9 million pounds compared with 57.6 million pounds in 2011. Revenue in its USA business grew by a third to $230.5 million.

The company said it would pay a final dividend equivalent to 12 pence per share, taking the total for the year to 18 pence, an increase of almost 6 percent on 2011.

LARGEST LOSS

A five-fold increase in claims related to UK flooding, and a London house fire that resulted in the group's largest ever single loss, trimmed profit at Hiscox's burgeoning UK retail business to 45.2 million pounds from 49 million.

In his last chairman's statement before handing the reins to Robert Childs, insurance veteran Robert Hiscox urged a plethora of trade groups to form a new body to lobby more effectively against what he saw as ill-conceived regulation, led by Britain's Financial Services Authority (FSA).

"The FSA has taken virtually all self-regulation away from our industry, which means that by definition we are invigilated and regulated by people with little or no trading experience in our business," he said.

"We in the industry know when a competitor is going to go bust as we trade against them and see the folly; we ought to have a system of warning the regulator. And we desperately need a strong lobby to fight for us in the corridors of power."

Hiscox reserved special criticism for the architects of Solvency II, a sweeping piece of regulation aimed at reducing the risk of insolvency within the insurance industry.

The new rules, which have been dogged by implementation delays despite being 10 years in the making, require insurers to hold higher capital reserves against their underwriting books.

"It was surreal to have a one-size-fits-all model ... inflicted on us in minute detail by actuarially driven regulators, combined with corporate governance diktats imposing huge expectations on non-executive directors," he said.