(Reuters) - Lloyd’s of London underwriter Hiscox (HSX.L) reported a more than 90 percent fall in annual pretax profit after a record year globally for insurance losses due to natural disasters took its toll.
Hiscox joined rival Beazley BEZG.L and Lancashire (LRE.L) in highlighting that insurers can claw back some of their losses by raising premiums for customers.
“Market pricing has improved and as a consequence we have growth ambitions for every part of our business,” CEO Bronek Masojada said.
The insurer reported pretax profit of 30.8 million pounds for 2017, marginally ahead of analysts’ expectations of 29.9 million pounds, according to company-supplied consensus estimates.
Hiscox suffered a $225 million bill for claims in 2017, a “historic year for natural catastrophes”.
“Following the catastrophes in the third quarter, we adjusted course and reworked our business plans to grow as prices rose... we have achieved good price rises in property, casualty and catastrophe-exposed lines,” Chairman Robert Childs said.
Hiscox's shares were down 4.4 percent at 1334 pence at 0855 GMT, making them the second biggest fallers on the FTSE Midcap index .FTMC.
Insurance industry premiums, pressured by tough competition, are now rising after the industry faced record bills from hurricanes, earthquakes and wildfire of over $135 billion last year.
“Prices have gone up in the bigger ticket areas. They have gone up nicely. We would like them to go up some more, but at the current levels, we see real opportunities,” Masojada told Reuters.
If the industry gets another big bill from catastrophes this year, prices would rise further, Masojada said.
Hiscox had raised its 2018 capacity - the amount of risk it can underwrite - to 1.6 billion pounds, from 450 million pounds in 2017, to participate in a “widespread market turn”.
“We do see the opportunity to grow in our London market and reinsurance business ... Of the 16 lines of business we do in the big ticket area, 14 of them saw prices rise on Jan. 1.
Peel Hunt analyst Andreas Van Embden said the growth plans marked a change of strategy as the company had planned to shrink in 2018 following soft market margin pressure.
Childs also pointed to a “regulatory burden” faced by insurers: “It’s hard not to feel tormented by regulation.”
“We are working hard to navigate geopolitical issues such as Brexit, US tax reform, General Data Protection Regulation (GDPR) and New York’s Cybersecurity regulation,” he said.
Hiscox has picked Luxembourg as its Brexit subsidiary and Masojada said the business would be operational by the end of 2018.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair