Hiscox shares surge after wildfire loss as buyback scheme expands

Shares in Hiscox, one of the London stock market’s leading insurers, soared despite the company revealing a substantial $170 million loss from the devastating wildfires that struck Los Angeles in January. The insurer announced it was enlarging its share buyback scheme by an additional $100 million, boosting investor confidence.

Hiscox reported first half net insurance premiums rose 6.2 per cent to $2.94 billion, buoyed by consistent growth across its retail business. The company’s combined ratio, a vital metric for measuring underwriting profitability, stood at a healthy 92.6 per cent, compared to 90.4 per cent for the same period last year. Results reflected steady expansion in key divisions including Hiscox Retail, Hiscox London Market and the reinsurance and ILS arm.

Analysts noted the resilience of the reinsurance division, which managed to deliver underwriting profits despite “the largest wildfire insurance event in history.” The wildfires, which ravaged parts of affluent Los Angeles communities such as Pacific Palisades and Altadena for three weeks, caused Hiscox to absorb a significant $170 million loss. Losses from wildfire claims were reflected in the company’s pre-tax profits, which fell modestly from $283.5 million in the previous year to $276.6 million.

The share buyback scheme, initially capped at $175 million, will now extend up to $275 million. Positive investor sentiment saw shares in Hiscox rise 132p, or 10.5 per cent, to £13.92 during afternoon trading in London.

Chief executive Aki Hussain emphasised the insurer’s robust performance, stating: “We have delivered a strong performance in the first half with profitable growth in each of our businesses. In retail, growth momentum has continued in line with our expectations and we are expanding margins.”

Hiscox is based in Bermuda and provides reinsurance cover to US insurers, accounting for much of its exposure to the Californian disaster. The group’s balance sheet remains robust, supporting continued investment and underpinning confidence in capturing future growth opportunities, particularly within its retail division.

Speculation regarding potential takeover interest in Hiscox has also circulated, with reports suggesting parties from Japan and Italy are evaluating bids and monitoring the situation closely.