Hiscox interim results: underwriting gains offset weaker investment returns

Hiscox has reported a stronger underlying insurance performance for the first half of 2026, with premium growth across all three operating segments and a marked improvement in underwriting profitability.

The awkward bit is that this did not translate into higher headline profit before tax. A weaker investment result, including unrealised losses on bonds, pulled reported profit before tax down by 13.1% to $240.5 million.

That contrast sits at the heart of these results. The insurance engine is running well, but movements in financial markets have made the statutory numbers look less impressive.

Hiscox's first-half results at a glance

Key figure	H1 2026	H1 2025	Change
Insurance contract written premium	$3,238.4 million	$2,941.6 million	10.1%
Insurance service result	$255.4 million	$196.2 million	30.2%
Investment result	$128.2 million	$234.9 million	-45.4%
Profit before tax	$240.5 million	$276.6 million	-13.1%
Adjusted operating profit before tax	$331.0 million	$262.0 million	26.3%
Adjusted operating ROTE	20.2%	14.5%	5.7 percentage points
Basic earnings per share	82.3 cents	67.2 cents	22.5%
Interim dividend per share	16.8 cents	14.4 cents	16.7%
Undiscounted combined ratio	90.4%	92.6%	2.2 percentage points better

You can read the original company announcement or visit the dedicated Hiscox Ltd share page for further company coverage.

Underwriting is the main positive

Insurance contract written premium rose 10.1% to $3,238.4 million, with growth in Hiscox Retail, Hiscox London Market and Hiscox Re.

More importantly, the insurance service result increased by 30.2% to $255.4 million. This measures the profit generated from providing insurance services before the investment and financing results.

The Group's undiscounted combined ratio improved from 92.6% to 90.4%. The combined ratio compares claims and operating costs with insurance revenue. A figure below 100% indicates an underwriting profit, and lower is generally better.

The improvement came despite Hiscox reserving an estimated net loss of $60 million relating to the conflict in the Middle East. Of this, $40 million was recorded in Hiscox London Market and $20 million in Hiscox Re.

Natural catastrophe losses were described as largely benign during the period. Investors should remember, however, that Hiscox's exposure to major catastrophe losses is greater during the second half, which includes the most active part of the North Atlantic windstorm season.

Retail growth guidance has been upgraded

Hiscox Retail increased written premium by 8.2% in constant currency to $1,560.7 million. Growth was volume-led, with policy numbers increasing faster than premiums and rates rising by a modest 1%.

Management has upgraded its constant-currency Retail growth guidance for 2026 from 8% to 9%. It also continues to target double-digit Retail growth by 2028.

The segment's undiscounted combined ratio improved from 92.7% to 92.1%, remaining within the target range of 89% to 94%. Its insurance service result rose from $128.0 million to $149.2 million.

Growth was spread across the division:

• Hiscox UK premium increased by 10.2% in constant currency to $530.2 million.
• Hiscox Europe grew by 6.2% in constant currency to $494.6 million.
• Hiscox USA grew by 8.1% to $535.9 million.

This broad base matters. It suggests the Retail acceleration is not dependent on one geography or product, although management is increasing marketing investment to support that expansion.

Big-ticket insurance is becoming more competitive

The picture is less straightforward in Hiscox London Market, where written premium grew 9.8% to $733.2 million. Prior-year premium adjustments contributed 4.5 percentage points, leaving underlying growth of 5.3%.

Rates across its portfolio fell by 5% in aggregate. In major property, rates declined by 14% on renewed business, while Hiscox declined to renew 17% of risks. It also non-renewed 23% of power and renewables business as competition increased.

That discipline is encouraging, but profitability weakened. The London Market undiscounted combined ratio rose from 87.9% to 93.8%, partly reflecting the Middle East conflict loss. Its insurance service result fell from $61.8 million to $44.1 million.

Hiscox Re produced a much stronger result. Its insurance service result increased from $8.5 million to $62.5 million, while the undiscounted combined ratio improved from 99.5% to 70.4%.

However, reinsurance rates fell by 16%, prompting Hiscox to reduce net natural catastrophe exposure. Gross written premium rose 6.4%, but net written premium declined 7.4% to $381.1 million.

This is a good example of management prioritising expected returns over premium volume, although softer pricing remains a risk if it spreads further.

Why reported profit fell

The investment result declined from $234.9 million to $128.2 million. This included $76.0 million of unrealised fair value losses on fixed-income securities, compared with gains of $47.7 million a year earlier.

Hiscox expects these losses to unwind as the bonds mature. They were excluded from adjusted operating profit, where the investment contribution increased from $187.2 million to $204.2 million.

That explains the divergence between reported and adjusted performance. Profit before tax fell to $240.5 million, while adjusted operating profit before tax rose 26.3% to $331.0 million.

Basic earnings per share nevertheless increased to 82.3 cents, helped by a $64.5 million one-off deferred tax asset and a lower average share count. The deferred tax item also added 2.2 percentage points to adjusted operating ROTE, so investors should not treat the full 20.2% return as recurring.

Efficiency savings and shareholder returns

Hiscox's change programme delivered a $45 million profit and loss benefit during the half, at a cost of $39 million. Management remains on track for benefits of $75 million in 2026 and $200 million in 2028 and onwards.

Underlying administrative expenses increased by just 0.4% in constant currency, compared with 8.0% gross premium growth. This operating leverage helped reduce the administrative expense ratio from 16.9% to 16.1%.

The Board raised the interim dividend by 16.7% to 16.8 cents per share. The $300 million share buyback was 32% complete at 30 June, with the remainder expected to finish before the full-year results.

Capital remains strong, with an estimated Bermuda Solvency Capital Requirement ratio of 224%. The Group also reported more than $1 billion of holding-company liquidity.

What investors should watch next

These are solid underlying results rather than an entirely clean set of headline numbers. Premium growth, the improved Group combined ratio, upgraded Retail guidance and progress on efficiency savings all support the investment case.

The main areas to monitor are softer pricing in London Market and reinsurance, second-half catastrophe exposure and whether Retail can maintain growth while gradually improving margins.

Investors should also separate operating progress from accounting benefits. The $64.5 million deferred tax asset helped earnings and returns, while bond valuation losses reduced reported profit. Neither tells the whole story alone.

For now, Hiscox appears to be balancing growth with underwriting discipline. The next test is whether that discipline holds as competition intensifies and the Group enters the more catastrophe-exposed second half of the year.