Hiscox ILS assets rise back to $1.5bn in Q3, sees robust investor pipeline ahead

Hiscox ILS, the dedicated insurance-linked securities (ILS) management arm of the global re/insurer, saw its ILS assets under management (AUM) recover back to $1.5 billion in the third-quarter of the year and the company is seeing growing interest from investors.

The Hiscox ILS unit started 2024 launching a new collateralized reinsurance sidecar vehicle and its first catastrophe bond fund, as well as a $140 million capital raise for the January renewals.

The year also saw additional capital raises as well as efforts to facilitate liquidity events for investors as reported first in May and again for the mid-year, which while resulting in a decline in assets under management has put the Hiscox ILS platform on a stronger footing with more deployable ILS capital available.

Hiscox ILS saw its overall ILS assets under management fall to $1.4 billion by July 1st, down from $1.5 billion at April 1st, as planned investor redemptions roughly equalled newly raised capital.

Now though, the ILS investment unit of Hiscox has seen a return to positive AUM growth, reporting $1.5 billion again as of September 30th 2024.

This morning, Hiscox said it continued to grow thanks to capital deployment through its reinsurance and ILS division, with insurance contract written premiums at Hiscox Re & ILS rising 12.0% to $491 million in the third-quarter of the year.

The company said that “the business deployed additional capital into the attractive underwriting conditions,” and overall net premiums have now more than doubled across the reinsurance and ILS business at Hiscox since 2020.

Most of this growth was achieved at the January renewals, when market conditions were most attractive, Hiscox reported this morning.

Hiscox sees a positive outlook for reinsurance through the end of this year and into the 2025 renewals.

The company said this morning, “The market has remained disciplined throughout the year, with rates flat on average across our portfolio for the first nine months of the year. The market remains attractive following cumulative rate increases of 90% since 2018. Attachment points and terms and conditions have broadly held firm during the year.

“We continue to see strong and growing demand from cedants, which has been met by supply, but at an appropriate price. As anticipated, at the mid-year renewals there were some rate reductions in the upper layers of structures and on higher quality business, however these were from generationally high levels.

“The positive outlook for the January 2025 renewal rates is likely to be reinforced following the impacts of Hurricanes Helene and Milton.”

As well as positive reinsurance underwriting conditions, Hiscox is anticipating positive ILS capital raising conditions as well, it seems.

The company reports that, “The pipeline of potential investors ahead of the January renewals is robust.”

Adding that, “Hiscox ILS assets under management were $1.5 billion as at 30 September 2024.”

Finally, Hiscox also said that it expects to reserve a net loss of $75 million for hurricane Milton in the fourth-quarter, based on an industry insured loss of $40 billion.

This loss will be split broadly equally between Hiscox London Market and Hiscox Re & ILS.

Aki Hussain, Chief Executive Officer, Hiscox Ltd, said, “The Group continues to deliver a solid performance, with our combined focus on building growth and earnings momentum. Our priorities of achieving high quality growth in all markets in our Retail business, and selectively deploying capital into attractive big-ticket lines, are unchanged and we continue to make significant progress against the Group’s strategy to deliver sustainable, less volatile returns while growing the business.”