Hiscox ILS gets net inflows of $561m, taking AuM to $1.9bn

Hiscox ILS, the insurance-linked securities (ILS) and collateralised reinsurance underwriting and investment management unit of the Hiscox Group, had significant fund-raising success through the second-quarter of the year, lifting its ILS assets under management to $1.9 billion.

As we had previously reported, Hiscox ILS had raised up to $200 million for a new special opportunities insurance-linked securities (ILS) fund that was largely deployed into opportunities in Florida’s reinsurance market at the mid-year.

But it seems the Hiscox ILS team had also had successes in raising investor capital into their other ILS fund strategies, with the amount raised far higher.

In reporting its half-year results this morning, parent Hiscox Group revealed that ILS inflows of new capital were one of the factors underpinning growth in its Hiscox Re & ILS division, which is where the ILS fund management operations sit, alongside the broader Hiscox reinsurance underwriting business.

Gross reinsurance premiums underwritten rose by 37.1% to $822.7 million for the first-half of 2022, up from $599.9 million a year earlier.

A key driver of this ability to write more business will have been the ILS capital fund-raising.

Hiscox reported that ILS net inflows were $561 million for the first-half of the year, which took the Hiscox ILS assets under management (AUM) to $1.9 billion as of July 1st 2022.

That’s up from the $1.6 billion of ILS AUM announced after the January reinsurance renewals, when Hiscox ILS raised $217 million in new assets.

It’s also encouraging to note, for Hiscox’s ILS investors, that the Hiscox Re & ILS combined ratio came out at a profitable 80.2% for the half-year, which is up slightly on H1 2021’s 76.7%, but in H1 2022 the figure is after Hiscox had absorbed its Ukraine net losses.

Hiscox said this morning that capital-lite fee income has become a meaningful contributor to the profitability of its Hiscox Re & ILS division and that the new inflows of ILS capital drive balance-sheet efficient fee income for the company.

This delivery of fee income is only going to accelerate now, with a larger pot of ILS capital under management at the Hiscox ILS unit.

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