Hiscox Ltd

Hello and welcome everyone to the Hiscox Q3 2025 Trading Update with Paul Cooper, Hiscox Group CFO. My name is Becky and I'll be your operator today. All lines will be muted throughout the presentation portion of the call with a chance for Q&A at the end. If you wish to ask a question at this time, please press star 551 on your telephone keypad. I will now hand over to your host, Paul Cooper, to begin. Please go ahead.

Thanks. Good morning everyone and welcome to our Q3 trading update. I'm Paul Cooper, Group CFO and today I'll cover growth, our change program progress, claims and investments. After that we will turn to Q&A. The Group's diversified business model is delivering compounding growth in retail and high quality opportunities in big ticket. This provides us with the capability to grow profitably through the cycle. The Group's ICWP is up 5.9% year-on-year to over $4 billion, with all three business segments delivering growth as we execute on our strategy. The multi-year momentum in retail continues, with the business on track to achieve constant currency growth in excess of 6% for the year. In Big Ticket, we remain focused on underwriting excellence in risk selection and disciplined pricing, London market has won attractive opportunities in a competitive market. In real IRS, through disciplined capital deployment, we have delivered net and gross growth. Let's dive into this by segment, starting with retail. Retail ICWP grew 7.3% in US dollars. In constant currency, this was 6.1% for the nine months, and 6.3% for Q3 Discrete driven by customer volumes in all markets as rates remained steady at 2%. In the UK, constant currency growth of 8% was underpinned by investments in technology, our reward-winning brand campaign and the many large distribution deals we have won over the last two years. Our European business delivered constant currency growth of 7.1%, driven by double-digit growth across our two largest markets, Germany and France. In the US, US BPD grew by 6.7%, underpinned by continued double-digit growth in digital direct. Digital partnerships grew mid-single digits, as the team worked to build momentum from new and existing partners through targeted incentives, and further enhancements to the sales journey. US broker premiums reduced by 1.2% due to a slower rate of new business growth in some classes of business. This trend is expected to reverse in the fourth quarter as a strong pipeline of growth opportunities is developing. With growth at 6.1%, new business growing at double digits, and momentum building across retail from distribution deals, brand investments, and new technologies, Hiscox Retail is well on track to deliver constant currency growth in excess of 6% for the year. Now moving on to London market, ICWP increased by 2.5% as a business found opportunities in a competitive market. In aggregate across the portfolio, rates are down 4% year to date and we are maintaining discipline and managing the cycles. This includes areas such as major property and commercial lines, where rates are down double-digit, and in casualty, where cyber and DLO rates have reduced for the third consecutive year. Nonetheless, we have been selective in finding opportunities for good quality growth, for example in our energy construction and portfolio deals in property. We are also expanding into new opportunities such as US middle market property, SME Cargo, and FI, leveraging our existing expertise and tech capabilities to access new markets. Hiscot 3 and IRS achieved net ICWP growth of 7%, driven by growth in specialty lines as we execute on our strategy to diversify our portfolio in a transitioning market. ICWP growth was 6.5%. While rates have reduced 5%, the business remains well-rated, with cumulative increases of 83% since 2018. Attachment points and terms and conditions have broadly held. ILS AUM was $1.3 billion at Q3, and we see a robust pipeline of potential investors ahead of 2026 renewals. Turning to our change programme. we continue to make good progress and remain on track to deliver our full-year targets. Developments in the third quarter include the selection of a new IT services provider, giving us access to an advanced service management platform that will automate and streamline business processes, and the signing of an exciting multi-year collaboration with Google, as well as further enhancing our claims fraud and recovery capabilities. Turning to claims. Claims experience for the group has been well within expectations in the third quarter. This has been underpinned by our underwriting excellence and further complemented by a largely benign experience from natural catastrophe and large man-made losses. This experience and the diverse earnings profile of the group have resulted in strong capital generation continuing in the third quarter. In terms of investments, The net investment result is $350.8 million, representing a year-to-date return of 4.2%. This has been driven by a strong coupon and cash income and mark-to-market gains. The reinvestment yield on the fixed income portfolio is 4.2%, with a duration of two years. The group's short duration and high-quality fixed income portfolio positions Hiscox well. To conclude, All three segments are growing. Retail momentum continues with the business on course to deliver constant currency growth in excess of 6% for the year. Our change program is on track. In terms of capital, capital generation continues to be strong. We have completed 65% of our $275 million buyback. Our final 2025 dividend per share will increase 20%, subject to final ratification by the Board, and as usual, the Board will consider any surplus capital returns ahead of the four-year results. This concludes my opening remarks, so I will now hand over to the Operator to start Q&A. Operator, over to you.

Thank you. If you wish to ask a question, please press Start followed by 1 on your telephone keypad now. If you feel your question has been answered or for any reason would like to remove yourself from the queue, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Will Hardhouser from UBS. Your line is now open. Please go ahead.