Hiscox (LON:HSX) executives told investors the company delivered another year of growth and record profitability in 2025, supported by underwriting discipline, product and distribution innovation, and a record investment result. Management also outlined plans to accelerate retail growth further in 2026 while continuing to manage pricing cycles in its “big ticket” businesses and maintain a strong capital position.
2025 financial performance: record underwriting, investment and profit
Management described 2025 as a “pivotal year,” citing accelerating growth and margin expansion across the diversified portfolio. Group insurance contract written premiums (ICWP) rose by $275 million, or 5.9% (6% referenced elsewhere), year-over-year. The undiscounted combined ratio improved to 87.8%, which executives said was the best in a decade, helping drive a record insurance service result of $614 million.
Segment results: retail growth, London discipline, and strong reinsurance margins
Retail: Retail ICWP grew 6.3% in constant currency to over $2.6 billion, described as broad-based across markets and driven by customer growth rather than pricing. Executives highlighted customer growth of 7.5% and said growth was “not rate dependent,” noting retail rate increases have moderated from about 7% in 2023 to about 2% in 2025. Retail’s undiscounted combined ratio improved to 92.6%, the strongest since 2016, with management pointing to early benefits from the company’s change program. Executives also said retail represented nearly half of group profit before tax, up from just over 40% in 2023.
On a question about the relationship between rate, policy count and premium growth, management said the difference was largely mix: the digitally traded business (direct and partners), with lower average premium per policy, grew faster than the broker business, boosting policy count more than premium.
London Market: London Market returned to growth, with ICWP up 1.6%. Management said the business is navigating a competitive environment through product and distribution innovation while maintaining underwriting discipline. The undiscounted combined ratio was 85.9%, marking the sixth consecutive year in the 80s. Underwriting leadership discussed active exposure management within microcycles, including intentional trimming in some casualty lines as rates declined, while expanding in other areas such as mid-market property and new adjacencies including financial institutions and technology E&O.
Reinsurance: Net ICWP increased 7.9%, driven by growth in pro rata and specialty lines including climate resilience, mortgage, and surety. The segment delivered an insurance service result of $189 million and an undiscounted combined ratio of 67.4%, the third consecutive year “in the 60s,” according to management. Executives also cited fee income of $109 million, above $100 million for the third consecutive year, and said more than $330 million was raised for ILS funds over the last year, with ILS AUM at $1.5 billion as of Jan. 1, 2026.
Strategy and technology: product launches, distribution expansion, and generative AI
Executives emphasized execution against a strategy presented in May 2025 focused on going deeper into retail. Management said premiums from growth initiatives increased five-fold versus the prior year, supported by “more new products than in the last five years” and expanded distribution. Examples cited included a U.S. delegated partner expanding access to its agent network, a U.K. distribution deal expected to begin producing premium in the first half of the year, and a new cyber product launch in France during the fourth quarter that will be rolled out more broadly over time.
Management also discussed generative AI as an emerging force reshaping insurance distribution and operations. The company said it has an established advantage in small commercial insurance, including a global digital platform “approaching $900 million of premium” and “almost 900,000 customers,” with more than 99% of risks on that platform auto-underwritten. Executives said prior investments in core systems and data quality position Hiscox to implement AI tools “relatively quickly at a modest cost.”
- New customer and broker portals in the U.S. and Europe are expected to roll out during the year to personalize purchasing and simplify broker processes.
- AI agents are being deployed into U.S. customer contact centers to provide real-time feedback on sentiment and to assist with claims.
- AI is also being used for marketing analytics and to triage broker submissions in the U.K., with plans to roll out more broadly.
On underwriting of AI-related risks, executives said they are not pursuing blanket exclusions, but are evaluating risk changes and potential opportunities, citing an example of affirmative AI coverage in a U.K. technology policy.
Cost and efficiency: change program targets reiterated
Management said the company’s change program delivered a $29 million P&L benefit in 2025 at a cost of $24 million and remains on track to deliver a $75 million benefit in 2026, with costs to achieve of $75 million. The longer-term target remains a $200 million P&L benefit in 2028.
Actions discussed included improved fraud detection (with some benefits not yet recognized in the P&L due to reserving conservatism), insourcing more than 100 roles into a Lisbon technology hub, reducing property footprint and consolidating suppliers, and decommissioning 20% of applications while launching automation tools. Executives said underlying expenses rose just $6 million, with a 0.8% increase in underlying expenses compared with 5% premium growth in constant currency.
Capital, reserves, and shareholder returns
Hiscox highlighted strong capital generation and increased shareholder distributions. The group ended 2025 with an estimated BSCR of 233% after returning over $400 million of capital during the year. The board ratified a 20% increase in the final dividend per share and announced a new $300 million share buyback, bringing total returns related to 2025 to over $450 million. Following payment of the final dividend and the buyback, management said pro forma BSCR would be 211%, above the group’s through-the-cycle operating range of 190%–200%.
On reserves, executives said the company’s conservative philosophy is unchanged. The risk adjustment was $345 million, increasing the confidence level to 86% (above the stated 75%–85% target range). Management said it expects to trend back within the range over time and emphasized inflation is already built into loss picks. The company reported $293 million of prior-year reserve releases, or 7.2% of opening reserves for 2025, and said all accident years ran favorably versus initial estimates.
Looking ahead, management reiterated retail growth plans to step up to 8% in 2026 and reach double-digit growth by 2028. In reinsurance, the company expects to keep natural catastrophe exposures broadly flat on a net basis while seeking growth in specialty classes. Executives also said January renewals reflected further softening in London Market and reinsurance rates, but maintained that much of the portfolio remains adequately priced, and emphasized continued disciplined cycle management.
About Hiscox (LON:HSX)
Hiscox Ltd, through its subsidiaries, provides insurance and reinsurance services in the United Kingdom, Europe, the United States, and internationally. The company operates through four segments: Hiscox Retail, Hiscox London Market, Hiscox Re & ILS, and Corporate Centre. It offers commercial insurance for small-and medium-sized businesses; and personal lines cover, including high-value household, fine art, and luxury motor, as well as artwork, antiques, classic cars, jewelry, collectables, and other assets through brokers, partners, and direct-to-consumers.
