How Hiscox has benefited from Brexit
Hiscox today has become one of the first companies to show how Brexit can benefit a bottom line, after currency shifts boosted its profits.
The figures
The insurer reported profits before tax of £206m for the half year to June, an increase of 52.5 per cent compared with £135.1m the year before, and gross premiums written of £1.3bn, up 17.5 per cent from £1.1bn.
However, the company noted one of the key causes of its profit growth was foreign exchange movement. Stripping out these gains and losses would bring the company's profit before tax for this period to £118.7m, down 21.3 per cent on the prior year's £150.8m.
Hiscox also announced a boost to its interim dividend, increasing to 8.5 pence per share from eight pence per share last year.
Shares in the company are trading up 1.1 per cent at 1,081p at time of writing.
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Why it's important
Most people watched in horror as sterling swung widely after the referendum results were revealed last month. However, Hiscox triumphed through, gaining £87.3m in total from foreign exchange movements during the six-month period.
The company's Hiscox USA division also performed well during the period, with 32.8 per cent growth in local currency, while the Hiscox Retail unit was the biggest contributor to profit.
Meanwhile, Hiscox London Market delivered 9.7 per cent growth in local currency.
What Hiscox said
"Brexit has caused volatility and sterling weakness, resulting in a foreign exchange gain which has benefited the bottom line, said Bronek Masojada, chief executive of Hiscox. "As this good result illustrates, our strategy, our people and our brand can deliver opportunities."
Masojada later told City PM: "In terms of other things [Brexit will affect for Hiscox] quite frankly it really is too early to tell because insurance, as you know, doesn't move that quickly and so customers are still buying insurance today just like they did yesterday."
Commenting on the insurer's growth across the Atlantic, Benjamin Walter, chief executive of Hiscox USA, explained to City PM the economic conditions were more favourable in the country "which gives [the company] a bit of a tailwind", while the niches it had focused on in particular were performing disproportionately well.
In short
Sterling's swings show up in a company's bottom line, but at least it's for the best.