HIIG’s Q2 GWP falls on E&S and A&H reductions

Houston International Insurance Group (HIIG) has recorded a drop in gross written premiums in a second quarter that also included $40mn of development on reserves covered by its loss portfolio transfer (LPT) with Randall & Quilter.

In an unaudited interim financial statement, controlling shareholder Westaim revealed that HIIG’s gross written premiums fell 2.2 percent to $253.0mn in the second quarter, from $258.7mn in the prior period.

This was the result of a drop in excess and surplus lines premiums to $66.6mn from $75.2mn, accident and health premiums to $23.6mn from $27.8mn and specialty premiums to $96.6mn from $99.6mn.

In contrast, commercial premiums were up to $66.2mn from $56.0mn.

Net written premiums fell 10 percent in the second quarter to $110.9mn from $123.2mn.

HIIG in the second quarter closed an LPT that provides reinsurance protection of $127.4mn above the net ceded claim reserves, primarily related to 2017 and prior policy years.

HIIG experienced Q2 prior period adverse development relating to reserves covered by the LPT of $40.0mn pre-tax, of which $28.2mn is recoverable from the LPT reinsurer.

Including the impact of the LPT, HIIG’s combined ratio for the second quarter was 140.9 percent, up from 98.2 percent. Net of the LPT recoverable the combined ratio was 111.1 percent, while excluding the LPT altogether the combined ratio was 98.7 percent.

Andrew Robinson took over as HIIG CEO during the second quarter, replacing founder Stephen Way.

Canadian investment holding company Westaim commented: “Andrew brings very strong insurance experience and leadership and will build on the HIIG platform in this favourable P&C insurance market.”

Westaim purchased $44.0mn of HIIG convertible preferred shares in a rights issue during the quarter to maintain its 44.0 percent look-through ownership of HIIG.

Along with the purchase of convertible preferred shares, Westaim recorded a fair value in HIIG of $191.0mn at 30 June compared with $144.8mn at 31 March 2020.

Westaim commented that the expected improvement in industry conditions, combined with operational enhancement initiatives undertaken by HIIG, new leadership and the additional capital contributed in the rights offering “puts HIIG in a solid position to take advantage of the hardening insurance industry environment”.

Westaim added that the pandemic has not had a material financial impact on HIIG.