An Update On The Performance Of Hiscox Ltd (HSX) And DCC Plc (DCC)

An Update On the Performance Of Hiscox Ltd (HSX) And DCC Plc (DCC)

Overview

Hiscox Ltd (HSX) is an international insurance group headquartered in Bermuda. The company is known for its strong brand recognition. The company is presently operating in 14 countries having 34 offices with an employee base of 3,300 professionals. The company, through its subsidiaries, operates in the geographical regions of the United States, Asia, Europe, the United Kingdom and Bermuda. The company’s business has been divided into four reportable segments being Hiscox London Market, Hiscox Re, Hiscox Retail and Corporate Centre. The company’s Retail segment contains the Hiscox United Kingdom & Ireland, Hiscox International and Hiscox Europe. The Hiscox division in the UK and Europe provide small- and medium-sized businesses with commercial insurance. The company’s Hiscox London Market division is primarily engaged in the insurance business internationally. The company’s Hiscox Re business is into reinsurance business and underwriting operations in Paris, London and Bermuda. The Corporate centre handles the management activities related to finance costs, administrative costs and investment return.

Trading Update for H1 Financial Year 2019

On 12th July 2019, Friday, the Hiscox Ltd provided highlights for the H1 FY2019’s financial performance. The company expected its PBT (profit before tax) for the H1 FY2019 to be in between $150 to $170 million, including forecasted investment return of $150 million due to positive market movement in Q2 FY2019.

The company expects its segmental performance to be in line with the Q1 and Hiscox Retail’s combined ratio within the range of 90 per cent to 95 per cent. The company also expected the Hiscox Retail growth to be in the centre of the range of 5 per cent to 15 per cent in the H2 of the financial year 2019.

Based on the events such as Hurricane Michael in Florida and Typhoon Jebi in Japan, the insurance market had been deteriorated continuously with a significant scale with increased loss estimates. Based on that, the company had increased its reserves to around $40 million (net) to settle the prior claims. The company expects reserve releases for the H1 FY2019 to be lower as compared to last year.

The Hiscox London Market business had witnessed good recovery and an excellent rate. The company’s Re & ILS business is looking for opportunities in the retrocession market with a reduction in capacity to improve rates.

The company remained committed towards its dividend policy and remained strongly capitalised. The company’s interim results would be published on 29th July 2019, Monday.

Financial Highlights – Financial Year 2018 ($, thousand)

(Source: Annual Report, Company Website)

For the financial year ending 31st December 2018, the company’s Total income surged by 3.24 per cent to $2,658,525 thousand as against $2,575,037 thousand in the FY2017. The company’s Gross premium written for the FY2018 stood at $3,778,341 thousand versus $3,286,021 thousand in FY2017. The company’s net premium earned for the FY2018 stood at $2,573,639 thousand versus $ 2,416,208 thousand in FY2017.

The company’s total expenses stood at $2,486,906 thousand for the FY2018 against $2,508,709 thousand in the FY2017. In the FY2018, the company’s operational expenses stood at $605,718 thousand versus $528,973 thousand in the FY2017.

The company’s Results of operating activities for the FY2018 was at $171,619 thousand versus $66,328 thousand in the FY2017. The PBT (Profit before tax) was reported at $137,375 thousand in the FY2018 as against $39,692 thousand in the FY2017. The company’s PBT excluding FX for the FY2018 was at $151.1 million versus $120.6 million in the FY2017.

The PAT (Profit after tax) attributable to shareholders was reported at $127,999 thousand in the FY2018 as against $33,904 thousand in the FY2017. The company’s Basic earnings per share for the FY2018 stood at 45.1 cents against 12 cents in FY2017. The company’s Diluted earnings per share for the FY2018 stood at 44.3 cents versus 11.6 cents in FY2017.

The company’s total dividend per share stood at 41.9 cents in the FY2018 versus 39.8 cents in the FY2017. The company’s reserve releases stood at $326.5 million in the financial year 2018 as against $324.2 million in the financial year 2017.

Hiscox Ltd Share Price Performance

Daily Chart as at July-12-19, before the market close (Source: Thomson Reuters)

On July 12, 2019, at the time of writing (before the market close, at 4:22 PM GMT), Hiscox Ltd shares were trading at GBX 1,702.00, down by 2.41 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 1,795.00/GBX 1,411.00. At the time of writing, the share was trading 5.18 per cent lower than the 52w High and 20.62 per cent higher than the 52w low. Stock’s average traded volume for 5 days was 375,262.00; 30 days – 439,882.27 and 90 days – 508,869.3. The average traded volume for 5 days was down by 14.69 per cent as compared to 30 days average traded volume. The company’s stock beta was 0.36, reflecting lower volatility as compared to the benchmark index. The outstanding market capitalisation was around £5.02 billion, with a dividend yield of 1.89 per cent.

DCC Plc

The company (DCC Plc) is primarily engaged in providing business support, international sales, marketing and distribution services. The Company’s business has been divided into four operating segments being DCC Technology, DCC Environmental, DCC Healthcare and DCC Energy. The company’s Technology segment provides technology products & services to customers in Europe. It is engaged in the activities related to supply chain, distribution, marketing and sales. The company’s Environmental segment provides services related to resource recovery, waste management and recycling to the construction, commercial, public and industrial sectors. The Healthcare segment provides products and services to healthcare companies and beauty brand owners. The company’s energy segment is providing oil distribution services in the geographic regions of Austria, Ireland, Sweden, Britain and Denmark. The company is having three businesses under its energy segment being Oil, liquefied petroleum gas (LPG) and Retail & Fuel Card.

Interim Management Statement

On 12th July 2019, Friday, the DCC Plc issued a half-yearly management statement.

The company’s Q1 FY20 ending on June 30th was in line with the expectations with decent growth in the operating profit. The operating profit growth was driven by acquisitions done in the FY2018.

The company expects H2 to be more profitable. FY 2020 will deliver higher profits with more development.

The company had successfully completed the acquisition of Amacom in the Netherlands and Comm-Tec in Germany. Both the acquisitions will help the company to build strong relationships with customers and suppliers in Continental Europe.

The company had signed an agreement for the disposal of its UK generic pharma operations and manufacturing facility in Ireland. The company will release its interim results on November 12th, 2019.

Financial Highlights – Financial Year 2019 (continuing operations £, thousand)

 (Source: Annual Report, Company Website)

For the Financial year ending 31st March 2019, DCC Plc’s reported revenue stood at £15,226,893 thousand as against £13,121,671 thousand for the previous year of the same period, up by 16.04 per cent mainly due to an increase in the sale from LPG and Retail & Oil segments in the current financial year.  

The group’s adjusted operating profit for FY2019 stood at £397,210 thousand as compared to £340,341 thousand reported in FY2018. The group’s reported operating profit for FY2019 stood at £369,025 thousand as compared to £295,228 thousand reported in FY2018.

The group’s adjusted PBT (Profit before tax) for FY2019 stood at £351,312 thousand as compared to £304,974 thousand reported in FY2018. The group’s Reported PBT for FY2019 stood at £327,434 thousand as compared to £260,160 thousand reported in FY2018.

The reported profit for the year (continuing and discontinued operations) stood at £271,132 thousand in FY2019 against £266,921 thousand in FY2018.  

The adjusted Basic earnings per share (continuing & discontinued operations) stood at 358.16 pence in FY2019 as compared to 318.35 pence in FY2018. The Basic earnings per share (continuing & discontinued operations) stood at 280.14 pence in FY2019 as compared to 293.83 pence in FY2018.

The adjusted Diluted earnings per share (continuing & discontinued operations) stood at 357.63 pence in FY2019 as compared to 317.21 pence in FY2018. The Diluted earnings per share (continuing & discontinued operations) stood at 279.73 pence in FY2019 as compared to 292.79 pence in FY2018.

DCC Plc Share Price Performance

 

Daily Chart as at July-12-19, before the market close (Source: Thomson Reuters)

On July 12, 2019, at the time of writing (before the market close, at 4:17 PM GMT), DCC Plc shares were trading at GBX 6,846.00, down by 1.38 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 7,450.00/GBX 5,555.00. At the time of writing, the share was trading 8.11 per cent lower than the 52w High and 23.24 per cent higher than the 52w low. Stock’s average traded volume for 5 days was 175,052.60; 30 days – 205,582.87 and 90 days – 207,852.89. The average traded volume for 5 days was down by 14.85 per cent as compared to 30 days average traded volume. The company’s stock beta was 0.98, reflecting the same directional movement of the stock as compared to the benchmark index. The outstanding market capitalisation was around £6.81 billion, with a dividend yield of 1.99 per cent.

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