Recent natural catastrophes have changed the reinsurance market, according to Hiscox.

In its interim management statement, the (re)insurer said the first quarter began with rate reductions in reinsurance lines. But following catastrophe losses, reinsurance rates have returned to 2010 levels with increases in some areas, especially in the Asia Pacific.

“We expect increases to become widespread during the June/July renewal period with potential average rate rises of around 10% in US catastrophe business, as the market is also impacted by the new RMS 11 model,” said the statement.

Overall, Hiscox’s Q1 2011 gross written premium was down 8% on Q1 2010 to £453.5m from £504.1m. Hiscox said the reduction was caused by underwriting discipline and walking away from poorly-rated risks.

Hiscox London Market reduced premium income by 22.3% to £182.4m (2010: £234.8m).

Hiscox Bermuda slightly reduced premiums by 0.6% to £86.8m from £87.3m in 2010.

Defying the downwards trend, UK GWP rose by 8% to £86.2m from £79.8m in 2010, which Hiscox attributed the increase to continued good growth from its direct business, as well as the underwriting partnership with underwriting agency DUAL International.

The statement also said in the first quarter this business cut back in areas where rates were under pressure, mainly reinsurance and professional indemnity. But Hiscox is now looking for growth opportunities, particularly in reinsurance.

Chief executive Bronek Masojada, said: "We continue to underwrite for profit over volume in these tough market conditions. This discipline has allowed us to keep our powder dry and we are ready to take advantage of rising reinsurance rates. Our own reinsurance cover remains substantially in place for the upcoming US hurricane season."