Final Results - Year Ended 31 Dec 1999, Part 1

Hiscox PLC
16 May 2000


Part 1


HISCOX PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS 1999


CORPORATE HIGHLIGHTS

- Group gross written income up 34% to £323.7 million

- Group operating profit £5.4 million (1998 - £12.2 m)

-   The   Hiscox  Insurance  Company  operating  profit   before
equalisation  provisions up to £3.2 million (1998  loss  £0.7m).
Good  first  quarter of 2000 - income up over 20%  and  combined
ratio under 100% (1999 Q1 - 110%)

-  The  Hiscox  Insurance Company (Guernsey) profitable  in  its
first year

- European underwriting agencies increased premium income by 62%
to £9.4 million

-  Syndicate  33  achieved 10% rate increases over  last  twelve
months

- £75 million letter of credit raised

-   Launch  of  the  first  fully  automated  online  high-value
household  insurance product.  Distribution  deals  signed  with
Hemscott and other leading online service providers.


Chairman Robert Hiscox said:-

'Profits  are  down this year, but we are now  in  a  period  of
exciting and sustainable development.  The investments in people
and  projects are paying off and I believe that the  Company  is
intrinsically  more  valuable than it has  ever  been  with  the
structure  and  the  talent to make a swift  return  to  growing
profits.  The figures for the first quarter of 2000 prove firmly
that the trend is up.

We  are  building  a  balanced  underwriting  business.   Inside
Lloyd's,  Syndicate 33 has increased rates by 10% over the  last
twelve months, and outside Lloyd's, the Hiscox Insurance Company
has  demonstrated further progress in an excellent first quarter
of  2000 with premium income up over 20% with the combined ratio
falling  to  under 100% (1999 Q1 - 110%).  Our internet  trading
will  accelerate later in the year, so all the portents are good
for profitable growth.'

The  Chairman's statement, the Chief Executive's report and  the
Group's  financial statements as at 31 December,  1999  will  be
available on the Hiscox website, www.hiscox.com.

For further information please contact:
Robert Hiscox, Bronek Masojada, Stuart Bridges - Hiscox plc  020
7448 6000
Philip  Gawith,  Suzanne Bartch - The Maitland  Consultancy  020
7379 5151



CHAIRMAN'S STATEMENT

RESULT

The result for the year ended December 31 1999 was an operating
profit of £5.4 million (1998 - £12.2 million).

We  are acutely aware of our ambition to increase value to  our
shareholders  and  that this has not been achieved  this  year.
However,  we  are  now in a period of exciting and  sustainable
development  and  I believe that the Company  is  intrinsically
more valuable than it has ever been with the structure and  the
talent  to  make a swift return to growing profits. The  Hiscox
Syndicate  33  at  Lloyd's  has been through  an  exceptionally
challenging period but is forecasting results above the  market
average.   The  Hiscox  Insurance  Company  made  further  good
progress  despite  highly competitive conditions.   The  Hiscox
Insurance Company (Guernsey) had an extremely good first  year.
The  European  offices  each  increased  their  revenues,  with
Germany in particular making rapid strides.  Extensive work has
been  done to use the internet to market and sell our  products
and to lower transaction costs.

Group  controlled premium income has increased from £483.8m  to
£537.7m.   Premium  income applicable to Hiscox  plc  increased
from £241.3m to £323.7m.

DIVIDEND

The  Directors propose maintaining the final dividend  at  2.3p
net  (1998 2.3p net) per ordinary share making a total dividend
for the year of 3.5p net (1998 3.5p net) as we are confident of
a return to satisfactory profits.  The dividend will be paid on
19 July 2000 to shareholders on the register on 26 May 2000.

THE STRATEGY

Our  objective is to grow shareholder value by building  Hiscox
plc  into  a major specialist insurer.  We will underwrite  the
large,   complicated   and   more   volatile   insurances   and
reinsurances in which we specialise through Syndicate 33, using
the  brand, licenses and security rating of Lloyd's.   We  will
balance  this London Market business with the Hiscox  Insurance
Company which will underwrite a steadier more retail account in
London and in regional offices.

In  all  underwriting, we will focus on areas in which  we  are
expert  and  in which we are major players.  We do not  believe
that  being  big  overall is any recipe for profitability,  but
being  big  in  the specific classes in which we specialise  is
important.

The  strategy of building a strong business outside Lloyd's  is
bearing  fruit  as  the Hiscox Insurance  Company,  the  Hiscox
Insurance  Company  (Guernsey), and  our  regional  offices  in
Amsterdam,  Harrogate, Munich and Paris  increase  revenue  and
yield profits.

We  believe  that  a strong Hiscox brand is a  vital  marketing
tool.   We  want our customers, be they intermediaries  or  the
ultimate  client,  to want to do business with  Hiscox  because
they  are  confident that they will get quality, integrity  and
service.   We are 'One Hiscox', with one brand and one  way  of
doing  business,  whether  it is  in  the  London  market,  the
insurance company or in a regional or overseas office.

REPORT ON OPERATIONS

Bronek  Masojada, the Chief Executive, covers the  business  in
detail in his report which follows.  I would just like to  pick
out a few salient points.

SYNDICATE 33

Hiscox plc now supplies 53% of the capital to Syndicate 33  for
the  2000 account (51% - 1999).  We acquired the extra capacity
in  the auctions for 7.5p per £, and we are content to be  paid
to  underwrite as agent using the capital of others rather than
pay too much to acquire the outstanding capacity.

Syndicate  33,  led  by Robert Childs, is  a  world  leader  in
political   risks,   the  insurance  of   international   trade
transactions  and  investments, was hard hit  by  the  economic
turmoil in 1998 and the consequent plummet in commodity prices.
Losses  continued to accrue from this account  in  1999.   This
account  has  been an excellent profit earner in the  past  and
will  be again.  Another account which has yielded good profits
for the past few years, the reinsurance account, was hit by the
second   worst   year  on  record  for  insured   catastrophes,
culminating  in the 'Storm of the Century', which swept  across
mainland  Europe  in December.  We benefit greatly  from  these
accounts  in  years of low loss incidence, so we must  not  and
will not flinch when we are called upon to perform.

Combine  these  major  losses with  the  lowest  premium  rates
experienced   in  living  memory  and  you  had  an   extremely
challenging time for the Syndicate, especially as  in  1998  it
had  absorbed the two marine syndicates with what proved to  be
rapidly  deteriorating  accounts.   Despite  outperforming  the
market,  it  may make a loss in the 1998 account, but  that  is
behind  us  and we are now in better market conditions  with  a
stronger syndicate able to write a broad spectrum of risks.   A
massive  amount  of  work has gone into  refining  systems  and
analysis  which  enables us to be more selective  and  to  coax
profits out of narrower margins.

LLOYD'S

Last  year  I  commented  on  the apparent  ignorance  of  some
underwriters facing inevitable losses.  Since then the red  ink
has  flowed, and reality has caused certain insurance companies
to withdraw from Lloyd's and the London Market which has had  a
beneficial effect on rates.

I  also  criticised the ease of entry to Lloyd's which devalues
the  franchise, causes unnecessary competition and a threat  to
our  capital  from incompetent underwriting.   The  Council  of
Lloyd's  has  since made a modest increase in  charges  to  new
businesses entering the market and is tightening standards  for
both  new and existing businesses which is a move in the  right
direction.

Decision making and implementation of change by the Council has
slowed  to  a  crawl following the satisfactory  conclusion  of
Reconstruction and Renewal in 1996.  A major reason is that 80%
of  those  voting  for the working members of  council  are  no
longer actively underwriting as Names in the market, so  it  is
not a surprise that those elected do not represent the business
of the market - underwriting. Only one member of the Council, a
representative  of  corporate capital, has  any  experience  of
underwriting   in  Lloyd's.   In  this  fast   moving,   highly
competitive  world,  we need a board of businessmen  and  women
experienced  in our business to run the Lloyd's  franchise.   I
and   others  have  been  applying  pressure  to  improve   the
representation  of the underwriting businesses on  the  Lloyd's
Council.

HISCOX INSURANCE COMPANY

The  Hiscox  Insurance Company has had another year  of  highly
satisfactory  progress,  despite the  'Storm  of  the  Century'
which   did   extraordinary  damage  in  France,  producing   a
substantial  gross  loss to the company which  was  reduced  by
reinsurance to reasonable proportions.

An exciting development in the company has been the vindication
of  its concentration in the insurance of the technology, media
and telecommunication (TMT) industries, in which area it is now
combining with Syndicate 33 to offer all-embracing packages  of
cover.  Sian Fisher, the Chief Underwriting Officer, has  built
a  book  of specialist professional indemnity insurance  within
which   five  years  ago  she  identified  TMT  as  the  growth
industries of the future.  If you have a website or  use  email
or  the internet, you need a Hiscox Cyberliability policy.   We
anticipate   good  growth  from  TMT  and  other   professional
insurances in which we specialise.

The High Net Worth account is growing satisfactorily in the  UK
and  mainland Europe.  It has suffered from rampant competition
and high loss levels, especially from the catastrophic winds in
Europe  at the year-end, but rates have been increased  in  the
UK,  competition has reduced and the internet is being used  to
attract  business  and  to  reduce costs  between  us  and  our
brokers.

www.hiscox.com

We  have  launched  Hiscox  Online to  attract  mid  net  worth
business from professionals, executives and others who will use
the  internet  to  purchase  insurance.  Our  online  household
product  can  be  introduced  to  clients  by  brokers  or  net
intermediaries,  and  they can receive introductory  commission
with  no  expense of servicing the business.   We  are  thereby
expanding our specialist household insurance to a wider market.

We  have embraced the new technology and the internet.  We  use
it  as an intra-business tool to reduce internal costs; we  use
it  as  a  business to business tool to improve efficiency  and
reduce  costs  in  our  transactions  with  intermediaries;  we
specialise  in  the insurance of the users of it,  and  we  are
using  it as a marketing and sales medium.  All of these facets
reduce  costs  or increase our revenue, so we are getting  real
value out of it now.

PEOPLE

I say every year, and I only say it because I mean it, that the
most  important ingredient to the success of this  business  is
the  people  who work in it.  My greatest sense of  achievement
comes  from having persuaded some very talented people to  join
me  in building the business - in particular, way back in 1973,
Nicholas  Thomson.   He and I get great pleasure  from  working
with the next generation - Bronek Masojada, Robert Childs, Sian
Fisher  and  the Finance Director, Stuart Bridges who  complete
the executive group which runs the Company, with extremely able
support  from a growing depth of talented people.   Bronek  has
concentrated on employing top grade staff for the six years  he
has  been with us, and talent is burgeoning up from below.  The
fact that we have replaced some high level posts from within is
a  reflection on the success of that policy.  I would  like  to
thank  everyone  in  the  Company  for  their  hard  work   and
enthusiasm.   This  year's result is not a true  reflection  of
their dedication, but the future years will be.

THE FUTURE

2000  (our  100th  year) has started with a genuine  cause  for
optimism.  The obituaries of the insurance cycle were premature
and  the  graphs  are  moving  in the  right  direction  again.
Syndicate 33 has achieved overall rate increases of 10% in  the
last  twelve months. The run-off of our 1998 and 1999 years  of
account   is   developing  within  expectations,   though   the
possibility of late reported claims on these accounts  remains.
In  the first quarter of 2000, the Hiscox Insurance Company has
accelerated its progress and increased revenues by over 20% and
reduced the combined ratio to under 100% (1999 Q1 - 110%).

Following  the  merger mania of the past few  years,  a  recent
report  by  a leading consultancy found no correlation  between
increasing  the  size  of  insurance companies  (by  merger  or
acquisition)  and  superior levels of growth, profitability  or
shareholder  value.  The doctrine of size  (in  which  we  have
never  believed) is being rightly replaced by the  survival  of
the  fastest,  and  we have the tremendous advantage  of  short
reporting lines and swift decision making.

We  have harnessed the new technology to increase business  and
to  reduce  costs.   However,  the computer  will  not  replace
relationships,   and   we  will  continue   to   forge   strong
partnerships with fellow spirited intermediaries and  will  use
the  technology to win business together with flexible decision
- making and lower costs.

We  will pursue our strategy of specialisation and being big in
the  areas in which we focus.  We have the right stuff  in  our
people;  they  have the right tools to grow  the  business  and
shareholder value.

Robert Hiscox
Chairman
16 May 2000


CHIEF EXECUTIVE'S REPORT

Our strategy remains to build and maintain leading positions  in
a  number of specialist areas.  We recognise that we are not big
when measured against some of the global giants, but we seek  to
be  a  large  player in the niches in which we participate.   We
achieve  this  by  creating  products  that  combine  specialist
knowledge  with  our  risk appetite to meet  the  needs  of  our
clients and their brokers.  Crucial to this business approach is
the attraction and retention of good staff.

Our  focus  on meeting the needs of clients does mean that  when
they  suffer  loss we are happy to pay valid claims quickly  and
efficiently.    At times when our clients suffer  above  average
level  of  losses  -  as has happened in certain  areas  of  our
business this year - we expect there to be a short-term  adverse
effect  on our profits. We believe that in the longer term  this
business philosophy enhances our market position to the ultimate
benefit of our shareholders.


GROUP FINANCIAL PERFORMANCE

Group operating profit before tax declined to £5.4m in 1999 from
£12.2m in 1998.  The Group made a pre-tax profit of £0.1m  (1998
£15.3m).  The  decline  in both operating  and  pre-tax  profits
reflects in part the higher level of losses suffered in  certain
areas,  but  is also a reflection of the weak prices which  have
prevailed  in  the wholesale markets during the year.   Table  1
sets  out  the  important components of the  business,  and  the
trends within each are explained below.


Table 1
                                1999     1998
                                  £m       £m
Gross Written Premium          323.7    241.3
Trading Result                   9.0     11.0
Other income less expenses     (3.6)      1.2
Operating Profit                 5.4     12.2
Equalisation provisions,       (5.3)      3.1
Sale of capacity and
Investment fluctuations
Group Pre-Tax Profit             0.1     15.3

-  The  decline in our operating profit is entirely due  to  the
performance  of  our  Lloyd's  based  activities.   The   Hiscox
Insurance  Company  improved its operating profit  significantly
and our newly established insurance company in Guernsey made  an
initial contribution to Group profits.

- Other income includes the aggregate performance of our Lloyd's
managing  agency and our underwriting agencies in  Europe.   The
decline  in  the  profitability of our Lloyd's underwriting  has
resulted  in  a  decline in the profit commissions  due  to  our
managing agency.  We have also maintained our net investment  in
Europe.

-  The  difference between operating profits and pre-tax profits
reflects  the  net  effect of equalisation provisions,  sale  of
capacity and short-term fluctuations in investment returns.   In
1999 we did not benefit from the £2.5m gain on the sale of third
party  capacity which we made in 1998 following the  acquisition
of  Hiscox Select.  In 1999 we have suffered a charge  of  £3.7m
due  to  the  under performance of our actual investment  result
versus  the  long-term rate.  In 1998 we benefited from  an  out
performance gain of £2.2m. Equalisation provisions contributions
have reduced slightly to £1.6m (1998: £1.7m).

These  results  are  in  part  a reflection  of  broader  market
conditions.  Good performance in our regional business has  been
masked by the declines within our Lloyd's activities.  In  order
to give shareholders a better understanding of our business, the
financial performance of each division is reviewed below.


LLOYD'S BUSINESS

Our  Lloyd's business comprises the activities which we  conduct
through Syndicate 33 and the related managing agency activities,
together  with the run-off of the third party capacity  acquired
in 1998 with the purchase of Hiscox Select Insurance Fund.

Table 2
                              1999      1998
Lloyd's                         £m        £m
                                            
Gross Written Premium        416.1     393.7
(100%)
Hiscox plc share of Gross    202.0     151.3
Written Premium
Combined Ratio              104.3%     94.4%
(100% basis)
Trading Result                 5.2      11.7
Profit Commission            (0.5)       8.0
Other Income less            (1.2)     (5.6)
expenses
Operating Profit               3.5      14.1

The  change in combined ratio of Syndicate 33 to 104.3% in  1999
from  94.4% in 1998 reflects the tough environment in which  the
business operated.  Low prices combined with higher than average
frequency of natural catastrophes - including the impact on  our
reinsurance  account of the December 'Storm of the  Century'  in
continental Europe  - and the advice of further political  risks
claims all drove down our trading result.

In  1999 we grew our share of Syndicate 33 to 51%, from  25%  in
1998.   This rapid growth in share causes 'new business  strain'
which  has the effect of depressing current year performance  as
we assume a greater proportion of current year expenses.

New business strain and the deterioration in combined ratio gave
rise to a trading result of £5.2m, compared to £11.7m last year.
Non-aligned  capacity  contributed £1.5m  to  the  1999  result,
compared with £1.5m last year.

The  aggregate business performance of the division reflects not
only  the  trading  result,  but also  the  performance  of  our
managing agency activities, interest, goodwill, expenses and the
investment return on capital. The level of our profit commission
largely  reflects  the profitability of our managed  syndicates.
As the results of the underlying syndicates have reduced, so the
profit commission has declined.


REGIONAL ACTIVITIES

Our   regional   activities   have  continued   their   positive
developments.  Operating profits improved by £3.8m to  a  profit
of  £1.9m.   The  improvement in performance  came  from  better
results  within  Hiscox Insurance Company and an initial  profit
from  our activities in Guernsey.  The detailed trends  in  each
are reviewed below.

Table 3
                                1999     1998
Regional Activities               £m       £m
Hiscox Insurance Company                     
Gross Written Premium           97.8     90.0
Combined Ratio                102.6%   108.0%
Trading Result                   3.2    (0.7)
Underwriting Agencies          (1.6)    (1.2)
Hiscox Insurance Co              0.3        -
(Guernsey)
Operating Profit                 1.9    (1.9)

-  The  Hiscox  Insurance Company's trading result has  improved
from  a  loss of £0.7m to a profit of £3.2m.  This reflects  the
better combined ratio of 102.6% in 1999 compared with 108.0%  in
1998.   The improvement has been achieved by maintaining expense
levels   whilst  growing  the  business  at  good  loss  ratios.
Particularly  strong  growth  was  achieved  by  our   specialty
professions  business whilst our affinity  and  property  owners
business achieved good loss ratios.  This strong performance was
offset, in part, by an above average level of losses within  our
high value household business.

-  We have strong evidence in the first quarter of 2000 that the
Hiscox   Insurance  Company  will  continue   to   grow   whilst
maintaining expense ratios and improving loss ratios, leading to
further improvements in the trading result.

-  The  net  investment  in our European  underwriting  agencies
remained  at  approximately the same level from  1998  to  1999.
They  generated a total premium of £9.4m (1998 £5.8m) on  behalf
of  Hiscox Insurance Company and Syndicate 33.  We have steadily
proven the value of the Hiscox product and service and this  has
been  rewarded with increased levels of business.   Nowhere  was
this  more evident than in France.  On December 27th France  was
hit  by its 'Storm of the Century'. Hiscox paid its first  claim
on  28th December and has received plaudits from brokers for its
response.   The  net  financial  impact  of  the  storm  on  the
insurance   company   activities  is  within   normal   business
expectations, but our reinsurers have shouldered a heavy burden.

-  In  late  1998  we  established the Hiscox Insurance  Company
(Guernsey)  to  meet  the demand for offshore  insurance.   This
business has developed well beyond our initial expectations  and
has   made   a  good  initial  contribution  to  the  division's
performance.  We expect that this will continue in the future.

Since  the year end we have agreed to sell the Life Fund  within
Hiscox  Insurance  Company.  We expect to recognise  a  gain  of
approximately £1m in the first half of 2000, and release £1m  of
assets to shareholders' funds.

GROUP BALANCE SHEET AND INVESTMENTS

During  the  course of the year shareholders'  funds,  including
equalisation provisions, have reduced from £139m to £136m, equal
to  net  assets per share of 94.1p (1998: 96.5p).  Total  assets
have  grown  from £597m to £689m.  This growth in part  reflects
the increasing scale of our insurance company activities as well
as the increased share of syndicate assets that accrue to Hiscox
plc.

We  increased the Group's ability to support additional capacity
at Lloyd's by raising a letter of credit facility of £75m.  This
provides  us with sufficient financial capability to  underwrite
up  to  75% of Syndicate 33's capacity.  We will seek to  create
other innovative forms of financing this year, with the goal  of
putting  in  place  sufficient financing to underwrite  100%  of
Syndicate 33's capacity without recourse to shareholders.

Under  the  new  accounting  standards  we  include  within  our
operating profit an investment return based on assumed long-term
rates  of  return.   Returns in financial markets  seldom  match
smoothed  assumptions,  so  we provide  in  the  table  below  a
reconciliation between actual returns and assumed returns.

Table 4
                              1999      1998
                                £m        £m
Total investment return       10.0      21.1
Assumed longer-term           13.7      18.9
return
Short-term fluctuations      (3.7)       2.2

In 1999 our equity funds out-performed their longer-term rate of
return significantly - 15% against an assumed rate of 7%  -  but
our bond funds under performed the longer-term rate.  Due to our
high weighting in bonds, this led to aggregate under performance
in  1999 compared with the long-term rate.  This contrasts  with
significant  out performance in 1998.  The volatility  of  total
investment return will continue to affect our pre-tax profit  in
the  future, hence the focus within this report on our operating
profit position.


BUSINESS STRATEGY AND DEVELOPMENTS

Our strategy remains to build and maintain leading positions  in
a  number  of  specialist  areas. As  client  needs  and  market
conditions  are continually evolving we are always reconsidering
how  we approach the market, how we distribute our products  and
the steps we need to take to maintain our cost efficiency.

The  way  we  report  our results - on a  Lloyd's  and  regional
business  basis  -  does not give the full picture  of  how  our
business is evolving. We are creating divisions focussed  around
customer and market groupings, as below.

Table 5
                                  1999
Area                Syndicate    Regional      Total
                           33   Business*
                           £m          £m         £m
London Market           152.3           -      152.3
                                                    
Global Niche            132.3           -      132.3
                             
Professions              18.3        14.0       32.3

Affluent Assureds        80.5        41.0      121.5
                                                    
Technology, Media &      32.7        11.1       43.8
Telecommunications

Local                       -        31.7       31.7

Total                   416.1        97.8      513.9

Proportion accruing       51%        100%          -
to Hiscox plc

                                 1998
Area                Syndicate    Regional      Total
                           33   Business*  
                           £m          £m         £m
London Market           155.4           -      155.4
                                                    
Global Niche            146.4           -      146.4
                                                    
Professions              18.5        10.1       28.6

Affluent Assureds        59.2        36.3       95.5

Technology, Media &      14.2         5.7       19.9
Telecommunications

Local                       -        37.9       37.9

Total                   393.7        90.0      483.7

Proportion accruing       25%        100%           
to Hiscox plc

*Excluding  Hiscox  Insurance Company (Guernsey)  Limited  whose
business is reinsured with Syndicate 33.


In  each  of the areas identified in table 5 we have a different
competitive  position,  usually  different  clients,  and   face
different  market  conditions.  As a result we pursue  different
strategies  in  each.   These strategies  are  increasingly  co-
ordinated across our Group, reflecting the benefits of a  single
global  brand  and market presence.  The strategic  approach  in
each area is set out below.

-  London Market: In this segment we are small players in  large
international  markets.  We seek to provide clients  with  cover
when other markets are withdrawing.  This approach allows us  to
earn above average profits per pound of premium written, but our
premium income will be volatile as others take business  off  us
as  rates  decline.   We  expect this  business  to  be  written
exclusively through Lloyd's, as its global licences, brand  name
and rating provide us with an excellent competitive position.

-  Global Niche: In this area we are reasonable sized players in
small, but highly specialist global markets.  Our strategy is to
build  expertise  so that we can be a leader in  these  markets.
For  example  in  the political risk area we  lead  95%  of  the
business   which  we  write,  effectively  setting   terms   and
conditions  for the whole of Lloyd's.  We expect  to  earn  good
margins in the business with less volatile premium income levels
than   the  London  Market  area.   This  business  is   written
exclusively in Lloyd's as the size of the niches does  not  make
it  economic for us to build a client service capability  around
the  world, and the level of specialisation is such that  global
experts are sought out wherever they are located.  But it  is  a
safe assumption that growth in this business will keep pace with
the enormous growth in these sectors themselves.

-  Professions:  We see continued opportunities  to  serve  both
traditional and 'new' professions.  For lower hazard business we
are  creating  package  insurance products  which  include  both
liability  insurances for areas like professional indemnity  and
employment  liability, and physical damage insurance  cover  for
office  contents.   This  has  the  potential  for  distribution
through  both  our  UK and our European operations.   In  higher
hazard  areas  we underwrite professional indemnity  on  a  very
selective basis.

- Affluent Assureds: Hiscox are a market leader in this segment.
We  seek  to serve our clients by offering broad policy coverage
at  fair  prices  and  outstanding claims service.   We  service
European  clients from local offices in the UK, France,  Germany
and  Holland and international clients from London and Guernsey.
We  have  established a leadership position in this segment  and
with  the  gradual growth in the number of affluent individuals,
we  believe  that  there is further opportunity for  substantial
growth.

-  Technology,  Media  and  Telecommunications:  Over  the  last
several  years we have built a strong position in the  insurance
of  technology,  media and telecommunication  (TMT)  businesses,
principally  in  the UK.  With this expertise we  now  have  the
ability to insure the traditional needs of TMT companies and the
new e-commerce risks which are faced by both new and old economy
companies  as they begin to trade online.  In time  this  market
segment  will  be  addressed in local markets via  each  of  our
offices  and  globally  through Lloyd's.   Our  growth  is  only
limited by the slow realisation by our potential clients of  the
exposures they face as they begin to do business in a completely
different way. In today's litigious world we do not expect  this
lack of awareness to last for long.

- Local Products: In each market in which we operate we identify
smaller  niches which we address in conjunction with  specialist
intermediaries  and  brokers.  In the UK this  consists  of  our
Affinity and Property Owners businesses.  We pursue these on  an
opportunistic basis where we believe that we can provide a  good
product and make an underwriting profit.

We recognise that while the London Market and Global Niche areas
can  produce volatile results, they are attractive as they focus
on  difficult to underwrite areas of business which can  produce
above  average  returns.   Our  longer-term  business  goal   is
therefore to maintain these areas and simultaneously to build up
the  less volatile areas, specifically TMT and Affluent Assureds
to provide a better balance.

E-COMMERCE

We are responding to the internet revolution in several distinct
ways.

-  Firstly, we have created the specialist Technology, Media and
Telecommunications  team profiled in the  business  segmentation
above.   Recent  court cases are highlighting to all  businesses
that they face new and worrying risks in the internet world, and
we are determined to be ready to meet these insurance needs.

- Secondly, we are dealing with the new online intermediaries as
they  are created.  We have already announced a partnership with
Hemscott  which will allow their clients to access our  personal
lines  products.  The system will be launched during May in  the
UK, and before the end of the year across Europe.  We expect  to
continue  to  build relationships with intermediaries,  be  they
online  brokers, infomediaries or traditional insurance  brokers
going on-line.

-  The  final  area of response has been in the  application  of
internet  technology to business processes with current brokers.
We are active participants in industry initiatives such as WISe,
as  well  as pursing separate initiatives with our major broking
partners.


THE FUTURE

Our business strategy relies on the attraction and retention  of
good  people.  This  is never more important  than  when  market
conditions are tough and losses abound.

An investment in good people has been crucial in the improvement
in  the performance of our regional business, and I am convinced
that  the  quality of our Lloyd's team will reward  shareholders
with an above average performance.

I  would  like to thank all 340 of our staff for their endeavors
during  the year.  These have led to an excellent start  to  the
year,  and  I  am  looking forward to more of  the  same  as  we
continue to build a first class business.

Bronek Masojada
Chief Executive
16 May 2000


CONSOLIDATED   PROFIT   AND  LOSS  ACCOUNT  (UNAUDITED)TECHNICAL
ACCOUNT - GENERAL BUSINESS FOR THE YEAR ENDED 31 DECEMBER 1999
                                 Notes      1999       1998
                                            £000       £000
Earned premiums, net of                                    
reinsurance
Gross premiums written               5   323,677    241,302
Outward reinsurance premiums            (78,306)   (48,011)
Net premiums written                     245,371    193,291
Change in the gross provision           (59,420)   (21,481)
for unearned premiums
Change in the provision for               15,501        650
unearned premiums, reinsurer's
share
Change in the net provision             (43,919)   (20,831)
for unearned premiums
Earned premiums, net of                  201,452    172,460
reinsurance
Allocated investment income        5,6    13,642     18,877
transferred from the non-
technical account
Claims incurred, net of                                    
reinsurance
Claims paid:
Gross amount                           (138,747)   (98,037)
Reinsurers' share                         47,214     26,776
Net claims paid                         (91,533)   (71,261)
Change in the provision for                                
claims:
Gross amount                            (80,774)   (51,313)
Reinsurers' share                         59,665     20,324
Change in the net provision             (21,109)   (30,989)
for claims:
Claims incurred, net of              5 (112,642)  (102,250)
reinsurance
Other technical income               5       774        180
Net operating expenses                  (91,689)   (78,271)
Movement in equalisation             5   (1,643)    (1,739)
provision
Balance on the technical                   9,894      9,257
account


CONSOLIDATED  PROFIT  AND  LOSS ACCOUNT (UNAUDITED)NON-TECHNICAL
ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1999
                               Notes       1999       1998
                                          Total      Total
                                           £000       £000
                                                          
Balance on the technical                  9,894      9,257
account
Investment income                  6     14,159     16,548
Net realised (losses)/gains on     6    (1,786)      1,199
investments
Unrealised (losses)/gains on       6    (1,750)      3,562
investments
Investment expenses and            6      (653)      (172)
charges
                                   6      9,970     21,137
Allocated investment return        6   (13,642)   (18,877)
transferred to the technical
account
                                   6    (3,672)      2,260
Other income                              2,792     13,008
Other expenses                          (8,902)    (9,274)
Profit on ordinary activities               112     15,251
before tax
Comprising:                                               
Operating profit based on          5      5,427     12,195
longer term investment return
Short term fluctuations in       5,6    (3,672)      2,260
investment return
Exceptional item: sale of non-     5          -      2,535
managed Lloyd's capacity            
Movement in equalisation           5    (1,643)    (1,739)
provision
                                            112     15,251
Tax on profit on ordinary                  (28)    (5,526)
activities
Profit on ordinary activities                84      9,725
after tax
Dividends - Interim paid                (1,707)    (1,695)
Dividends - Final payable               (3,274)    (3,328)
                                        (4,981)    (5,023)
Retained (loss)/profit for the          (4,897)      4,702
year
Earnings per share:                                       
- Basic, based on operating        7       2.6p       5.4p
profit after tax (on longer
term investment return)
- Basic, based on profit on        7       0.1p       6.9p
ordinary activities after tax
- Diluted, based on profit on      7       0.1p       6.8p
ordinary activities after tax

All operations of the Group are continuing.

In accordance with the amendment to FRS 3 published in June 1999
no  note  of  historical cost profits has been prepared  as  the
Group's only material gains and losses on assets relate  to  the
holding and disposal of investments.

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                               Notes       1999       1998
                                           £000       £000
Profit on ordinary activities                84      9,725
after tax
Revaluation of tangible fixed             (413)          -
assets
Exchange differences taken to              (91)          -
reserves
Prior period restatement           4    (1,977)      5,653
Total recognised gains and              (2,397)     15,378
losses


CONSOLIDATED BALANCE SHEET (UNAUDITED)AT 31 DECEMBER 1999
                               Notes       1999       1998
                                                  Restated
                                           £000       £000
Assets                                                    
Intangible assets                                         
Goodwill                                  6,971      7,317
Other intangible assets                  14,814     15,057
                                         21,785     22,374
Investments                                               
Land and buildings                          951      1,382
Other financial investments        8    228,979    228,568
                                        229,930    229,950
                                                          
Assets held to cover linked               3,016      2,516
liabilities
Reinsurers' share of technical                            
provisions
Provision for unearned                   22,078      6,578
premiums
Long term business provision                849        904
Claims outstanding                      136,620     82,318
                                        159,547     89,800
Debtors                                                   
Debtors arising out of direct           100,191     70,134
insurance operations
Debtors arising out of                   47,127     41,898
reinsurance operations
                                        147,318    112,032
Other assets                                              
Tangible assets                           6,690      9,116
Cash at bank and in hand                 27,602     43,868
Other debtors                            37,081     56,960
                                         71,373    109,944
                                                          
Prepayments and accrued income                            
Accrued interest                          3,275      1,832
Deferred acquisition costs               47,171     27,361
Other prepayments and accrued             5,992      1,389
income
                                         56,438     30,582
                                                          
Total assets                            689,407    597,198
CONSOLIDATED BALANCE SHEET (UNAUDITED)AT 31 DECEMBER 1999
                               Notes       1999       1998
                                                  Restated
                                           £000       £000
Liabilities                                               
Capital and reserves                                      
Called up share capital            9      7,223      7,184
Share premium account              9     69,042     68,011
Merger reserve                     9      4,723      4,723
Capital redemption reserve         9     33,244     33,244
Profit and loss account            9     15,353     20,754
Shareholders' funds                     129,585    133,916
attributable to equity
interests
                                                          
Fund for future appropriations            1,902      1,692
                                                          
Technical provisions                                      
Provision for unearned                  142,658     83,238
premiums
Long term business provision             15,191     16,180
Claims outstanding                      290,402    227,741
Equalisation provisions                   6,338      4,695
                                        454,589    331,854
                                                          
Technical provisions for                  3,016      2,516
linked liabilities
                                                          
Creditors: amounts falling due                            
within one year
Creditors arising out of                 33,405     18,130
direct insurance operations
Creditors arising out of                 19,507     33,694
reinsurance operations
Other creditors including                31,935     46,540
taxation and social security
                                         84,847     98,364
                                                          
Creditors: amounts falling due                            
after one year
Other creditors                           2,768     18,820
                                                          
Provisions for other risks and            1,729      1,810
charges
                                                          
Accruals and deferred income             10,971      8,226
                                                          
Total liabilities                       689,407    597,198


CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)FOR THE  YEAR  ENDED
31 DECEMBER 1999
                               Notes       1999       1998
                                           £000       £000
                                                          
Net cash inflow from general             16,710      9,147
business
Net shareholders' cash inflow     d)     12,021     17,531
from Lloyd's business
Net cash flow from operating      a)     28,731     26,678
activities
Interest paid                     e)    (1,835)      (899)
Taxation paid                           (4,102)    (4,433)
Capital expenditure               e)        264   (13,565)
Acquisitions                      e)          -    (4,674)
Equity dividends paid                   (4,963)    (4,819)
Financing                         e)    (7,724)      9,214
                                         10,371      7,502
Cash flows were invested as                               
follows:
                                                          
(Decrease)/increase in cash       f)   (16,752)     15,472
holding
                                                          
Net portfolio investment:                                 
Shares and units in unit          f)     12,623    (7,100)
trusts
Debt securities and other         f)     14,513     42,805
fixed income securities
Deposits with credit              f)      (271)   (43,616)
institutions
Other investments                 f)        258       (59)
Net investment of cash flows             10,371      7,502

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