Hiscox Ltd interim results

RNS Number : 5026M
Hiscox Ltd
31 July 2017
 

Hiscox Ltd interim results

For the six months ended 30 June 2017

 

"A good underwriting result despite on-going headwinds"

 

 

H1 2017

H1 2016

Gross premiums written

£1,459.6m

£1,288.5m

Net premiums earned

£936.6m

£767.5m

Profit before tax

£102.6m

£206.0m

Profit before tax excluding FX

£133.5m

£118.7m

Earnings per share

34.9p

70.4p

Interim dividend per share

9.5p

8.5p

Net asset value per share

657.7p

591.7p

Group combined ratio

91.0%

80.7%

Group combined ratio excluding FX

89.9%

88.4%

Return on equity (annualised)

11.1%

28.3%

Investment return (annualised)

2.3%

2.3%

Foreign exchange (losses)/gains

£(30.9)m

£87.3m

 

 

Highlights

 

·      Profits before tax up 12.5% excluding the impact of foreign exchange.

·      Hiscox Retail is the greatest contributor to profit in the first half, with Hiscox USA a stand-out performer, generating 31.1% premium growth in local currency.

·      Hiscox London Market reduced GWP by 8.2% in line with expectations, a disciplined response to challenging conditions.

·      In Hiscox Re and ILS, growth is coming from our ILS business, where assets under management have now reached US$1.35 billion.

 

Bronek Masojada, Chief Executive Officer, Hiscox Ltd, commented:

"We are managing the cycle and driving retail growth, as our long-held strategy of balancing the portfolio between volatile big-ticket business and steady retail business continues to deliver.  Despite tough market conditions we are finding opportunities."

 

 

ENDS

 

 

Contacts:

 

Hiscox

 

 

Jeremy Pinchin, Company Secretary, Bermuda

+1 441 278 8300

Kylie O'Connor, Head of Communications, London

+44 (0) 20 7448 6656

 

 

Brunswick

 

Tom Burns

+44 (0)20 7404 5959

Simone Selzer                                                                  +44 (0)20 7404 5959

 

 

Notes to editors

 

About The Hiscox Group

Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle. It's a long-standing strategy which in 2016 helped generate gross premiums written of £2,402.6 million and a record profit before tax of £354.5 million.

 

The Hiscox Group employs over 2,300 people in 13 countries, and has customers worldwide. Through the retail businesses in the UK, Europe, Asia and the US, we offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re and ILS.

 

Our values define our business, with a focus on people, quality, courage and excellence in execution.  We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit www.hiscoxgroup.com.

 

 

Chairman's statement
 

It has been a good first half, with the Group delivering a pre-tax profit of £102.6 million (2016: £206.0 million) and growing gross written premium by 13.3% to £1,459.6 million (2016: £1,288.5 million).  In contrast to the prior year, foreign exchange has moved against us with a £30.9m negative impact on the result. Excluding the impact of foreign exchange we have seen an increase of 12.5% of profits to £133.5 million (2016: £118.7 million).  Across the Group we have seen a more normalised claims pattern return, although the environment is still largely benign.

The retail operations we have been diligently building for more than 20 years are offsetting on-going volatility in bigger ticket lines, and it is pleasing to see that Hiscox Retail has made the biggest contribution to the bottom line in the first half for the second consecutive year.  We now have more than 750,000 retail customers.

Conditions in the London Market continue to test our mettle. We have trimmed back in some of the most affected areas - making difficult but necessary decisions to reduce our involvement or withdraw completely from some lines of business.  In Hiscox Re and ILS, we are benefitting from strong underwriting heritage and product innovation.

We are pleased with this result, but as usual we look forward with caution to the second half of the year as the hurricane season approaches.

Results

The half year result to 30 June 2017 was a pre-tax profit of £102.6 million (2016: £206.0 million), £133.5 million excluding foreign exchange gains/(losses) (2016: £118.7 million). Gross written premiums increased to £1,459.6 million (2016: £1,288.5 million) or 4.8% growth in constant currencies. Net earned premiums were £936.6 million (2016: £767.5 million). The impact of foreign exchange was a loss of £30.9 million (2016: gain of £87.3 million). The net combined ratio was 91.0% (2016: 80.7%) and was 89.9% (2016: 88.4%) excluding foreign exchange (losses)/gains. Earnings per share were 34.9p (2016: 70.4p) and net assets per share grew to 657.7p (2016: 591.7p). The annualised return on equity was 11.1% (2016: 28.3%).

Dividend, balance sheet and capital management

The Board of Hiscox Ltd has declared an interim dividend for 2017 of 9.5p per share (2016: 8.5p) reflecting the Group's decision in February to announce a 15% step-up in the full year dividend and associated commitment to a progressive dividend policy. The record date for the dividend will be 11 August 2017 and the payment date will be 13 September 2017.

The Board proposes to offer a scrip dividend alternative subject to the terms and conditions of Hiscox Ltd's 2016 Scrip Dividend Scheme. The last date for receipt of scrip elections will be 18 August 2017 and the reference price will be announced on 30 August 2017. Details of how to elect for the Scrip Dividend are provided on the Company's website.

We still see plenty of opportunities for profitable growth and will continue to deploy our capital to this end,  As ever we will review our capital position at year end.   

 

Rates

The rating environment for big ticket business has not improved but we remain agile, shrinking where rates have reduced and pursuing growth where margins have held up better.  In our retail lines, rates are broadly stable.

 

In the London Market, rates are drifting down and stabilizing at a marginal level. As announced earlier in the year, we have exited political risks and materially reduced in other areas including aviation, extended warranty and big-ticket property.

 

In Hiscox Re and ILS, pressure on North American reinsurance rates was still evident during the important 1 June and 1 July renewal seasons but the rate of decline is slowing. 

 

Claims

 

The weather has been good to us, and like others in the industry we have benefited from a benign catastrophe claims environment.  We had minimal exposure to high-profile losses in the market, such as the tragic Grenfell Tower fire and Cyclone Debbie which hit parts of Australia and New Zealand in March. We have seen a more normalised loss environment across the Group.

 

Hiscox's prudent approach to reserving is reflected in reserve releases for the first half of £96.1 million (2016: £96.1 million).

 

Marketing

 

Our strong brand continues to differentiate us and is delivering good growth in key markets which is why we will be investing over £50 million in marketing during 2017 (2016: £42 million).  To ensure we are managing this budget prudently around the globe, we have developed new econometric modeling to measure our marketing effectiveness.  

 

The US and UK are the focus of most of our marketing investment.  Our US small business brand continues to go from strength-to-strength, given this we have increased our marketing spend in this area by $12 million. 

 

At the beginning of the year we launched a new brand campaign in the US which has delivered good results to date.  I'mpossible highlights the courage of some of our small business customers with an advertising campaign telling their stories.  In the UK in June we launched Ever Onwards a campaign with a rallying cry to consumers in pursuit of progress. 

 

Hiscox Retail

The Hiscox Retail segment comprises Hiscox UK and Europe, and Hiscox International.

Gross written premiums

£739.6 million (2016: £581.1 million)

Profit before tax

Profit before tax excluding FX

£73.4 million (2016: £92.3 million)

£71.4 million (2016: £68.2 million)

Combined ratio

Combined ratio excluding FX

90.6% (2016: 84.1%)

90.9% (2016: 89.4%)

Hiscox UK and Europe

This division provides personal lines cover - from high-value household, fine art and collectibles to luxury motor - and commercial insurance for small and medium-sized businesses, typically operating in white collar industries. These products are distributed via brokers and through a growing network of partnerships. Our schemes business offers insurance solutions to customers with similar risk profiles for example sports clubs and niche industry associations. For some simple risks we distribute policies direct-to-consumer in the UK, France and Germany.

Gross written premiums

£405.8 million (2016: £345.6 million)

Profit before tax

Profit before tax excluding FX

£52.4 million (2016: £65.2 million)

£47.7 million (2016: £47.5 million)

Combined ratio

Combined ratio excluding FX

86.6% (2016: 79.9%)

88.0% (2016: 86.6%)

Hiscox UK and Ireland

Gross written premium grew by 13.9% to £278.4 million (2016: £244.4 million), or 12.9% in constant currency, driven by strong new business and retention rates.

In the broker channel, schemes and specialty commercial were particularly strong performers.  We are benefiting from our niche position of working with non-standard 'specialist' retailers, and our on-going focus on technology business is paying off.  Underwriting partnerships also achieved good growth, albeit from a low base.  The migration of our broker channel business to a new IT platform continues apace and we hope to reap the same benefits in terms of conversion, pricing and service that we have seen in our direct business.

In the direct-to-consumer channel, there is good growth in our core direct commercial and home business. Our direct home business has an exciting new partnership with Barclays where we are providing home insurance products to their Premier customers.

Hiscox Europe

Gross written premiums grew by 25.8% to £127.4 million (2016: £101.2 million), or 12.2% in constant currency. This growth was mainly driven by commercial lines business in Germany and Spain.

Much of the growth in Germany is coming from cyber and classic car, two specialty areas in which we are building a reputation. In Spain, we are growing thanks to the performance of our professional indemnity, directors and officers' and management liability lines, and in partnerships with other financial service providers.  We have also introduced a new commercial property product here, with promising early signs.

In France, growth in our professions book is pleasing, and a focus on specialty commercial schemes is paying off. Our Benelux business continues to focus on professionals and specialty commercial and we will consider adding to its product suite in time.

We continue to invest in digitising our business in every country across Europe, with broker extranet sites that enable us to distribute and service our products to brokers more efficiently.  The 'My Hiscox' broker extranet site most recently launched in France, and has been well received.

Hiscox International

This division comprises Hiscox Special Risks, Hiscox USA and DirectAsia.

Gross written premiums

£333.8 million (2016: £235.5 million)

Profit before tax

Profit before tax excluding FX

£21.0 million (2016: £27.1 million)

£23.7 million (2016: £20.7 million)

Combined ratio 

Combined ratio excluding FX

95.3% (2016: 89.7%)

94.3% (2016: 93.3 %)

Hiscox Special Risks

Hiscox Special Risks underwrites kidnap and ransom, security risks, personal accident, classic car, jewellery and fine art risks. Hiscox Special Risks has teams in London, Guernsey, Cologne, Munich, Paris, New York, Los Angeles and Miami.

Gross written premiums increased by 17.0% to £52.5 million (2016: £44.9 million), or 13.6% in constant currency. Following an exceptionally benign claims experience in 2016, we have seen a return to a normal loss environment. Similar to other parts of the business, we have established an underwriting centre for Special Risks and it is an approach that is paying off, boosting both new business and retention.

The Security Incident Response product we launched in January in the UK has been well-received by the market.  It gives us opportunities with a wider range of clients who are focused on broader security issues beyond kidnap exposure, using additional distribution channels such as directors and officers' brokers.  Building on this success, we have also recently launched the SIR product in Spain and the US.

Hiscox USA

Hiscox USA underwrites small-to-mid market commercial risks through brokers, other insurers and directly to businesses online and over the telephone.

Hiscox USA continues to be a major area of opportunity for the Group, with gross written premiums increasing by 50.3% to £275.6 million (2016: £183.4 million), or 31.1% in constant currency.

Our broker channel business and direct and partnerships division have both performed well. Good growth is coming from our professions, cyber and general liability lines.     

 

Our small business operations continue to go from strength-to-strength and we now have more than 210,000 policies in force. We have introduced a new quote, bind and pay portal delivering Hiscox products to our distribution partners with their own branded interface.  This system has already been adopted by a major online aggregator.

 

Work is well underway on the IT infrastructure changes we are undertaking to replace the existing policy and claims administration system in the US. 

 

DirectAsia

DirectAsia is a direct-to-consumer business in Singapore and Thailand that sells predominantly motor insurance. Hiscox acquired the business in April 2014.

DirectAsia achieved gross written premiums of £5.7 million (2016: £7.2 million).  As we've said before, most of this reduction can be attributed to the sale of the Hong Kong business in the second quarter of 2016.

In Singapore, we have extended our distribution in conjunction with a local aggregator, and a new partnership with a vehicle inspection centre is helping us to grow reach and sales.

Hiscox London Market

This segment uses the global licences, distribution network and credit rating available through Lloyd's to insure clients throughout the world.

Gross written premiums

£314.6 million (2016: £342.7 million)

Profit before tax

Profit before tax excluding FX

£17.2 million (2016: £37.1 million)

£25.5 million (2016: £19.9 million)

Combined ratio

Combined ratio excluding FX

94.8% (2016: 85.3%)

91.0% (2016: 94.8%)

Gross written premiums in Hiscox London Market reduced by 8.2% to £314.6 million (2016: £342.7 million), or 16.9% in constant currency. This is in line with our previous guidance of reducing in areas under most pressure

We are doing what we said we would do in our London Market business.  We are reducing materially where margins are evaporating, such as aviation, big ticket property and London Market healthcare.  We have not renewed the extended warranty business we wrote through White Oak and are writing a much reduced line on the physical damage portfolio.  As announced earlier in the year, we have taken decisive action and exited political risks which has moved outside of our risk appetite. 

We are holding our position in areas of strength and margin such as household and commercial property binders and terrorism. 

We are investing where we see real opportunity; in US flood, where the market is deregulating, and good growth in cargo albeit from a low base. In casualty, our general liability team is bringing new business to London which previously would have been written elsewhere and we are benefiting from this.

Another significant area of opportunity of growth for Hiscox London Market is where we support other expert underwriters with capacity as well as our expertise in contracts, claims, wordings and pricing. For example, we are working with another Lloyd's coverholder on a niche California earthquake product that, by combining both of our specific areas of expertise, enables us to bridge an existing gap in the market.

Hiscox MGA continues to perform well, boosted by strong renewals in the yacht account, new talent in the marine team and the addition of our space business which transferred into the MGA during the period.  

The Hiscox London Market team received recognition at the Reactions London Market Awards 2017, where they were awarded Marketing Campaign of the Year for their cyber campaign.

Hiscox Re and ILS

The Hiscox Re segment comprises the Group's reinsurance businesses in London, Paris and Bermuda and Insurance Linked Security (ILS) activity.

 

 

 

 

 

Gross written premiums

£405.4 million (2016: £364.7 million)

Profit before tax

Profit before tax excluding FX

£38.2 million (2016: £54.6 million)

£39.6 million (2016: £41.8 million)

Combined ratio

Combined ratio excluding FX

84.0% (2016: 56.0%)

81.8% (2016: 69.8%)

Gross written premiums grew by 11.2% to £405.4 million (2016: £364.7 million), or 4.3% in constant currency. This is the result of successful product innovation in Hiscox Re and on-going growth in the Hiscox ILS funds. At a net level, the top line has reduced by 8.7%, due to reductions in specialty and the closure of our healthcare business.

In Hiscox Re, a combination of disciplined underwriting, growth in key client partnerships and new opportunities to write well-rated business in areas such as Japan, US flood and cyber is paying off.

Assets under management in ILS funds and vehicles are now in excess of US$ 1.35 billion with continued demand from investors. The fully collateralized fund that launched at the start of the year has already fully deployed its assets under management. We were delighted that the ILS team was awarded ILS Fund Manager of the Year at the Reactions London Market Awards 2017.


Investments

The investment return for the first six months of the year is ahead of expectations, helped in part by the performance from our risk assets.  The investment result before derivatives was £50.5 million (2016: £42.0 million), 2.3% on an annualised basis (2016: 2.3%).  Assets under management at 30 June 2017 were £4,415 million (2016: £3,946 million).

 

In contrast to the corresponding period last year, market sentiment has been broadly positive with measures of volatility subdued at historically low levels.  Equity markets have been strong and sector performance has been less diverse.  The portfolio of risk assets has therefore made a good contribution in absolute and relative terms.  Income from our bond portfolios overall is more in line with expectation and mainly derived from the US dollar allocation.  Generating positive returns from sterling and euro bonds has been more challenging recently, with the marked increase in yields at the end of June.

 

Having largely ignored political outcomes, predicted or otherwise, investor attention has switched recently to the more hawkish rhetoric from a range of Central Banks as they prepare to join the Federal Reserve in gradually reducing their accommodative stance.  Given valuations across asset classes and the likely moves towards normalising monetary policy, we remain cautious with the majority of our risk appetite focused on the exposure to risk assets which represents 7.4% of the portfolio.

 

The Board

Having served nine years on the Hiscox Ltd Board (at which point the UK Corporate Governance Code deems them not independent), Ernst Jansen and Gunnar Stokholm will retire from the Board with effect from 16 November 2017. Ernst and Gunnar have both provided a significant contribution to the Board over the years and I would like to thank them for their wisdom and insight which will be sorely missed.

I am delighted to say that we have appointed three new Board members; Michael Goodwin, Thomas Hüerlimann and Costas Miranthis. They will join the Hiscox Ltd Board as Independent Non Executive Directors from the same date.

Michael Goodwin has valuable experience from the Asia Pacific region, gained not only during his time as Asia Pacific CEO at QBE insurance but also as Vice President of the General Insurance Association of Singapore. Thomas Huerlimann brings important leadership experience, most recently as CEO of Zurich Global Corporate. Costas Miranthis is based in Bermuda and has extensive reinsurance experience from his time as President and CEO at Partner Re.

 

We will benefit from their impressive insurance industry experience, covering some of our key geographies (Bermuda, Asia and Europe) and I look forward to working with them alongside the rest of the Board.

 

 

Outlook

Our strategy was designed for this climate; managing the insurance cycle and driving retail growth.   Finding attractive bigger-ticket business remains challenging, and there is no indication that will change anytime soon, but we are not afraid to make tough decisions where necessary.

 

As we announced in May, we plan to establish a new EU subsidiary in Luxembourg in response to Brexit.  We are now working closely with the Luxembourg regulator on license approval, and local recruitment as well as sourcing office space is underway.  Our plan means we will be well placed to continue to serve our sizeable European customer base after 1 April 2019.

 

However, Brexit is just one example of the increasing number of Group projects we are undertaking.  Regulatory obligations such as the implementation of GDPR in Europe and cyber security regulations from the New York Department of Financial Services all require financial and human resource. The critical infrastructure projects that I have spoken about previously, such as upgrading our financial processes  and the IT platform changes in our UK and US retail businesses, are equally necessary. These will impact our expense ratio in the short-term, but in the long-term they will ensure we operate efficiently and effectively - matching our capabilities with our ambitions.

 

We continue to execute our plan successfully.  We have plenty of room for growth in Hiscox Retail, and the selective approach we have taken within Hiscox London Market and Hiscox Re and ILS continues to yield opportunities.

 

Robert Childs

31 July 2017

 

 

 

 

Additional performance measures

 

The Group has identified additional performance measures (APM) that are not defined in accordance with Generally Accepted Accounting Principles (GAAP), being International Financial Reporting Standards (IFRS), and may not necessarily have standardised meanings for ease of comparability across other organisations in the industry. These non-GAAP measures are used within these interim financial statements. These APMs are: profit excluding foreign exchange gains/(losses), combined claims and expense ratios, return on equity, net asset value pence per share and reserve releases. These are standard measures used across the industry, and allow the reader of the half year report to compare across peer companies.

 

-     Profit excluding foreign exchange gains/(losses)

This represents the profit for the period after deducting foreign exchange gains or adding back foreign exchange losses in the relevant period. This enables the reader of these financial statements, and the Group, to measure the comparability of underlying profitability without the foreign exchange  volatility. To obtain the value, the reader of these financial statements should remove the foreign exchange gains/(losses), as identified in the income statement, from the profit for the period.

 

-       Combined claims and expense ratios

The Combined claims and expense ratios are a common measure enabling comparability across the insurance industry, that measures the relevant underwriting profitability of the business by reference to its costs as a proportion of its net earned premium. The Group calculates the combined ratio as if the Group owned all of the business, including the 27.5% of Syndicate 33 that the Group does not own. The Group does this to enable comparability from period to period as the business mix may change in a segment between insurance carriers, and this enables us to measure all of our underwriting businesses on an equal measure. The calculation is discussed further in note 8, operating segments. The combined ratio excluding foreign exchange gains is calculated as the sum of the claims ratio and the expense ratio.

 

-       Return on Equity (ROE)

As is common within the financial services industry, the Group uses ROE as one of its key performance metrics. Whilst the measure enables the company to compare itself against other peer companies in the immediate industry, it is also a key measure internally where it is used to compare the profitability of business segments, and underpins the performance related pay and shared based payment structures, as discussed within the remuneration policy report in the annual Report and Accounts. The ROE is shown in note 10, along with an explanation of the calculation.

 

-       Net asset value (NAV) pence per share

The Group uses NAV pence per share as one of its key performance metrics. This is a widely used key measure for management and also for users of the financial statements to provide comparability across peers in the market. NAV pence per share is shown in note 9, along with an explanation of the calculation.

 

-       Reserve releases

Reserve releases are a measure of favourable development on claims reserves that existed at the prior balance sheet date. It enables the users of the financial statements to compare and contrast our performance relative to peer companies. The Group maintains a prudent approach to reserving, to help mitigate the uncertainty within the reserve estimates. The release is calculated as the movement in ultimate losses on prior accident years between the current and prior year balance sheet date, as shown in note 15, as a result of better than expected outcomes of the estimates booked at the prior period close.

 

 

 

Condensed consolidated interim income statement

For the six month period ended 30 June 2017

 

Note

6 months to

30 June 2017

6 months to

30 June 2016

Year to
31 Dec 2016

 

 

£000

£000

£000

Income

 

 

 

 

Gross premiums written

8

1,459,601

1,288,478

2,402,579

Outward reinsurance premiums

 

(446,056)

(399,368)

(614,636)

Net premiums written

 

1,013,545

889,110

1,787,943

Gross premiums earned

 

1,243,813

1,014,461

2,220,853

Premiums ceded to reinsurers

 

(307,181)

(246,920)

(545,840)

Net premiums earned

 

936,632

767,541

1,675,013

Investment result

11

48,957

39,907

74,991

Other income

12

21,954

18,549

37,594

Total income

 

1,007,543

825,997

1,787,598

Expenses

 

 

 

 

Claims and claim adjustment expenses

 

(559,667)

(449,941)

(1,004,601)

Reinsurance recoveries

 

116,459

121,572

264,829

Claims and claim adjustment expenses, net of reinsurance

 

(443,208)

(328,369)

(739,772)

Expenses for the acquisition of insurance contracts

 

(299,072)

(244,351)

(538,467)

Reinsurance commission income

 

82,522

52,052

128,627

Operational expenses

12

(204,218)

(176,429)

(415,719)

Net foreign exchange (losses)/gains

20

(30,871)

87,323

152,408

Total expenses

 

(894,847)

(609,774)

(1,412,923)

Results of operating activities

 

112,696

216,223

374,675

Finance costs

13

(9,882)

(10,206)

(20,266)

Share of profit of associates after tax

 

(191)

4

134

Profit before tax

 

102,623

206,021

354,543

Tax expense

14

(4,716)

(8,395)

(17,557)

Profit for the period (all attributable to owners of the Company)

 

97,907

197,626

336,986

Earnings per share on profit attributable to owners of the Company

 

 

 

 

Basic

16

34.9p

70.4p

119.8p

Diluted

16

33.9p

68.2p

116.0p

 

 

The notes to the condensed consolidated interim financial statements are an integral part of this document.

 

 

Condensed consolidated interim statement of comprehensive income

For the six month period ended 30 June 2017

 

 

 

6 months to

30 June 2017

6 months to

30 June 2016

Year to
31 Dec 2016

 

 

£000

£000

£000

Profit for the period

97,907

197,626

336,986

Other comprehensive income

 

 

 

Items that will not be reclassified to profit and loss:

 

 

 

Remeasurements of the net defined benefit obligation

-

(36,081)

(46,531)

-

7,786

9,502

-

(28,295)

(37,029)

Items that may be reclassified subsequently to profit and loss:

 

 

 

Exchange differences on translating foreign operations

(23,979)

56,383

111,094

-

-

-

 

(23,979)

56,383

111,094

Other comprehensive income net of tax

(23,979)

28,088

74,065

Total comprehensive income for the year (all attributable to owners of the Company)

73,928

225,714

411,051

 

 

The notes to the condensed consolidated interim financial statements are an integral part of this document.

 

 

Condensed consolidated interim balance sheet

At 30 June 2017

 

Note

30 June 2017

30 June 2016

31 Dec 2016

 

 

£000

£000

£000

Assets

 

 

 

 

Goodwill and intangible assets

 

132,062

130,653

123,724

Property, plant and equipment

 

46,861

47,019

48,425

Investments in associates

 

7,948

13,523

13,835

Asset held for sale

3

5,593

12,010

-

Deferred tax

 

39,404

38,452

41,392

Deferred acquisition costs

 

378,008

344,308

346,592

Financial assets carried at fair value

18

3,689,938

3,305,812

3,792,033

Reinsurance assets

15

925,389

793,606

805,649

Loans and receivables including insurance receivables

 

969,203

865,068

802,906

Current tax asset

 

5,782

1,311

2,406

Cash and cash equivalents

 

770,571

685,859

664,816

Total assets

 

6,970,759

6,237,621

6,641,778

 

 

 

 

 

Equity and liabilities

 

 

 

 

Shareholders' equity

 

 

 

 

Share capital

 

19,102

19,042

19,060

Share premium

 

23,081

16,069

18,035

Contributed surplus

 

89,864

89,864

89,864

Currency translation reserve

 

178,293

147,561

202,272

Retained earnings

 

1,547,637

1,394,301

1,488,306

Equity attributable to owners of the Company

 

1,857,977

1,666,837

1,817,537

Non-controlling interest

 

866

866

866

Total equity

 

1,858,843

1,667,703

1,818,403

 

 

 

 

 

Employee retirement benefit obligation

 

56,139

43,414

56,139

Deferred tax

 

7,537

20,109

17,030

Insurance liabilities

15

4,051,411

3,618,881

3,852,976

Financial liabilities

18

284,371

284,877

276,293

Current tax

 

10,309

9,253

21,735

Trade and other payables

 

702,149

593,384

599,202

Total liabilities

 

5,111,916

4,569,918

4,823,375

Total equity and liabilities

 

6,970,759

6,237,621

6,641,778

 

 

The notes to the condensed consolidated interim financial statements are an integral part of this document.

 

 

Condensed consolidated interim statement of changes in equity

For the six month period ended 30 June 2017

 

Share capital

Share premium

Contributed surplus

Currency translation reserve

Retained earnings

Non controlling interest

Total

 

£000

£000

£000

£000

£000

£000

£000

Balance at 1 January 2017

19,060

18,035

89,864

202,272

1,488,306

866

1,818,403

Profit for the period (all attributable to owners of the company)

-

-

-

-

97,907

-

97,907

Other comprehensive income/(expense) net of tax (all attributable to owners of the company)

-

-

-

(23,979)

-

-

(23,979)

Employee share options:

 

 

 

 

 

 

 

Equity settled share-based payments

-

                -

-

-

13,648

-

13,648

Proceeds from shares issued

26

2,027

-

-

-

-

2,053

Deferred and current tax on employee share options

-

-

-

-

3,308

-

3,308

Shares purchased by Trust

-

-

-

-

(1,249)

-

(1,249)

Shares issued in relation to Scrip dividends

16

3,019

-

-

-

-

3,035

Dividends paid to owners of the Company

-

-

-

-

(54,283)

-

(54,283)

Balance at 30 June 2017

19,102

23,081

89,864

178,293

1,547,637

866

1,858,843

 

The equity attributable to owners of the Company is £1,857,977,000 at 30 June 2017.

 

 

Condensed consolidated interim statement of changes in equity

For the six month period ended 30 June 2016

 

 

Share capital

Share premium

Contributed surplus

Currency translation reserve

Retained earnings

Non controlling interest

Total

 

£000

£000

£000

£000

£000

£000

£000

Balance at 1 January 2016

19,030

15,231

89,864

91,178

1,312,660

866

1,528,829

Profit for the period (all attributable to owners of the company)

-

-

-

-

197,626

-

197,626

Other comprehensive income/(expense) net of tax (all attributable to owners of the company)

-

-

-

56,383

(28,295)

-

28,088

Employee share options:

 

 

 

 

 

 

 

Equity settled share-based payments

-

-

-

-

10,669

-

10,669

Proceeds from shares issued

12

838

-

-

-

-

850

Deferred and current tax on employee share options

-

-

-

-

1,260

-

1,260

Shares purchased by Trust

-

-

-

-

(9,945)

-

(9,945)

Dividends paid to Owners of the Company

-

-

-

-

(89,674)

-

(89,674)

Balance at 30 June 2016

19,042

16,069

89,864

147,561

1,394,301

866

1,667,703

 

The equity attributable to owners of the Company is £1,666,837,000 at 30 June 2016.

 

 

Condensed consolidated interim statement of changes in equity

For the year ended 31 December 2016

 

 

 

Share capital

Share premium

Contributed surplus

Currency translation reserve

Retained earnings

Non controlling interest

Total

 

 

£000

£000

£000

£000

£000

£000

£000

Balance at 1 January 2016

 

19,030

15,231

89,864

91,178

1,312,660

866

1,528,829

Profit for the year (all attributable to owners of the company)

 

-

-

-

-

336,986

-

336,986

Other comprehensive income net of tax (all attributable to owners of the company)

 

-

-

-

111,094

(37,029)

-

74,065

Employee share options:

 

 

 

 

 

 

 

 

Equity settled share-based payments

 

-

-

-

-

26,274

-

26,274

Proceeds from shares issued

 

22

1,534

-

-

-

-

1,556

Deferred and current tax on employee share options

 

-

-

-

-

1,907

-

1,907

Shares purchased by Trust

 

-

-

-

-

(38,558)

-

(38,558)

Shares issued in relation to Scrip dividends

 

8

1,270

-

-

-

-

1,278

Dividends paid to owners of the Company

 

-

-

-

-

(113,934)

-

(113,934)

Balance at 31 December 2016

 

19,060

18,035

89,864

202,272

1,488,306

866

1,818,403

 

The notes to the condensed consolidated interim financial statements are an integral part of this document.

The equity attributable to owners of the Company is £1,817,537,000 at 31 December 2016.

 

 

Condensed consolidated interim cash flow statement

For the six month period ended 30 June 2017

 

Note

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

 

 

£000

£000

£000

 

Profit  before tax

 

102,623

206,021

354,543

 

Adjustments for:

 

 

 

 

 

Net foreign exchange losses/(gains)

 

30,871

(87,323)

(152,408)

 

Interest and equity dividend income

 

(30,435)

(23,280)

(54,789)

 

Interest expense

13

9,882

10,206

20,266

 

Net fair value gains on financial assets and liabilities

 

(21,600)

(16,302)

(13,786)

 

Depreciation, amortisation and impairment

 

9,599

7,299

28,162

 

Charges in respect of share based payments

 

13,648

10,669

26,274

 

Changes in operational assets and liabilities:

 

 

 

 

 

Insurance and reinsurance contracts

 

56,301

72,887

251,836

 

Financial assets carried at fair value

 

12,359

(133,212)

(431,324)

 

Financial liabilities carried at fair value

 

(329)

745

458

 

Financial liabilities carried at amortised cost

 

8,407

8,453

156

 

Other assets and liabilities

 

(27,324)

(11,111)

3,687

 

Interest received

 

29,114

19,368

55,273

 

Equity dividends received

 

333

174

505

 

Interest paid

 

(2,003)

(3,180)

(21,852)

 

Current tax paid

 

(23,715)

(5,484)

(6,108)

 

Cash flows from subscriptions (paid)/received in advance

 

-

-

(4,000)

 

Net cash flows from operating activities

 

167,731

55,930

56,893

 

Cash flow from the purchase and sale of subsidiaries

 

13,772

(17,477)

(3,881)

 

Cash flow from the sale and purchase of associates

 

-

-

(448)

 

Cash flows from the purchase of property, plant and equipment

 

(1,948)

(158)

(5,770)

 

Cash flows from the purchase of intangible assets

 

(12,831)

(11,307)

(20,909)

 

Net cash flows from investing activities

 

(1,007)

(28,942)

(31,008)

 

Proceeds from the issue of ordinary shares

 

2,052

850

1,556

 

Shares repurchased

 

(1,249)

(9,945)

(38,558)

 

Distributions paid to owners of the Company

17

(51,247)

(89,674)

(112,656)

 

Net cash flows from financing activities

 

(50,444)

(98,769)

(149,658)

 

Net increase/(decrease) in cash and cash equivalents

 

116,280

(71,781)

(123,773)

 

Cash and cash equivalents at 1 January

 

664,816

727,880

727,880

 

Net increase/(decrease) in cash and cash equivalents

 

116,280

(71,781)

(123,773)

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

(10,525)

29,760

60,709

 

Cash and cash equivalents at end of period

21

770,571

685,859

664,816

 

The notes to the condensed consolidated interim financial statements are an integral part of this document.

 

 

 

Notes to the condensed consolidated interim financial statements

1. Reporting entity

Hiscox Ltd (the 'Company') is a public limited company registered and domiciled in Bermuda. The condensed consolidated interim financial statements for the Company as at, and for the six months ended, 30 June 2017 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates. The Chairman's statement accompanying these condensed consolidated interim financial statements forms the Interim Management Report for the half year ended 30 June 2017.

The Directors of Hiscox Ltd are listed in the Group's 2016 Report and Accounts. A list of current Directors is maintained and available for inspection at the registered office of the Company located at 4th Floor, Wessex House, 45 Reid Street, Hamilton, HM 12, Bermuda.

2. Basis of preparation

These condensed consolidated interim financial statements have been prepared in accordance with the Listing Rules issued by the Financial Conduct Authority. The information presented herein does not include all of the disclosures typically required for full consolidated financial statements. Consequently these condensed consolidated interim financial statements should be read in conjunction with the full consolidated financial statements of the Group as at, and for the year ended, 31 December 2016 which are available from the Company's registered office or at www.hiscoxgroup.com. Except where otherwise indicated, all amounts are presented in Pounds Sterling and rounded to the nearest thousand.

After making enquiries, the Directors have an expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason the condensed consolidated interim financial statements have been prepared on a going concern basis and are prepared on the historical cost basis except that pension scheme assets included in the measurement of the employee retirement benefit obligation, and certain financial instruments including derivative instruments are measured at fair value.

Taxes on income for the interim period are accrued using the estimated effective tax rate that would be applicable to estimated total annual earnings.

Within the condensed consolidated interim cash flow statement, the Group has allocated the cash derecognised on loss of control out of cash flows from operating activities and provided a netted down position under cash flow from the purchase and sale of subsidiaries under investing activities.

The independent auditors, have reported on the Group's full consolidated financial statements as at, and for the year ended, 31 December 2016. The report of the independent auditors was not qualified. The amounts presented for the 30 June 2017 and 30 June 2016 periods are unaudited.

These condensed consolidated interim financial statements were approved on behalf of the Board of Directors by the Chief Executive, B E Masojada and the Chairman, R S Childs. Accordingly the Half Yearly Report to the London Stock Exchange was approved for issue on Monday, 31 July 2017 following receipt of confirmation from the auditors that they had reviewed the final content.

3. Basis of consolidation

 

On 1 May 2017, the Group disposed of its subsidiary Blue Hill Specialty Insurance Company Inc.

 

As a result of the disposal, the Group has derecognised the assets and liabilities relating to the company. Below is a table disclosing the impact to the consolidated financial statement following the disposal.

 

 

£000

Total assets no longer recognised in the consolidated balance sheet

(12,021)

Total currency translation reserve no longer recognised in the consolidated balance sheet

1

Cash received on disposal

14,571

Profit recognised in other income in the consolidated income statement

2,561

 

In addition, on 30 June 2017, the Group entered into an agreement for the disposal of one of its associate holdings Lark (2012) Limited. The sale is subject to regulatory approval, and as such, the Group have assessed that the sale is not complete. The Group has concluded that the transaction meets the criteria of IFRS 5, in that it shall be recognised as an asset held for sale on the balance sheet at its current carrying value.

                                                                                                                                               

 4. Accounting policies and methods of computation

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those applied by the Group in its consolidated financial statements as at, and for the year ended, 31 December 2016. The consolidated financial statements as at, and for the year ended, 31 December 2016 were compliant with International Financial Reporting Standards as adopted by the European Union and in accordance with the provisions of the Bermuda Companies Act 1981. The Interim Report is compliant with IAS 34 Interim Financial Reporting as adopted by the European Union.

In preparing these interim financial statements, Management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgments made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.

 

5. Financial, insurance and other risk management

The Group's financial, insurance and other risk management objectives and policies are consistent with that disclosed in note 3 of the full consolidated financial statements as at, and for the year ended, 31 December 2016. The principal risks and uncertainties are unchanged and may be summarised as underwriting risk, reserving risk, reliability of fair values, equity price risk, interest rate risk, liquidity risk, credit risk, currency risk and capital risk. The Group recognises that following the decision of the UK to leave the European Union, it may continue to face greater volatility in credit, currency and liquidity risk whilst uncertainty remains.

The Group continues to monitor all aspects of its financial risk appetite and the resultant exposure taken with caution, and has consequently suffered insignificant defaults on investments held, and other third-party balances during the period under review.

As detailed in note 18, the Group's investment allocation is broadly comparable to that at 31 December 2016 as outlined in the Group Report and Accounts. The Group also continues to be mindful of the processes required for establishing the reliability of fair values obtained for some classes of financial assets affected by ongoing periods of diminished liquidity. In order to assist users, the Group has disclosed the measurement attributes of its investment portfolio in a fair value hierarchy in note 19 in accordance with IFRS 13 Fair Value Measurement.

The Group remains susceptible to fluctuations in rates of foreign exchange, in particular between Pound Sterling and the US Dollar.

Strong treasury management has ensured that the Group's balance sheet remains well capitalised and its operations are financed to accommodate foreseen liquidity demands together with a high level of capital sufficient to meet future catastrophe obligations even if difficult investment market conditions were to prevail for a period of time.

 

6. Seasonality and weather

Historically the Group's most material exposure to catastrophe losses on certain lines of business such as reinsurance inwards and marine and major property risk have been greater during the second half of the calendar year, broadly in line with the most active period of the North Atlantic hurricane season. In contrast, a majority of gross premium income written in these lines of business occurs during the first half of the calendar year. The Group actively participates in many regions and if any catastrophic events do occur, it is likely that the Group will share some of the market's losses. Consequently, the potential for significantly greater volatility in expected returns remains during the second half of the year. Details of the Group's recent exposures to these classes of business are disclosed in the Group's 2016 Report and Accounts.

7. Related party transactions

Transactions with related parties during the period are consistent in nature and scope with those disclosed in note 36 of the Group's 2016 Report and Accounts.

8. Operating segments

The Group's operating segment reporting follows the organisational structure and management's internal reporting systems, which form the basis for assessing the financial reporting performance of, and allocation of resource to each business segment. The Group's four primary business segments are identified as follows:

Hiscox Retail brings together the results of the UK and Europe, and Hiscox International being the US, Special Risks and Asia retail business divisions.

Hiscox UK and Europe underwrite European personal and commercial lines of business through Hiscox Insurance Company Limited, together with the fine art and non-US household insurance business written through Syndicate 33. In addition, Hiscox UK includes elements of specialty and international employees and officers' insurance written by Syndicate 3624, but excludes the European kidnap and ransom business written by Hiscox Insurance Company Limited.

 

Hiscox International comprises the specialty and fine art lines written through Hiscox Insurance Company (Guernsey) Limited, and the motor business written via DirectAsia, together with US commercial, property and specialty business written by Syndicate 3624 and Hiscox Insurance Company Inc. via the Hiscox USA business division. It also includes the European kidnap and ransom business written by Hiscox Insurance Company Limited and Syndicate 33.

 

Hiscox London Market comprises the internationally traded insurance business written by the Group's London based underwriters via Syndicate 33, including lines in property, marine and energy, casualty and other specialty insurance lines, excluding the kidnap and ransom business. In addition, the segment includes elements of business written by Syndicate 3624 being auto physical damage, auto extended warranty and aviation business.

Hiscox Re and ILS is the Reinsurance division of the Hiscox Group, combining the underwriting platforms in Bermuda, London and Paris. The segment comprises the performance of Hiscox Insurance Company (Bermuda) Limited with the reinsurance contracts written by Syndicate 33. In addition, the healthcare and casualty reinsurance contracts written in the Bermuda hub on Syndicate capacity are also included.

Corporate Centre comprises the investment return, finance costs and administrative costs associated with Group management activities. Corporate Centre also includes the majority of foreign currency items on economic hedges and intragroup borrowings, further details of these can be found in note 13 of the Group's Report and Accounts for the year ended 31 December 2016. Corporate Centre forms a reportable segment due to its investment activities which earn significant external returns.

All amounts reported below represent transactions with external parties only. In the normal course of trade, the Group's entities enter into various reinsurance arrangements with one another. The related results of these transactions are eliminated on consolidation and are not included within the results of the segments. This is consistent with the information used by the chief operating decision-maker when evaluating the results of the Group. Performance is measured based on each reportable segment's profit before tax.

6 months ended 30 June 2017

 

Hiscox Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Gross premiums written

739,555

314,602

405,444

-

1,459,601

Net premiums written

681,686

199,750

132,109

-

1,013,545

Net premiums earned

602,392

230,158

104,082

-

936,632

Investment result

12,304

8,329

13,659

14,665

48,957

Other income

9,174

6,060

6,613

107

21,954

Total income

623,870

244,547

124,354

14,772

1,007,543

Claims and claim adjustment expenses, net of reinsurance

(261,443)

(123,396)

(58,369)

-

(443,208)

Expenses for the acquisition of insurance contracts

(143,820)

(67,749)

(4,981)

-

(216,550)

Operational expenses

(147,011)

(27,908)

(20,751)

(8,548)

(204,218)

Foreign exchange gains/(losses)

1,985

(8,247)

(1,472)

(23,137)

(30,871)

Total expenses

(550,289)

(227,300)

(85,573)

(31,685)

(894,847)

Results of operating activities

73,581

17,247

38,781

(16,913)

112,696

Finance costs

(4)

-

(618)

(9,260)

(9,882)

Share of profit of associates after tax

(197)

-

-

6

(191)

Profit before tax

73,380

17,247

38,163

(26,167)

102,623

Profit before tax and foreign exchange gains/(losses)

71,395

25,494

39,635

(3,030)

133,494

100% ratio analysis*

 

 

 

 

 

Claims ratio (%)

43.1

50.4

58.5

-

46.9

Expense ratio (%)

47.8

40.6

23.3

-

43.0

Combined ratio excluding foreign exchange impact (%)

90.9

91.0

81.8

-

89.9

Foreign exchange impact (%)

(0.3)

3.8

2.2

-

1.1

Combined ratio (%)^

90.6

94.8

84.0

-

91.0

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2016

 

Hiscox Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Gross premiums written

581,065

342,665

364,748

-

1,288,478

Net premiums written

528,200

216,188

144,722

-

889,110

Net premiums earned

470,391

198,154

98,996

-

767,541

Investment result

15,325

10,142

7,658

6,782

39,907

Other income

7,517

4,518

5,815

699

18,549

Total income

493,233

212,814

112,469

7,481

825,997

Claims and claim adjustment expenses, net of reinsurance

(174,651)

(109,714)

(44,004)

-

(328,369)

Expenses for the acquisition of insurance contracts

(125,309)

(62,374)

(4,616)

-

(192,299)

Operational expenses

(125,038)

(20,846)

(21,095)

(9,450)

(176,429)

Foreign exchange gains

24,039

17,215

12,803

33,266

87,323

Total expenses

(400,959)

(175,719)

(56,912)

23,816

(609,774)

Results of operating activities

92,274

37,095

55,557

31,297

216,223

Finance costs

-

-

(919)

(9,287)

(10,206)

Share of profit of associates after tax

4

-

-

-

4

Profit before tax

92,278

37,095

54,638

22,010

206,021

Profit before tax and foreign exchange gains

68,239

19,880

41,835

(11,256)

118,698

100% ratio analysis*

 

 

 

 

 

Claims ratio (%)

36.5

54.3

45.0

-

42.9

Expense ratio (%)

52.9

40.5

24.8

-

45.5

Combined ratio excluding foreign exchange impact (%)

89.4

94.8

69.8

-

88.4

Foreign exchange impact (%)

(5.3)

(9.5)

(13.8)

-

(7.7)

Combined ratio (%)^

84.1

85.3

56.0

 

80.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2016

 

Hiscox

Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Gross premiums written

1,181,384

726,045

495,150

-

2,402,579

Net premiums written

1,091,969

469,143

226,831

-

1,787,943

Net premiums earned

1,020,531

443,129

211,353

-

1,675,013

Investment result

31,328

13,351

11,749

18,563

74,991

Other income

14,075

9,121

13,704

694

37,594

Total income

1,065,934

465,601

236,806

19,257

1,787,598

Claims and claim adjustment expenses, net of reinsurance

(396,137)

(260,468)

(83,167)

-

(739,772)

Expenses for the acquisition of insurance contracts

(262,545)

(137,177)

(10,118)

-

(409,840)

Operational expenses

(287,642)

(57,933)

(49,335)

(20,809)

(415,719)

Foreign exchange gains

37,248

34,991

22,959

57,210

152,408

Total expenses

(909,076)

(420,587)

(119,661)

36,401

(1,412,923)

Results of operating activities

156,858

45,014

117,145

55,658

374,675

Finance costs

-

-

(1,654)

(18,612)

(20,266)

Share of profit of associates after tax

1,137

(1,003)

-

-

134

Profit before tax

157,995

44,011

115,491

37,046

354,543

Profit before tax and foreign exchange gains

120,747

9,020

92,532

(20,164)

202,135

100% ratio analysis*

 

 

 

 

 

Claims ratio (%)

38.4

57.4

39.1

-

44.2

Expense ratio (%)

53.5

42.3

26.5

-

46.6

Combined ratio excluding foreign exchange impact (%)

91.9

99.7

65.6

-

90.8

Foreign exchange impact (%)

(3.8)

(8.7)

(11.9)

-

(6.4)

Combined ratio (%)^

88.1

91.0

53.7

-

84.4

             

* The Group's percentage participation in Syndicate 33 can fluctuate from year to year and consequently, presentation of the ratios at the 100% level removes any distortions arising therefrom.

^ The combined ratio is made up of the aggregation of the claims ratio, the expense ratio and the impact of foreign exchange. The claims ratio is calculated as claims and claim adjustment expenses, net of reinsurance, as a proportion of net premiums earned. The expense ratio is calculated as the total of expenses for the acquisition of insurance contracts, and operational expenses as a proportion of net premiums earned. The foreign exchange impact ratio is calculated as the foreign exchange gains or losses as a proportion of net premiums earned. All ratios are calculated using the 100% results. Costs allocated to the Corporate Centre are non-underwriting related costs and are not included within the combined ratio.

 

The tables presented below contain the net earned premium, claims, expenses and foreign exchange items at 100% ownership, to enable calculation of the underling ratios included in the operating segments.

 

Period ended 30 June 2017

 

Hiscox

Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Net premium earned

616,856

286,680

118,514

-

1,022,050

Claims and claim adjustment expenses, net of reinsurance

(265,757)

(144,377)

(69,336)

-

(479,470)

Expenses for the acquisition of insurance contracts

(147,272)

(83,228)

(4,300)

-

(234,800)

Operational expenses

(147,860)

(33,056)

(23,270)

-

(204,186)

Foreign exchange gains/(losses)

1,807

(10,919)

(2,641)

-

(11,753)

 

 

 

 

 

 

Period ended 30 June 2016

 

Hiscox

Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Net premium earned

483,613

246,989

113,409

-

844,011

Claims and claim adjustment expenses, net of reinsurance

(176,779)

(134,091)

(51,083)

-

(361,953)

Expenses for the acquisition of insurance contracts

(124,671)

(75,236)

(4,652)

-

(204,559)

Operational expenses

(131,198)

(24,735)

(23,479)

-

(179,412)

Foreign exchange gains

25,825

23,412

15,673

-

64,910

             

 

Year ended 31 December 2016

 

Hiscox

Retail

Hiscox London Market

Hiscox Re and ILS

Corporate centre

Total

 

£000

£000

£000

£000

£000

Net premium earned

1,046,838

550,229

242,462

-

1,839,529

Claims and claim adjustment expenses, net of reinsurance

(402,508)

(315,951)

(94,819)

-

(813,278)

Expenses for the acquisition of insurance contracts

(270,986)

(165,131)

(10,337)

-

(446,454)

Operational expenses

(289,028)

(67,376)

(54,015)

-

(410,419)

Foreign exchange gains

40,115

48,101

28,927

-

117,143

             

 

9. Net asset value per share

 

 

30 June 2017

30 June 2016

31 Dec 2016

 

Net asset

value

(total equity)

NAV

per share

pence

Net asset

value

(total equity)

NAV

per share

pence

Net asset

value

(total equity)

NAV

per share

pence

 

£000

 

£000

 

£000

 

Net asset value

1,858,843

657.7

1,667,703

591.7

1,818,403

649.9

Net tangible asset value

1,726,781

611.0

1,537,050

545.3

1,694,679

605.7

 

The net asset value per share is based on 282,632,166 shares (30 June 2016: 281,862,040; 31 December 2016: 279,805,393), being the shares in issue at 30 June, less those held in treasury and those held by the Group Employee Benefit Trust. Net tangible assets comprise total equity excluding intangible assets. 

10. Return on equity

 

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

£000

£000

£000

Profit for the period

97,907

197,626

336,986

Opening total equity

1,818,403

1,528,829

1,528,829

Adjusted for the time weighted impact of capital distributions and issuance of shares

(2,407)

(38,154)

(60,742)

1,815,996

1,490,675

1,468,087

11.1

28.3

23.0

         

 

The return on equity is calculated by using profit for the period divided by the adjusted opening shareholders' equity. The adjusted opening shareholders' equity represents the equity on 1 January of the relevant year as adjusted for time weighted aspects of capital distributions and issuing of shares or treasury share purchases during the period.  The time weighted positions are calculated on a daily basis with reference to the proportion of time from the transaction to the end of the period. The Company annualises the ROE by using a standard compound formula for the half year periods, being the profit for the period divided by the adjusted opening total equity, to the power of 2 to annualise for a full year comparison.

 

 

11. Investment result

 

i.

Analysis of investment result

 

The total investment result for the Group before taxation comprises:

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

£000

£000

£000

Investment income including interest receivable

30,435

23,280

54,789

Net realised (losses)/gains on financial investments at fair value through profit or loss

(3,078)

325

6,416

Net fair value gains on financial investments at fair value through profit or loss

23,169

18,353

13,631

Investment result - financial assets

50,526

41,958

74,836

Fair value (losses)/gains on derivative financial instruments

(1,569)

(2,051)

155

48,957

39,907

74,991

 

Investment expenses are presented within other expenses (note 12).

ii.

Annualised investment return

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

£000

£000

£000

 

Return

 £000

Yield

%

Return

£000

Yield

%

Return

£000

Yield

%

Debt and fixed income securities

25,480

1.5

43,581

3.2

55,709

1.9

Equities and shares in unit trusts

23,607

15.7

(2,737)

(2.0)

17,246

6.2

Deposits with credit institutions/cash and cash equivalents

1,439

0.4

1,114

0.3

1,881

0.3

 

50,526

2.3

41,958

2.3

74,836

1.9

Weighted average assets (£m)

4,454

 

3,629

 

4,041

 

                       

  

12. Other income and operational expenses

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

£000

£000

£000

Agency related income

8,740

6,443

11,743

Profit commission

2,820

6,189

11,720

Other underwriting income

1,083

2,986

3,666

Other income

9,311

2,931

10,465

21,954

18,549

37,594

Wages and salaries

65,561

65,947

145,997

Social security costs

10,147

9,487

23,288

Pension cost - defined contribution

4,813

3,775

8,243

Pension cost - defined benefit

-

80

172

Share based payments

13,648

10,669

26,274

Marketing expenses

25,349

23,130

42,051

Investment expenses

2,428

1,825

4,361

Depreciation, amortisation and impairment

9,599

7,299

28,162

Other expenses

72,673

54,217

137,171

204,218

176,429

415,719

 

Wages and salaries have been shown net of transfers to acquisition and claims expenses.

 

Other expenses include, but are not limited to, legal and professional costs, computer costs, contractor-based costs and property costs. None of the items are individually material.

 

13. Finance costs

 

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

£000

£000

£000

Interest charge associated with long-term debt

8,353

8,399

16,844

Interest and expenses associated with bank borrowing facilities

898

839

1,703

Interest and charges associated with Letters of Credit

261

311

580

Interest charges on experience account

370

657

1,139

 

9,882

10,206

20,266

 

As at 30 June 2017, the total amount drawn by way of Letter of Credit to support the Funds at Lloyd's requirement was $10.0 million (30 June 2016: $10.0 million, 31 December 2016: $10.0 million).

         

14. Tax expense

 

The Company and its subsidiaries are subject to enacted tax laws in the jurisdictions in which they are incorporated and domiciled.

The amounts charged in the condensed consolidated income statement comprise the following:

 

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

£000

£000

£000

Current tax

 

 

 

Expense for the year

10,556

14,618

32,240

Adjustments in respect of prior years

(325)

(1,279)

(5,010)

Total current tax

10,231

13,339

27,230

 

 

 

 

Deferred tax

 

 

 

Credit for the year

(5,830)

(5,140)

(5,055)

Adjustments in respect of prior years

315

196

(3,786)

Effect of rate change

-

-

(832)

Total deferred tax

(5,515)

(4,944)

(9,673)

Total tax charged to the income statement

4,716

8,395

17,557

 

The Group records its income tax expense based on the expected effective rate for the full year.

15. Insurance liabilities and reinsurance assets

 

 

30 June 2017

30 June 2016

31 Dec 2016

 

£000

£000

£000

Gross

 

 

 

Claims and claim adjustment expenses outstanding

2,578,583

2,280,309

2,565,824

Unearned premiums

1,472,828

1,338,572

1,287,152

Total insurance liabilities, gross

4,051,411

3,618,881

3,852,976

Recoverable from reinsurers

 

 

 

Claims and claim adjustment expenses outstanding

530,733

454,270

543,115

Unearned premiums

394,656

339,336

262,534

Total reinsurers' share of insurance liabilities

925,389

793,606

805,649

Net

 

 

 

Claims and claim adjustment expenses outstanding

2,047,850

1,826,039

2,022,709

Unearned premiums

1,078,172

999,236

1,024,618

Total insurance liabilities, net

3,126,022

2,825,275

3,047,327

           

 

Net claims and claim adjustment expenses include releases of £96.1m (30 June 2016: £96.1m; 31 December 2016: £212.9m) of reserves established in prior reporting periods.

 

 

The development of net claims reserves by accident years are detailed below.

Insurance claims and claims expenses reserves - net at 100%

Accident year ending 31 December **

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimate of ultimate claims costs as adjusted for foreign exchange*:

 

 

 

 

 

 

 

 

 

 

 

 

at end of accident year**

894,635

785,227

927,802

1,158,193

917,051

870,342

903,661

961,467

1,123,423

586,216

9,128,017

 

one period later**

795,286

651,426

808,229

1,068,836

806,156

769,424

786,891

884,092

1,065,854

-

7,636,194

 

two periods later**

793,442

620,960

761,569

1,025,160

747,003

690,527

716,433

854,090

-

-

6,209,184

 

three periods later**

746,317

623,804

741,513

1,023,186

720,972

640,219

701,652

-

-

-

5,197,663

 

four periods later**

710,614

612,821

718,384

1,016,446

714,647

640,512

-

-

-

-

4,413,424

 

five periods later**

697,281

610,038

714,352

978,314

707,617

-

-

-

-

-

3,707,602

 

six periods later**

688,487

597,092

691,657

970,303

-

-

-

-

-

-

2,947,539

 

seven periods later**

673,838

594,610

692,287

-

-

-

-

-

-

-

1,960,735

 

eight periods later**

666,210

590,301

-

-

-

-

-

-

-

-

1,256,511

 

nine periods later**

661,100

-

-

-

-

-

-

-

-

-

661,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current estimate of cumulative claims

661,100

590,301

692,287

970,303

707,617

640,512

701,652

854,090

1,065,854

586,216

7,469,932

 

Cumulative payments to date

(639,982)

(539,468)

(630,661)

(867,272)

(564,655)

(531,903)

(499,235)

(469,033)

(402,073)

(121,987)

(5,266,269)

 

Liability recognised at 100% level

21,118

50,833

61,626

103,031

142,962

108,609

202,417

385,057

663,781

464,229

2,203,663

 

Liability recognised in respect of prior accident years at 100% level

 

 

 

 

 

 

 

 

 

 

130,815

 

Total net liability to external parties at 100%

 

 

 

 

 

 

2,334,478

                                     

* The foreign exchange adjustment arises from the retranslation of the estimates at each date using the exchange rate ruling at 30 June 2017.

** With the exception of the most recent development data for each accident year, which only relates to the six months ending 30 June 2017, the term period refers to one full calendar year.

 

 

Reconciliation of 100% disclosures above to Group's share - net

 

Accident year

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

Current estimate of cumulative claims

661,100

590,301

692,287

970,303

707,617

640,512

701,652

854,090

1,065,854

586,216

7,469,932

Less:

attributable to external Names

(119,360)

(97,418)

(99,242)

(132,460)

(77,022)

(65,840)

(75,097)

(91,183)

(106,932)

(52,459)

(917,013)

Group share of current ultimate claims estimate

541,740

492,883

593,045

837,843

630,595

574,672

626,555

762,907

958,922

533,757

6,552,919

 

 

 

 

 

 

 

 

 

 

 

Cumulative payments to date

(639,982)

(539,468)

(630,661)

(867,272)

(564,655)

(531,903)

(499,235)

(469,033)

(402,073)

(5,266,269)

Less: attributable to external Names

116,028

88,218

86,973

115,384

58,311

54,538

51,480

46,658

36,481

8,867

662,938

Group share of cumulative payments

(523,954)

(451,250)

(543,688)

(751,888)

(506,344)

(477,365)

(447,755)

(422,375)

(365,592)

(113,120)

(4,603,331)

 

 

 

 

 

 

 

 

 

 

 

Liability for 2008 to 2017 accident years
recognised on Group's balance sheet

17,786

41,633

49,357

85,955

124,251

97,307

178,800

340,532

593,330

1,949,588

Liability for accident years before 2008 recognised on Group's balance sheet

 

 

 

 

 

 

 

 

 

 

98,262

Total Group liability to external parties included in the balance sheet, net

 

 

 

 

2,047,850

 

This represents the claims element of the Group's insurance liabilities and reinsurance assets.

 

 

  

16. Earnings per share

 

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held in treasury as own shares.

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

Profit for the period attributable to owners of the Company (£000)

97,907

197,626

336,986

Weighted average number of ordinary shares in issue (thousands)

280,445

280,835

281,175

Basic earnings per share (pence per share)

34.9p

70.4p

119.8p

         

 

Diluted

Diluted earnings per share is calculated by adjusting the assumed conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares, share options and awards. For the share options, a calculation is made to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

Profit for the period attributable to owners of the Company (£000)

97,907

197,626

336,986

Weighted average number of ordinary shares in issue (thousands)

280,445

280,835

281,175

Adjustment for share options (thousands)

8,477

8,824

9,402

Weighted average number of ordinary shares for diluted earnings per share (thousands)

288,922

289,659

290,577

Diluted earnings per share (pence per share)

33.9p

68.2p

116.0p

 

Diluted earnings per share has been calculated after taking account of outstanding options and awards under employee share option and performance plan schemes and also options under save as you earn schemes.

 

17. Dividends paid to owners of the Company

 

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

£000

£000

£000

Final dividend for the year ended:

 

 

 

31 December 2016 of 19.0p (net) per share

54,283

-

-

Second interim dividend for the year ended:

 

 

 

31 December 2015 of 32.0p (net) per share

-

89,674

89,674

Interim dividend for the year ended:

 

 

 

31 December 2016 of 8.5p (net) per share

-

-

24,260

 

54,283

89,674

113,934

 

The final dividend for the year ended 31 December 2016 was paid in cash of £51,247,000 and 251,000 shares for the scrip dividend. The interim dividend for the year ended 31 December 2016 was paid in cash of £22,983,000 and 119,302 shares for the scrip dividend.

 

An interim dividend of 9.5p (net) per ordinary share has been declared payable on 13 September 2017 to shareholders registered on 11 August 2017 in respect of the six months to 30 June 2017 (30 June 2016: 8.5p (net) per ordinary share). A scrip dividend alternative will be offered to the owners of the Company. The dividend was declared in Bermuda on 28 July 2017 and accordingly has not been included as a distribution or liability in this interim consolidated financial information in accordance with IAS 10 Events after the balance sheet date.

 

 

18. Financial assets and liabilities

i.

Analysis of financial assets carried at fair value

 

30 June 2017

30 June 2016

31 Dec 2016

 

 

£000

£000

£000

 

Debt and fixed income securities

3,308,379

2,980,654

3,414,949

 

Equities and shares in unit trusts

325,685

270,669

305,342

 

Deposits with credit institutions

10,574

9,051

24,592

 

Total investments

3,644,638

3,260,374

3,744,883

 

Insurance linked funds

45,181

44,983

46,821

 

Derivative financial instruments

119

455

329

 

Total financial assets carried at fair value

3,689,938

3,305,812

3,792,033

 

 

 

ii.

Analysis of financial liabilities carried at fair value

 

 

30 June 2017

 £000

30 June 2016

 £000

31 Dec 2016

 £000

 

Derivative financial instruments

145

761

474

 

Total financial liabilities carried at fair value

145

761

474

 

 

iii.

Analysis of financial liabilities carried at amortised cost

 

30 June 2017

 £000

30 June 2016

 £000

31 Dec 2016

 £000

Long-term debt

274,074

273,964

274,019

Accrued interest on long-term debt

10,152

10,152

1,800

Total financial liabilities carried at amortised cost

284,226

284,116

275,819

           

  

iv.

Investment and cash allocation

 

30 June 2017

30 June 2016

 31 Dec 2016

 

£000

%

£000

%

£000

%

Debt and fixed income securities

3,308,379

74.9

2,980,654

75.5

3,414,949

77.5

Equities and shares in unit trusts

325,685

7.4

270,669

6.9

305,342

6.9

Deposits with credit institutions/cash and cash equivalents

781,145

17.7

694,910

17.6

689,408

15.6

Total

4,415,209

 

3,946,233

 

4,409,699

 

                           

 

On 24 November 2015, the group issued £275.0 million 6.125% fixed-to-floating rate callable subordinated notes due 2045, with a first call date of 2025.

The notes bear interest from and including 24 November 2015 at a fixed rate of 6.125% per annum annually in arrears starting 24 November 2016 up until the first call date in November 2025, and thereafter at a floating rate of interest equal to three-month LIBOR plus 5.076% payable quarterly in arrears on each floating interest payment date. The Group will be exposed to interest rate risk on its long-term debt.

On 25 November 2015 the notes were admitted for trading on the London Stock Exchange's regulated market. The notes were rated BBB- by S&P as well as by Fitch.

The interest accrued on the long-term debt was £10.2 million at the balance sheet date (30 June 2016 : £10.2 million; 31 December 2016 : £1.8 million) and is included in financial liabilities.

 

v.

Investment and cash allocation by currency

 

30 June 2017
%

30 June 2016
%

 31 Dec 2016
%

Sterling

22.2

24.0

23.1

US Dollars

65.1

61.9

64.7

Euro and other currencies

12.7

14.1

12.2

           

 

19. Fair value measurements

In accordance with IFRS 13 Fair Value Measurement, the fair value of financial instruments based on a three-level fair value hierarchy that reflects the significance of the inputs used in measuring the fair value, is set out below:

 

As at 30 June 2017

Level 1

Level 2

Level 3

Total

 

£000

£000

£000

£000

Financial Assets

 

 

 

 

Debt and fixed income securities

986,043

2,322,336

-

3,308,379

Equities and shares in unit trusts

-

314,382

11,303

325,685

Deposits with credit institutions

10,574

-

-

10,574

Insurance linked fund

-

-

45,181

45,181

Derivative financial instruments

-

119

-

119

Total

996,617

2,636,837

56,484

3,689,938

Financial Liabilities

 

 

 

 

Derivative financial instruments

-

145

-

145

Total

-

145

-

145

 

 

 

 

 

 

As at 30 June 2016

Level 1

Level 2

Level 3

Total

 

£000

£000

£000

£000

Financial Assets

 

 

 

 

Debt and fixed income securities

800,260

2,180,394

-

2,980,654

Equities and shares in unit trusts

-

258,216

12,453

270,669

Deposits with credit institutions

9,051

-

-

9,051

Insurance linked fund

-

-

44,983

44,983

Derivative financial instruments

-

455

-

455

Total

809,311

2,439,065

57,436

3,305,812

Financial Liabilities

 

 

 

 

Derivative financial instruments

-

761

-

761

Total

-

761

-

761

 

 

 

 

 

 

 

 

As at 31 December 2016

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

Debt and fixed income securities

1,005,111

2,409,838

-

3,414,949

Equities and shares in unit trusts

-

293,187

12,155

305,342

Deposits with credit institutions

24,592

-

-

24,592

Insurance linked fund

-

-

46,821

46,821

Derivative financial instruments

-

329

-

329

Total

1,029,703

2,703,354

58,976

3,792,033

 

Financial Liabilities

 

 

 

 

Derivative financial instruments

-

474

-

474

Total

-

474

-

474

 

 

The levels of the fair value hierarchy are defined by the standard as follows:

           

 

·             

level 1 - fair values measured using quoted prices (unadjusted) in active markets for identical instruments;

·              

level 2 -  fair values measured using directly or indirectly observable inputs or other similar valuation techniques for which all   significant inputs are based on market observable data;

·              

level 3 -  fair values measured using valuation techniques for which significant inputs are not based on market observable data.

     

 

The fair values of the Group's financial assets are based on prices provided by investment managers who obtain market data from numerous independent pricing services. The pricing services used by the investment managers obtain actual transaction prices for securities that have quoted prices in active markets. For those securities which are not actively traded, the pricing services use common market valuation pricing models. Observable inputs used in common market valuation pricing models include, but are not limited to, broker quotes, credit ratings, interest rates and yield curves, prepayment speeds, default rates and other such inputs which are available from market sources.

Investments in mutual funds, which are included in equities and shares in unit trusts, comprise a portfolio of stock investments in trading entities which are invested in various quoted investments. The fair value of shares in unit trusts are based on the net asset value of the fund reported by independent pricing sources or the fund manager.

Included within Level 1 of the fair value hierarchy are certain government bonds, treasury bills, long-term debt and exchange traded equities which are measured based on quoted prices in active markets.

Level 2 of the hierarchy contains certain government bonds, US government agencies, corporate securities, asset backed securities and mortgage backed securities. The fair value of these assets are based on the prices obtained from both investment managers and investment custodians as discussed above. The Group records the unadjusted price provided and validates the price through a number of methods including a comparison of the prices provided by the investment managers with the investment custodians and the valuation used by external parties to derive fair value. Quoted prices for US government agencies and corporate securities are based on a limited number of transactions for those securities and as such the Group considers these instruments to have similar characteristics as those instruments classified as Level 2. Also included within Level 2 are units held in traditional long funds and long and short special funds and over the counter derivatives.

Level 3 contains investments in a limited partnership and unquoted equity securities and an insurance linked fund which have limited observable inputs on which to measure fair value. Unquoted equities, including equity instruments in limited partnerships, are carried at fair value. Fair value is determined to be net asset value for the limited partnerships, and for the equity holdings it is determined to be the latest available traded price. The effect of changing one or more of the inputs used in the measurement of fair value of these instruments to another reasonably possible assumption would not be significant. At 30 June 2017, the insurance linked fund of £45,181,000 (30 June 2016 : £44,983,000; 31 December 2016 £46,821,000) represents the Group's investment in Kiskadee Funds.

The fair value of the Kiskadee Funds is estimated to be the net asset value as at the balance sheet date. The net asset value is based on the fair value of the assets and liabilities in the Funds. Significant inputs and assumptions in calculating the fair value of the assets and liabilities associated with reinsurance contracts written by the Kiskadee Funds include the amount and timing of claims payable in respect of claims incurred and periods of unexpired risk. The Group has considered changes in the net asset valuation of the Kiskadee Funds if reasonably different inputs and assumptions were used and has found no significant changes in the valuation.

In certain cases, the inputs used to measure the fair value of a financial instrument may fall into more than one level within the fair value hierarchy. In this instance, the fair value of the instrument in its entirety is classified based on the lowest level of input that is significant to the fair value measurement.

During the period, there were no significant transfers made between Level 1, Level 2 or Level 3 of the fair value hierarchy.  The following table sets forth a reconciliation of opening and closing balances for financial instruments classified under Level 3 of the fair value hierarchy:

 

 

30 June 2017

Financial assets

 

 

 

Equities and shares in unit trusts

Insurance linked fund

Total

 

 

 

£000

£000

£000

 

Balance at 1 January

 

12,155

46,821

58,976

 

Fair value gains or losses through profit or loss

 

(175)

1,083

908

 

Foreign exchange gains

 

(119)

(2,279)

(2,398)

 

Purchases

 

215

4,000

4,215

 

Settlements

 

(773)

(4,444)

(5,217)

 

Closing balance

 

11,303

45,181

56,484

 

Unrealised gains and losses in the period on securities held at the end of the period

 

(246)

1,083

837

 

 

 

 

 

30 June 2016

Financial assets

 

 

 

 

Equities and shares in unit trusts

Insurance linked fund

Total

 

 

 

£000

£000

£000

 

Balance at 1 January

 

13,640

40,045

53,685

 

Fair value gains or losses through profit or loss

 

(603)

979

376

 

Foreign exchange gains and losses

 

334

3,959

4,293

 

Purchases

 

652

-

652

 

Settlements

 

(1,570)

-

(1,570)

 

Closing balance

 

12,453

44,983

57,436

 

Unrealised gains and losses in the year on securities held at the end of the year

 

(645)

979

334

 

 

 

 

 

 

 

 

20. Impact of foreign exchange related items

The net foreign exchange (losses)/gains for the year include the following amounts:

 

6 months to
30 June 2017

6 months to
30 June 2016

Year to
31 Dec 2016

 

£000

£000

£000

Exchange (losses)/gains recognised in the consolidated income statement

(30,871)

87,323

152,408

Exchange (losses)/gains classified as a separate component of equity

(23,979)

56,383

111,094

Overall impact of foreign exchange related items on net assets

(54,850)

143,706

263,502

         

 

The above excludes profit or losses on foreign exchange derivative contracts which are included within the investment result.

 

 

21. Condensed consolidated interim cash flow statement

The purchase, maturity and disposal of financial assets and liabilities, including derivatives, is part of the Group's insurance activities and is therefore classified as an operating cash flow.

Included within cash and cash equivalents held by the Group are balances totalling £134 million (30 June 2016: £162 million; 31 December 2016: £136 million) not available for use by the Group outside of the Lloyd's Syndicates within which they are held. Additionally, £39 million (30 June 2016: £76 million; 31 December 2016: £38 million) is pledged cash against Funds at Lloyd's, and £8 million (30 June 2016: £8 million; 31 December 2016: £13 million) is held within trust funds against reinsurance arrangements

 

 

Directors' responsibilities statement

 

The Directors confirm, to the best of our knowledge, that the Chairman's statement and condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and the Interim Statement includes a fair review of the information required by sections 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority, being:

1.

an indication of important events during the first six months of the current financial year and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

2.

related-party transactions that have taken place in the first six months of the current year and that have materially affected  the consolidated financial position or performance of Hiscox Ltd during that period, and any changes in the related party transactions described in the last annual report that could have such a material effect.

The individuals responsible for authorising the responsibility statement on behalf of the Board are the Chief Executive, B E Masojada and the Chairman, R S Childs. Accordingly the Half Yearly Report to the London Stock Exchange was approved for issue on Monday, 31 July 2017 following receipt of confirmation from the auditors that they had reviewed the final content.

     

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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