for Hiscox. We have given retail brokers the Hiscox UK: Our UK business made
Chief Executive’s ability to place smaller risks quickly and cost
effectively directly with us online and this
another excellent profit of £45.2 million
(2011: £49.0 million) despite spending more
report continued investment in e-trading has delivered modest on marketing and paying record flood
premiums in 2012 which we expect to grow losses. The business benefited from a good
in 2013. We will also be looking to trade investment return and good underwriting.
in this manner in other lines of business. Growth in commercial product lines offset
the cancellation of two high net worth
Casualty: The casualty market remains underwriting partnerships, resulting in
a challenging place and we continue to an increase in revenues of 2.2% to £375.2
reduce our lines as the rates on offer remain million (2011: £367.1 million). The progress
Hiscox London Market inadequate. We do, however, believe that in our core lines is set out below:
2012 2011 ultimately economic sanity will prevail and the
£m £m
market will inevitably harden. In preparation, The high net worth business delivered
Gross premiums written 640.0 585.4
during the course of 2012 we recruited a strong profit despite the largest single
Net premiums earned 419.0 418.8 several senior staff to build on our existing loss in its history – a London house fire.
Underwriting profit 105.1 50.3 team. The division has performed well Premium income shrank slightly, reflecting
Investment result 27.0 8.8
at the bottom line, as we have benefited the previously announced withdrawal from
from releases in prior years – demonstrating two partnerships which did not live up
Foreign exchange (10.2) (1.5)
our prudent approach to reserving. to expectations. We also experienced the
Profit before tax 121.9 57.6 greatest level of flood activity in our history,
Combined ratio 75.5% 89.1% Aviation and space: Both lines continue paying claims to the value of £14 million in
Combined ratio excluding
to make steady profitable progress. Pricing flood and storm losses. You only find out the
foreign exchange 73.1% 89.1% in the aviation market remains challenging, worth of your insurer when you make a claim
but our risk selection and hence loss so it is pleasing that during this busy year our
experience have remained exemplary, so team lived up to its reputation for excellence,
results are very acceptable for our second winning ‘The British Insurance Awards
Hiscox UK year of underwriting this class of business. Customer Care’ accolade. In the competitive
2012 2011 There has been increased launch activity luxury motor market we reached maturity
£m £m
in the space market leading to slightly higher with a second year of profit, our service
Gross premiums written 375.2 367.1
volumes. As the global economy continues and brand setting the team apart.
Net premiums earned 351.3 325.2 to depend on more support from
Underwriting profit 31.2 41.5 extraterrestrial services, we believe this Our professions, specialty commercial,
Investment result 14.6 7.3
business will grow steadily over time. and technology lines have made good
progress. We launched five new professional
Foreign exchange (0.6) 0.2
Our London Market business has a global remit. indemnity products during the year
Profit before tax 45.2 49.0 It makes use of the Lloyd’s brand name and specifically for the unique risks professions
Combined ratio 92.1% 87.5% licences to write business located around the such as facilities managers and interior
Combined ratio excluding
world. Lloyd’s is making steady progress to and garden designers face. These products
foreign exchange 91.9% 87.6% enhance its own licence network, and we at have sold well, filling a real customer need.
Hiscox are supportive of all efforts to expand Recession-related claims have not been as
the range of licences the market has for both severe as we had expected.
reinsurance and insurance. We are particularly
supportive of licensing which allows us to trade The direct business continues to propel the
from London without the costs of teams on brand. We increased our marketing spend
the ground. In 2012 we saw the benefit of doing in the year by £4 million and returned to TV
this with the significant expansion of our with an advertising campaign that promotes
Japanese and Thai reinsurance exposures, our ethos of trust, honesty and fair customer
and the insurance support we were able to service. An unexpected outcome has been
give the New Zealand economy to enable the the strength with which our broker partners
rebuilding of Christchurch. All of this business have identified with this message, reinforcing
was underwritten from London, backed by our relationships. The direct household
extensive visits to local clients and brokers. products have been held back by challenges
We hope that as regulators get more parochial within our online platform hampering our
they will remember the benefits of accessing flexibility in pricing. We are investing in 2013
global expertise and capital, and will not restrict and beyond to address this. Our commercial
our ability to trade in this way. products continue to move ahead despite
an increasingly competitive market. Again
Hiscox UK and Hiscox Europe the brand and our service reputation are real
In 1987 we took our first step into UK retail differentiators. Competitors can copy
business (or local specialty insurance) moving our wordings, but these more intangible
into Continental Europe in 1993. By 2012 our elements are real protective moats
businesses had expanded materially, writing to our business.
premium income of £507.5 million (2011: £498.0
million) and delivering a profit of £49.1 million In 2013 Hiscox UK has a big agenda.
(2011: £51.5 million). There is plenty of room Distribution for the insurance market has
to grow in these markets and I remain confident evolved over the years; it is no longer as
that we have the products, expertise and brand black and white as broker versus direct.
to continue to expand. We are launching a tied agency to address
8 Chief Executive’s report Hiscox Ltd Report and Accounts 2012