Profit before tax for the year was £217.1 The net claims ratio remained constant at 47.2%
Group financial million (2011: £17.3 million), including a solid
investment return of 3.1% (2011: 0.9%) and
(2011: 46.3%). Two specific losses in the year
contributed to the small decline. The combined
performance despite Superstorm Sandy losses of £90 ratio declined to 94.4% (2011: 91.0%), in part
million. The Group recorded a post-tax return due to a slight increase in the expense ratio
on equity of 16.9% (2011: 1.7%) and earnings as we increased the marketing spend in both
per share were 53.1p (2011: 5.5p). UK and Europe for the year.
Net asset value per share increased by 8.1% As a result, profit before tax for the year was
to 349.7p (2011: 323.5p). The Group continues slightly down at £49.1 million (2011: £51.5 million).
to maintain a progressive dividend policy and
£217.1m total dividend per share rose by 5.9% to 18.0p
(2011: 17.0p), subject to shareholder approval
of the final dividend equivalent. Following
Hiscox International
Gross premiums written increased 14.3% to
£418.3 million (2011: £365.8 million) largely driven
Profit before tax
a review of the Group’s capital position, it is by the US. The US increased premiums by
proposed to make a further special distribution, 32.6%, driven in the main from the specialty lines,
subject to shareholder approval, through but all areas contributed. The Direct division
the B share scheme of 38.0p per share. grew by 223% from a small base. Bermuda also
saw their premium increase by 13.0% to £200.7
Gross premiums written of £1.56 billion were million (2011: £177.7 million). Gross premiums
up 8.0% year-on-year. Strong growth in the written in Guernsey decreased as less piracy
property, reinsurance, aviation and local E&O and multi-year policies were written.
and commercial lines were offset in part by a
decline in art and private clients. The Group’s The net claims ratio improved significantly
85.5% combined ratio including foreign exchange was
85.5% (2011: 99.5%).
to 46.0% (2011: 89.9%) with only Superstorm
Sandy as a larger event during the year compared
Combined ratio to the multiple catastrophe events in 2011.
This has been a good year for the Group in the The impact on the combined ratio was an
investment markets, with the Group’s investments improvement of 44.7% to 89.2% (2011: 133.9%).
producing a return of 3.1% (2011: 0.9%). All asset
classes outstripped their benchmarks. As a result, the profit before tax was £62.6 million
(2011: loss of £89.5 million).
The underwriting performance for each
operating segment is detailed on the next page. Hiscox Corporate Centre
Investments performed well during the year
Hiscox London Market with a return of £18.5 million (2011: £2.2 million).
Gross premiums written increased by 9.3% This was offset in part by operational expenses
to £640.0 million (2011: £585.4 million), with increasing to £17.3 million (2011: £12.3 million)
strong growth in the property division along and foreign exchange losses of £11.5 million
with the aviation and reinsurance accounts. (2011: gain £12.4 million). The losses on foreign
exchange were as a result of holding US Dollar
Reinsurance purchased was at a similar level assets. The loss before tax was £16.5 million
to the prior year at 27.8% of gross premiums (2011: loss £2.3 million).
written (2011: 29.4%). The quota share
arrangement with Syndicate 6104 and others Cash and liquidity
remained in place and are increasing in 2013. The Group’s primary source of liquidity is from
premium income and investment income.
The net claims ratio improved to 40.3% These funds are used predominantly to pay
(2011: 56.6%), with much less catastrophe claims, expenses, reinsurance costs, dividends
impact in the year. Superstorm Sandy and Costa and taxes, and to invest in more assets. During
Concordia being the two larger events of note the year there were additional rebates of tax.
compared to an over-active 2011.
Total net cash inflows for the year were £150.6
As a result, the combined ratio improved greatly million (2011: inflow £179.1 million). The inflow
to 75.5% (2011: 89.1%). Profit before tax for the was mainly due to prompt settlement of
year was £121.9 million (2011: £57.6 million). premiums and reinsurance recoveries, along
with amounts recovered on tax. Net cash outflow
Hiscox UK and Europe from investing activities, being comparable
Gross premiums written rose by 1.9% to £507.5 to the prior year, was £13.7 million (2011:
million (2011: £498.0 million). Gross premiums £11.8 million). The Group continues to invest
written for the UK increased by 2.2% with in its IT infrastructure and the development
a reduction in the art and private client lines of projects such as a management information
offset by gains in professional and specialty project aimed at improving the quality and
commercial. Europe remained broadly constant efficiency of information provision. Marketing
year-on-year with gross premiums written expenses increased to £26 million in the year.
of £132.3 million (2011: £130.9 million), being
a 1.1% increase. In underlying currency terms, Net cash outflows from financing activities
Europe fared better with an increase of 5.9%. for the year were £60.8 million (2011: outflow
18 Group financial performance Hiscox Ltd Report and Accounts 2012