Notes to the consolidated 2.1 Statement of compliance They are compiled on a going concern
financial statements The consolidated financial statements
have been prepared in accordance with
basis and prepared on the historical cost
basis except that pension scheme assets
IFRS as adopted by the European Union included in the measurement of the
and in accordance with the provisions employee retirement benefit obligation,
of the Bermuda Companies Act 1981. and certain financial instruments including
derivative instruments, are measured at
Since 2002, the standards adopted by the fair value. Employee retirement benefit
International Accounting Standards Board obligations are determined using actuarial
(IASB) have been referred to as IFRS. The analysis. The balance sheet of the Group
standards from prior years continue to bear is presented in order of increasing liquidity.
the title ‘International Accounting Standards’
(IAS). Insofar as a particular standard is not The accounting policies have been applied
1 General information explicitly referred to, the two terms are used consistently by all Group entities, to all
The Hiscox Group, which is headquartered in these financial statements synonymously. periods presented, solely for the purpose
in Hamilton, Bermuda, comprises Hiscox Ltd Compliance with IFRS includes the adoption of producing the consolidated Group
(the parent Company, referred to herein of interpretations issued by the International financial statements.
as the ‘Company’) and its subsidiaries Financial Reporting Interpretations
(collectively, the ‘Hiscox Group’ or the Committee (IFRIC). The Group has financial assets and cash
‘Group’). For the period under review the of over £3.06 billion. The portfolio is
Group provided insurance and reinsurance In March 2004, the IASB issued IFRS 4 predominantly invested in liquid short-dated
services to its clients worldwide. It has Insurance Contracts which specifies the bonds and cash to ensure significant
operations in Bermuda, the UK, Europe, financial reporting for insurance contracts liquidity to the Group and to reduce risk
and the US and employs over 1,400 people. by an insurer. The standard was the first from the financial markets. In addition the
phase in the IASB’s insurance contract Group has significant borrowing facilities
The Company is registered and domiciled project and as such is a stepping stone to in place.
in Bermuda and on 12 December 2006 its Phase II, introducing limited improvements
ordinary shares were listed on the London to accounting for insurance contracts. The Group writes a balanced book of
Stock Exchange. As such it is required Accordingly, to the extent that IFRS 4 does insurance and reinsurance business spread
to prepare its annual audited financial not specify the recognition or measurement by product and geography. The Directors
information in accordance with Section 4.1 of insurance contracts, transactions believe that the Group is well placed to
of the Disclosure and Transparency Rules reported in these consolidated financial manage its business risk and continue
and the Listing Rules, both issued by the statements have been prepared in to trade successfully.
Financial Services Authority (FSA), in accordance with another comprehensive
addition to the Bermuda Companies Act body of accounting principles for insurance A review of the financial performance of
1981. The first two pronouncements issued contracts, namely accounting principles the Group is set out on pages 18 to 19. The
by the FSA require the Group to prepare generally accepted in the UK. financial position of the Group, its cash flows
financial statements which comprise the and borrowing facilities are included therein.
consolidated income statement, the In July 2010 the IASB published an exposure In addition, note 3 to the financial statements
consolidated statement of comprehensive draft for Phase II of the insurance contracts provides a detailed discussion on the risks
income, the consolidated balance sheet, the project. The exposure draft proposes which are inherent to the Group’s business
consolidated statement of changes in equity, a number of significant changes to the and how those risks are managed.
the consolidated cash flow statement and measurement of insurance contracts and
the related notes 1 to 38 in accordance with as such adoption of a final standard in a The Directors have an expectation that
International Financial Reporting Standards form similar to the exposure draft will likely the Company and the Group have adequate
(IFRS) as adopted by the European Union. have a significant impact on the results resources to continue in operational
of the Group. existence for the foreseeable future.
The consolidated financial statements for Accordingly, they continue to adopt the
the year ended 31 December 2012 include Since the original exposure draft, further going concern basis in preparing the Annual
all of the Group’s subsidiary companies amendments have been made to the Report and Accounts.
and the Group’s interest in associates. proposals. As a result, the IASB has
All amounts relate to continuing operations. committed to re-exposing the draft during The accounting policies adopted are
the first half of 2013. In addition, the IASB consistent with those of the previous
The financial statements were approved has also stated they will allow at least three financial year. There were no new or
for issue by the Board of Directors on full years from the date of any final standard amended Standards and Interpretations
25 February 2013. to actual implementation, therefore 2018 is issued by the IASB and endorsed by the
likely to be the earliest date for the adoption EU as of 1 January 2012 that had a material
2 Significant accounting policies of a new standard. impact on the Group.
The principal accounting policies applied
in the preparation of these consolidated We continue to monitor the progress A number of new standards, amendments
Group financial statements are set of the project. to standards and interpretations are
out below. The most critical individual effective for annual periods beginning
components of these financial statements 2.2 Basis of preparation after 1 January 2012, and have not been
that involve the highest degree of judgement The financial statements are presented applied in preparing these consolidated
or significant assumptions and estimations in Pounds Sterling and are rounded to the financial statements.
are identified at note 2.22. nearest thousand unless otherwise stated.
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012 55