It is a nostalgic moment to be writing my profit to shareholders which will have a
Chairman’s last Chairman’s report, and pleasing to
be able to announce a solid profit. The year
favourable impact on both the Group premium
to capital gearing ratio and return on capital,
statement had its catastrophic moments, but as whilst still providing sufficient headroom above
we grow bigger and more balanced, we can existing internal and external capital needs.
absorb Mother Nature’s punches and the This proposed return of capital will be made
vicissitudes of accidents and criminal acts by way of a B share scheme and will be
with greater ease. combined with a share consolidation.
In addition, a sum of 12.0p per share will be
paid instead of a final dividend for the year ended
31 December 2012 as part of the B share
scheme. This amount, together with the interim
dividend of 6.0p per share, represents a total
dividend for 2012 equal to 18.0p per share
(2011: 17.0p), an increase of 5.9%, in line with our
policy of progressive dividend growth. As a result
of this amount being paid as part of the B share
scheme, a scrip dividend alternative will not
be offered to shareholders.
Full details of the proposed return of capital
and final dividend equivalent will be set out in
a circular expected to be despatched to Hiscox
shareholders on or around 26 February 2013.
The business
As ever, Bronek will comment in detail in
his following report on the various business
activities. I would like to comment on the
current state of the business that I have
helped develop over the last 48 years and
Since I announced last year that I would its future opportunities.
be stepping down as Chairman, I have been
asked to look back over my years in the The basic underwriting strategy
insurance world and have enjoyed the When I stopped underwriting for our Lloyd’s
memories of growing the business from days Syndicate in 1988, the ‘retail’ account of
of buccaneering in a lawless market place, relatively simple insurance business was 50%
Robert Hiscox through the Lloyd’s crisis and recently of the portfolio, the balance being internationally
Chairman through stronger and stricter strait-jackets traded reinsurance and large insurance
of rules and regulations. But I get greater business. That balance remains roughly the
pleasure from looking forward at the future same to this day, albeit over a larger and more
opportunities for this business as it moves diverse Group.
into its next era. I would not be stepping
down if I were not absolutely sure that the We have created insurance companies in the UK,
business is in great shape and the next Guernsey and the US to underwrite the simpler
generation are more than qualified to take business, and one in Bermuda to augment our
it to the next level. strong reinsurance presence. We have the huge
advantage of all our underwriters being able
Results to use one of our local companies if suitable
The result for the year ending 31 December or Lloyd’s with its great brand, financial strength
2012 was a profit before tax of £217.1 million and worldwide licences.
(2011: £17.3 million) on a gross written premium
income of £1,565.8 million (2011: £1,449.2 Catastrophe and internationally
million). The combined ratio was 85.5% traded business
(2011: 99.5%). Earnings per share were 53.1p The core profit earner remains our founding
(2011: 5.5p) and the net assets per share rose London Market business. I believe that London
to 349.7p (2011: 323.5p). The return on equity will retain its prominence in the world of
was 16.9% (2011: 1.7%). internationally traded business, and that Lloyd’s
will be the strongest magnet in that market.
Dividend, balance sheet and capital
management The catastrophe and major loss business
The Board has reviewed the capital requirements currently looks very volatile with international
of the Group for the coming year and has political unrest and more disturbed weather
proposed that a special distribution of 38.0p per patterns. This is an opportunity for us as it keeps
share (amounting to approximately £150 million), demand up and the weaker competitors away.
should be made. This will reduce capital levels
close to those of the 2012 opening balance Bermuda is a great addition to our involvement
sheet, effectively distributing all of this year’s in that business and they and London work
4 Chairman’s statement Hiscox Ltd Report and Accounts 2012