Notes to the consolidated
financial statements
continued
3 Management of risk continued
3.1 Insurance risk continued
i) Underwriting risk continued
Types of insurance risk in the Group
Estimated concentration of gross and net
Property – Property – Casualty –
insurance liabilities on balance sheet by territory Reinsurance marine and other professional Casualty –
inwards major assets assets indemnity other risks Other* Total
coverage of premium written 31 December 2012 £000 £000 £000 £000 £000 £000 £000
UK and Ireland Gross 2,222 11,098 142,799 316,820 7,167 23,427 503,533
Net 1,700 4,939 124,722 283,463 7,092 13,868 435,784
Europe Gross 4,567 20,995 70,753 130,375 16,837 34,073 277,600
Net 4,220 14,739 61,637 111,989 14,615 27,878 235,078
United States Gross 286,305 88,501 131,387 291,391 34,715 20,602 852,901
Net 141,113 46,615 76,376 270,016 30,428 17,767 582,315
Other territories Gross 107,676 11,716 38,838 29,665 22,695 77,960 288,550
Net 94,429 8,604 34,904 29,188 17,531 60,544 245,200
Multiple territory coverage Gross 292,506 181,389 33,223 – 102,296 64,614 674,028
Net 238,366 161,215 26,545 – 82,429 49,291 557,846
Total Gross 693,276 313,699 417,000 768,251 183,710 220,676 2,596,612
Net 479,828 236,112 324,184 694,656 152,095 169,348 2,056,223
Types of insurance risk in the Group
Estimated concentration of gross and net
Property – Property – Casualty –
insurance liabilities on balance sheet by territory Reinsurance marine and other professional Casualty –
inwards major assets assets indemnity other risks Other* Total
coverage of premium written 31 December 2011 £000 £000 £000 £000 £000 £000 £000
UK and Ireland Gross 16,985 16,339 136,379 319,209 12,548 30,079 531,539
Net 13,575 4,366 134,889 280,220 7,683 19,251 459,984
Europe Gross 14,383 4,893 68,600 98,754 12,547 39,627 238,804
Net 11,843 4,618 62,324 93,435 10,168 33,591 215,979
United States Gross 246,957 53,306 81,804 237,744 46,446 26,260 692,517
Net 171,255 23,107 33,393 220,686 39,423 20,453 508,317
Other territories Gross 122,281 37,026 19,877 27,574 3,579 63,769 274,106
Net 91,606 32,901 12,764 24,278 3,095 44,314 208,958
Multiple territory coverage Gross 370,228 172,933 61,808 3,435 88,278 66,612 763,294
Net 307,442 128,813 31,625 3,358 86,776 56,493 614,507
Total Gross 770,834 284,497 368,468 686,716 163,398 226,347 2,500,260
Net 595,721 193,805 274,995 621,977 147,145 174,102 2,007,745
*Includes a diverse mix of certain specialty lines such as kidnap and ransom, terrorism, bloodstock and other risks which contain a mix of property and casualty exposures.
The estimated liquidity profile to settle these net claims liabilities is given in note 3.2 (e).
The specific insurance risks accepted by the Group fall broadly into the following main categories: reinsurance inwards, marine and major
asset property, other property risks, professional indemnity casualty and casualty other insurance risks. These specific categories are
defined for risk review purposes only, as each contains risks specific to the nature of the cover provided. They are not exclusively aligned
to any specific reportable segment in the Group’s operational structure or the primary internal reports reviewed by the chief operating
decision maker. The following describes the policies and procedures used to identify and measure the risks associated with each individual
category of business.
Reinsurance inwards
The Group’s reinsurance inwards acceptances are primarily focused on large commercial property, homeowner and marine and crop
exposures held by other insurance companies predominantly in North America and other developed economies. This business is
characterised more by large claims arising from individual events or catastrophes than the high-frequency, low-severity attritional losses
associated with certain other business written by the Group. Multiple insured losses can periodically arise out of a single natural or man-
made occurrence. The main circumstances that result in claims against the reinsurance inwards book are conventional catastrophes,
such as earthquakes or storms, and other events including fires and explosions. The occurrence and impact of these events are very
difficult to model over the short-term which complicates attempts to anticipate loss frequencies on an annual basis. In those years where
there is a low incidence of severe catastrophes, loss frequencies on the reinsurance inwards book can be relatively low.
64 Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012