3 Management of risk continued
3.2 Financial risk continued
(d) Credit risk continued
An analysis of the Group’s positions in respect of government issued and supported debt are shown in the table below. The Group
has no direct government exposure to Portugal, Italy, Ireland, Greece or Spain.
31 December 2012 31 December 2011
Government Government Government Government
issued supported Total issued supported Total
£000 £000 £000 £000 £000 £000
United States of America 489,070 120,991 610,061 302,605 269,048 571,653
United Kingdom 209,847 23,083 232,930 208,235 81,699 289,934
Australia – 8,921 8,921 – 13,975 13,975
Belgium – – – – 1,537 1,537
Canada 17,297 31,373 48,670 – 58,380 58,380
Denmark – 4,384 4,384 – 5,158 5,158
Finland 7,003 2,197 9,200 6,380 3,985 10,365
France 6,551 1,531 8,082 4,015 16,533 20,548
Germany 109,871 51,806 161,677 92,414 36,205 128,619
Netherlands – 12,329 12,329 – 24,539 24,539
New Zealand – – – – 584 584
Norway 3,118 – 3,118 – 6,035 6,035
Supranationals – 25,645 25,645 – 30,135 30,135
South Korea 2,614 209 2,823 2,833 – 2,833
Sweden 2,191 1,133 3,324 2,307 3,494 5,801
Other 1,474 – 1,474 338 141 479
Total 849,036 283,602 1,132,638 619,127 551,448 1,170,575
Included above are £1,012 million (2011: £1,049 million) in relation to holdings in debt securities, £10 million (2011: £nil) held as deposits
with credit institutions and £111 million (2011: £122 million) held as cash equivalents, having a maturity of less than three months at the time
of purchase. Of the amount held as cash equivalents, £35 million (2011: £114 million) is held with the UK Government and £75 million (2011:
£nil) with the US Treasury.
Additionally, the geographical location and credit quality of individual bank borrowers are closely monitored. An analysis of the Group’s
exposure to bank counterparties by country and credit rating is detailed below. Bank debt held by the Group is mostly senior unsecured
and covered bonds. The subordinated bonds are all classed as Lower Tier 2 capital.
Senior Subordinated
AAA AA A BBB Sub-total A BBB B Sub-total Total
31 December 2012 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
United States
of America – – 65,651 1,311 66,962 603 – – 603 67,565
United Kingdom 10,632 4,375 12,948 – 27,955 303 894 1,394 2,591 30,546
Australia 1,102 7,829 – – 8,931 – – – – 8,931
Canada 12,066 4,973 15,090 – 32,129 1,828 823 – 2,651 34,780
Denmark 349 – 537 – 886 – – – – 886
France 1,364 292 8,373 – 10,029 – – – – 10,029
Germany – – 1,712 – 1,712 – – – – 1,712
Netherlands 1,893 3,516 4,751 – 10,160 – 765 – 765 10,925
New Zealand 662 637 – – 1,299 – – – – 1,299
Norway 1,704 – 1,059 – 2,763 – – – – 2,763
Spain – – – 614 614 – – – – 614
Sweden 1,853 6,723 6,432 – 15,008 – – – – 15,008
Switzerland – – 8,833 – 8,833 – – – – 8,833
Other – 190 304 495 989 – – – – 989
Total 31,625 28,535 125,690 2,420 188,270 2,734 2,482 1,394 6,610 194,880
Included in the bank debt table above, are £192 million in relation to holdings in debt securities and £3 million held as deposits with
credit institutions.
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012 69