Notes to the consolidated
financial statements
continued
16 Investments in associates
2012 2011
Year ended 31 December £000 £000
At beginning of year 6,380 6,886
Additions during the year 3,104 –
Disposals during the year – (729)
Net (loss)/profit from investments in associates (430) 223
At end of year 9,054 6,380
The Group’s interests in its principal associates, all of which are unlisted, were as follows:
100% results
% interest
held at Assets Liabilities Revenues Profit after tax
31 December £000 £000 £000 £000
2012
Associates incorporated in the UK from 25% to 35% 67,773 52,720 14,987 661
Associates incorporated in Europe from 25% to 49% 1,806 1,097 2,523 254
Total at the end of 2012 69,579 53,817 17,510 915
100% results
% interest
held at Assets Liabilities Revenues Profit after tax
31 December £000 £000 £000 £000
2011
Associates incorporated in the UK from 25% to 35% 5,984 3,294 5,041 198
Associates incorporated in Europe 25% 900 386 1,341 15
Associates incorporated in the USA 25% 691 645 116 (894)
Total at the end of 2011 7,575 4,325 6,498 (681)
On 6 August 2012, the Group acquired a 25% holding in Lark (2012) Ltd, for total consideration of £3,104,000 as referred to in note 33.
The company is treated as an associate from this date.
During 2012, the Group disposed of its holding in InsuranceBee, Inc. During 2011 the Group sold its holding in Plexstar Insurance
Services Ltd.
The equity interests held by the Group in respect of associates do not have quoted market prices and are not traded regularly in any active
recognised market. The associates concerned have no material impact on the results or assets of the Group.
17 Deferred acquisition costs
2012 2011
Gross Reinsurance Net Gross Reinsurance Net
£000 £000 £000 £000 £000 £000
Balance deferred at 1 January 150,050 (15,641) 134,409 142,736 (17,048) 125,688
Acquisition costs incurred in relation to insurance
contracts written 353,193 (53,077) 300,116 320,529 (43,186) 277,343
Acquisition costs expensed to the income statement (333,758) 50,143 (283,615) (314,385) 44,593 (269,792)
Foreign exchange adjustment (3,444) 235 (3,209) 1,170 – 1,170
Balance deferred at 31 December 166,041 (18,340) 147,701 150,050 (15,641) 134,409
The deferred amount of insurance contract acquisition costs attributable to reinsurers of £18,340,000 (2011: £15,641,000) is not eligible
for offset against the gross balance sheet asset and is included separately within trade and other payables (note 27).
The amounts expected to be recovered before and after one year are estimated as follows: 2012
£000
2011
£000
Within one year 137,754 126,847
After one year 9,947 7,562
147,701 134,409
84 Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012