18 Reinsurance assets
2012 2011
Note £000 £000
Reinsurers’ share of insurance liabilities 541,387 493,422
Provision for non-recovery and impairment (998) (907)
Reinsurance assets 26 540,389 492,515
The amounts expected to be recovered before and after one year, based on historical experience, are estimated as follows:
Within one year 286,532 265,525
After one year 253,857 226,990
540,389 492,515
Amounts due from reinsurers in respect of outstanding premiums and claims already paid by the Group are included in loans and receivables
(note 20). The Group recognised a loss during the year of £91,000 (2011: gain of £52,000) in respect of previously impaired balances.
19 Financial assets and liabilities
Financial assets are measured at their bid price values, with all changes from one accounting period to the next being recorded through
the income statement.
2012 2011
Fair value Fair value
Note £000 £000
Debt and fixed income securities 2,194,866 2,170,588
Equities and shares in unit trusts 190,029 173,432
Deposits with credit institutions 13,203 12,848
Total investments 2,398,098 2,356,868
Insurance linked fund 8,098 –
Catastrophe bonds – 11,639
Derivative financial instruments 21 73 129
Total financial assets carried at fair value 2,406,269 2,368,636
2012 2011
Fair value Fair value
Note £000 £000
Derivative financial instruments 21 301 –
Total financial liabilities 301 –
An analysis of the credit risk and contractual maturity profiles of the Group’s financial instruments is given in notes 3.2(d) and 3.2(e).
On 27 December 2012, the Group invested $13.2 million into the Third Point Reinsurance Opportunities Fund (‘the Fund’), representing
a 32% non-voting interest holding, subject to a two-year initial lock-up period. The Group has committed to invest an additional $16.8 million
into the Fund which is payable on demand. The Fund specialises in catastrophe reinsurance opportunities and is classified by the Group
as an insurance linked fund.
The Group has entered into a quota share arrangement with Third Point Re Cat Ltd, a wholly-owned reinsurance entity of the Fund.
No contracts have been ceded to the entity as of 31 December 2012.
The Group’s investment in catastrophe bonds was dissolved during the year (2011: £11.6 million). 2011 comprised 16 catastrophe bonds
with credit ratings of BB and B. The issuers of these securities used the proceeds to collateralise certain catastrophe reinsurance obligations
mainly in US and European wind and earthquake risks.
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012 85