24 Share capital continued
Share options and performance share plan awards continued
The range of principal Group assumptions applied in determining the fair value of share based payment instruments granted during the year
under review are:
Assumptions affecting inputs to fair value models 2012 2011
Annual risk-free rates of return and discount rates (%) 0.27-0.55 0.9-1.9
Long-term dividend yield (%) 3.95-4.31 4.24-4.59
Expected life of options (years) 3.25 3.25
Implied volatility of share price (%) 28 29
Weighted average share price (p) 416.0 397.0
The weighted average fair value of each share option granted during the year was 93.4p (2011: 89.9p). The weighted average fair value
of each performance share plan award granted during the year was 414.0p (2011: 397.0p).
Movements in the number of share options during the year and details of the balances outstanding at 31 December 2012 are shown
in the Directors’ remuneration report.
The implied volatility assumption is based on historical data for periods of between five and ten years immediately preceding grant date.
For options issued after 1 January 2006 the assumptions regarding long-term dividend yield have been aligned to the progressive dividend
policy announced during the 2005 Rights Issue.
25 Retained earnings and other reserves
2012 2011
£000 £000
Currency translation reserve at 31 December 24,711 60,517
Retained earnings at 31 December 1,046,652 897,728
The currency translation reserve comprises qualifying net investment gains and losses and foreign exchange differences arising from
the translation of the financial statements of, and investments in, foreign operations.
There were no transactions by the Company in its own shares during the year.
At 31 December 2012 Hiscox Ltd held 19,682,214 shares in treasury (2011: 22,836,487). Additional details are shown in note 37 to these
financial statements in respect of additional Hiscox Ltd shares held by subsidiaries.
26 Insurance liabilities and reinsurance assets
2012 2011
Note £000 £000
Gross
Claims reported and claim adjustment expenses 932,604 938,498
Claims incurred but not reported 1,000,300 964,073
Unearned premiums 663,708 597,689
Total insurance liabilities, gross 2,596,612 2,500,260
Recoverable from reinsurers
Claims reported and claim adjustment expenses 192,311 187,973
Claims incurred but not reported 261,128 224,855
Unearned premiums 86,950 79,687
Total reinsurers’ share of insurance liabilities 18 540,389 492,515
Net
Claims reported and claim adjustment expenses 740,293 750,525
Claims incurred but not reported 739,172 739,218
Unearned premiums 576,758 518,002
Total insurance liabilities, net 2,056,223 2,007,745
The amounts expected to be recovered and settled before and after one year, based on historical experience, are estimated as follows:
Within one year 1,190,613 1,160,744
After one year 865,610 847,001
2,056,223 2,007,745
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012 91