26 Insurance liabilities and reinsurance assets continued
26.1 Insurance contracts assumptions continued
(b) Claims development tables continued
Insurance claims and claim adjustment expenses reserves – gross at 100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
Accident year £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Estimate of ultimate
claims costs as
adjusted for foreign
exchange* at end
of accident year 451,232 677,420 1,132,098 586,952 785,828 1,089,977 830,500 999,343 1,305,556 1,068,466 8,927,372
one year later 462,982 750,898 1,252,403 560,426 700,297 924,155 691,660 858,866 1,177,441 – 7,379,128
two years later 435,298 716,648 1,254,360 539,926 664,529 901,688 635,020 805,499 – – 5,952,968
three years later 448,028 678,079 1,236,690 509,990 677,008 864,069 628,871 – – – 5,042,735
four years later 442,618 681,010 1,231,059 519,672 670,233 828,996 – – – – 4,373,588
five years later 432,405 663,389 1,232,155 509,716 641,088 – – – – – 3,478,753
six years later 427,914 666,685 1,188,963 496,764 – – – – – – 2,780,326
seven years later 417,794 648,433 1,182,120 – – – – – – – 2,248,347
eight years later 413,874 638,611 – – – – – – – – 1,052,485
nine years later 413,545 – – – – – – – – – 413,545
Current estimate of
cumulative claims 413,545 638,611 1,182,120 496,764 641,088 828,996 628,871 805,499 1,177,441 1,068,466 7,881,401
Cumulative
payments to date (380,930) (603,815) (1,137,927) (456,744) (551,708) (705,187) (490,583) (508,862) (612,544) (211,444) (5,659,744)
Liability recognised
at 100% level 32,615 34,796 44,193 40,020 89,380 123,809 138,288 296,637 564,897 857,022 2,221,657
Liability recognised
in respect of prior
accident years at
100% level 107,975
Total gross liability to external parties at 100% level 2,329,632
*The foreign exchange adjustment arises from the retranslation of the estimates at each date using the exchange rate ruling at 31 December 2012.
Reconciliation of 100% disclosures above to Group’s share – gross
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
Accident year £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Current estimate of
cumulative claims 413,545 638,611 1,182,120 496,764 641,088 828,996 628,871 805,499 1,177,441 1,068,466 7,881,401
Less: attributable
to external Names (92,227) (149,455) (297,239) (104,031) (124,512) (158,706) (104,563) (122,246) (167,408) (151,799) (1,472,186)
Group’s share of
current ultimate
claims estimate 321,318 489,156 884,881 392,733 516,576 670,290 524,308 683,253 1,010,033 916,667 6,409,215
Cumulative
payments to date (380,930) (603,815) (1,137,927) (456,744) (551,708) (705,187) (490,583) (508,862) (612,544) (211,444) (5,659,744)
Less: attributable
to external Names 83,632 140,725 286,497 94,183 105,597 131,908 81,998 69,254 86,192 21,317 1,101,303
Group’s share
of cumulative
payments (297,298) (463,090) (851,430) (362,561) (446,111) (573,279) (408,585) (439,608) (526,352) (190,127) (4,558,441)
Liability for 2003 to
2012 accident years
recognised on
Group’s balance sheet 24,020 26,066 33,451 30,172 70,465 97,011 115,723 243,645 483,681 726,540 1,850,774
Liability for accident
years before 2003
recognised on
Group’s balance sheet 82,130
Total Group liability to external parties included in balance sheet – gross** 1,932,904
**This represents the claims element of the Group’s insurance liabilities.
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012 93