Notes to the consolidated
financial statements
continued
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 – net 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 355,725 566,426 668,943 522,105 683,708 762,679 681,858 800,335 1,016,675 790,001 6,848,455
one year later 375,233 618,704 768,212 513,824 622,394 681,434 573,182 705,854 940,543 – 5,799,380
two years later 342,232 594,381 758,222 497,020 603,148 677,599 547,415 665,628 – – 4,685,645
three years later 352,920 557,991 733,810 455,123 572,223 639,340 548,086 – – – 3,859,493
four years later 343,372 558,860 724,053 471,721 568,043 608,530 – – – – 3,274,579
five years later 338,539 544,064 724,336 460,025 543,510 – – – – – 2,610,474
six years later 334,976 544,245 703,604 453,022 – – – – – – 2,035,847
seven years later 323,900 528,724 695,163 – – – – – – – 1,547,787
eight years later 316,035 520,847 – – – – – – – – 836,882
nine years later 321,250 – – – – – – – – – 321,250
Current estimate of
cumulative claims 321,250 520,847 695,163 453,022 543,510 608,530 548,086 665,628 940,543 790,001 6,086,580
Cumulative
payments to date (313,107) (487,971) (644,541) (420,041) (471,241) (508,311) (422,048) (445,819) (502,022) (182,459) (4,397,560)
Liability recognised
at 100% level 8,143 32,876 50,622 32,981 72,269 100,219 126,038 219,809 438,521 607,542 1,689,020
Liability recognised
in respect of prior
accident years
at 100% level 65,222
Total net liability to external parties at 100% level 1,754,242
*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 – net
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 321,250 520,847 695,163 453,022 543,510 608,530 548,086 665,628 940,543 790,001 6,086,580
Less: attributable
to external Names (70,288) (122,336) (167,281) (94,653) (106,623) (109,893) (86,099) (90,474) (121,073) (97,137) (1,065,857)
Group’s share of
current ultimate
claims estimate 250,962 398,511 527,882 358,369 436,887 498,637 461,987 575,154 819,470 692,864 5,020,723
Cumulative
payments to date (313,107) (487,971) (644,541) (420,041) (471,241) (508,311) (422,048) (445,819) (502,022) (182,459) (4,397,560)
Less: attributable
to external Names 68,282 113,935 154,537 86,235 90,960 87,609 64,676 58,138 65,136 18,319 807,827
Group’s share
of cumulative
payments (244,825) (374,036) (490,004) (333,806) (380,281) (420,702) (357,372) (387,681) (436,886) (164,140) (3,589,733)
Liability for 2003 to
2012 accident years
recognised on
Group’s balance sheet 6,137 24,475 37,878 24,563 56,606 77,935 104,615 187,473 382,584 528,724 1,430,990
Liability for accident
years before 2003
recognised on
Group’s balance sheet 48,475
Total Group liability to external parties included in the balance sheet – net** 1,479,465
**This represents the claims element of the Group’s insurance liabilities and reinsurance assets.
94 Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012