Interim Results
Hiscox PLC
28 September 2000
HISCOX PLC
INTERIM STATEMENT 2000
CORPORATE HIGHLIGHTS
- GROUP GROSS WRITTEN PREMIUM INCOME UP 16% TO £215.9M
- GROUP OPERATING PROFIT £0.9M (1999: £5.1M)
- THE GROUP STRATEGY OF REGIONAL AND OVERSEAS EXPANSION
IS SUCCEEDING
- THE HISCOX INSURANCE COMPANY OPERATING PROFIT UP TO
£2.5M (1999: £1.0M)
- Overseas operations premium income increased by 40% to £21.3m
- HISCOX ONLINE LAUNCHED
6 months ended 30 June
2000 1999
SUMMARY OF RESULTS £m £m
Gross Written Premium Income 215.9 185.7
OPERATING PROFIT
Hiscox Insurance Company 2.5 1.0
Overseas Operations 0.4 (0.2)
Lloyd's Business (2.0) 4.3
0.9 5.1
PRE-TAX PROFIT
Hiscox Insurance Company 2.8 (1.1)
Overseas Operations 0.6 (0.2)
Lloyd's Business (3.3) 2.7
0.1 1.4
FOR FURTHER INFORMATION PLEASE CONTACT:
Robert Hiscox, Bronek Masojada, Stuart Bridges, Hiscox plc:
020 7448 6000
Suzanne Bartch, The Maitland Consultancy: 020 7379 5151
CHAIRMAN'S STATEMENT
Group premium income for the period increased by 16% to £215.9
million generating an operating profit of £0.9 million (1999:
£5.1m) and a pre-tax profit of £0.1 m (1999: £1.4m). An interim
dividend of 1.2p net per share has been declared (1999: 1.2p
net) payable on 10 November 2000 to shareholders on the register
on 13 October 2000.
The interim results show a continued strong improvement in the
Hiscox Insurance Company and the Overseas Operations, covering a
loss from the Lloyd's business. The strategy of building a
retail business outside Lloyd's is working.
THE HISCOX INSURANCE COMPANY
Gross written premium was up 17% for the period and the combined
ratio dropped to 99% (1999: 103%). The first 6 months suffered
fewer than usual losses and, subject to no extraordinary events
in the rest of the year, we expect that the combined ratio will
remain under 100% for the year. This will maintain the
consistent improvement since 1997 when Hiscox disciplines were
imposed.
The Company continues to focus on two main areas of business -
personal insurances for the affluent, and professional
insurances for Technology, Media and Management Consultancy
firms as well as the traditional professions. We have had
considerable success this year in taking a share of the
solicitors market following the break-up of their insurance
mutual.
In June we completed the purchase of the right to renew the
regional business of Chartwell Underwriting Ltd and have added
their branch offices in Birmingham, Glasgow and Leeds to our
existing branch office in Harrogate. There is a terrific
opportunity to win business in the regions following the mergers
of the major insurance companies and the consequent need for
alternative specialist insurers.
The Hiscox Insurance Company's rating by A.M. Best was confirmed
at A-, and improved by Standard & Poor from BBB to BBB+
reflecting the improving results and the growing strength of the
Company. The underwriting is and has been good but needed more
volume to reduce the expense ratio. This is being achieved, and
the Hiscox Insurance Company will clearly be a growing
contributor to the profits of the future.
The Company's dormant life fund was successfully sold in April
yielding a profit of £1.0 million.
OVERSEAS OPERATIONS
The Hiscox offices in Paris, Munich and Amsterdam have increased
our distribution network, enabling us to obtain business for
both the Hiscox Insurance Company and the Syndicate. The net
combined income from these entities and the Hiscox Insurance
Company (Guernsey) is now covering costs and has generated a
small profit of £0.4m.
We have set up a joint venture in Belgium with a respected
Belgian underwriting agency, and have signed a distribution
agreement with a major insurer in Austria to sell our polices.
We see great growth opportunities from the overseas operations
over the next few years.
HISCOX ONLINE
We have launched Hiscox Online via www.hiscox.com and third
party websites. It has been well received as the first online
portal for higher value household insurance. There are people
who want to buy insurance online, and we must be capable of
accepting their business. Whether the online business
flourishes or not, the project has had the added benefit of
assisting us in developing technology which enables our
underwriting to be accessed by intermediaries very simply and at
low cost, delivering significant value to the group and our new
and existing partners.
LLOYD'S BUSINESS
Syndicate 33 has had two extremely difficult years in 1998 and
1999. The main areas of loss have been marine hull and cargo,
offshore energy and political risks, the first three of which
are marine classes. Rapid action has been taken to eradicate
the unprofitable marine business introduced by the merger of the
two marine syndicates in 1998 into Syndicate 33 and to return
the Syndicate to its traditionally superior performance. The
2000 account is now showing figures back to Syndicate 33
standards. Both 1998 and 1999 accounts continued to deteriorate
during the first 6 months of 2000, especially in the marine
area, and the forecast losses for the Syndicate for those years
are: 1998 -7.5% to -12.5%, 1999 -6.5% to -11.5%.
The Syndicate has a very strong group of talented young
underwriters and will undoubtedly benefit from the cathartic
experience of loss. Their steel has been tempered. Market
analysts confirm that 1999 was the bottom of the cycle and the
market is firming with better 2000 figures being adversely
affected by reserve strengthening for 1998 and 1999. Rates are
rising and the 2000 account figures of Syndicate 33 are very
satisfactory at this early stage. The fact is that feast
follows famine in the London Market and we intend to benefit to
the maximum from the upturn in rates which is now happening.
We have bought £22,000,000 of capacity on Syndicate 33 in the
first five auctions at an average price of 4.0p but will not bid
aggressively for further capacity as we are content to be paid
to underwrite using third party capital.
Following the success of the Hiscox Insurance Company (Guernsey)
we have formed a captive insurance company in Guernsey to write
selected reinsurances of the Syndicate. Although small to start
with, we anticipate this growing to be a significant reinsurer
of the group in the future.
FINALLY
Syndicate 33 has done what is necessary to make a return to the
substantial levels of profit achievable in the London Market.
Our retail business in the UK and overseas, led by the Hiscox
Insurance Company, is growing in importance and profitability.
We have created some innovative and exciting new businesses and
have a clear strategy for profitable and stable growth. We have
a strong brand backed by a strong culture and people with talent
and drive. The combination of all these factors will yield
proper returns to shareholders in the near future.
ROBERT HISCOX
CHAIRMAN
27 SEPTEMBER 2000
HISCOX PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 6 MONTH PERIOD
ENDED 30 JUNE 2000
6 months 6 months Year to
to 30June to 31 Dec
2000(un- 30June 1999
audited) 1999(un- (audited)
audited)
£000 £000 £000
Gross premiums written 215,938 185,723 323,677
Net premiums earned 97,021 83,699 201,452
Trading profit, before change 4,663 5,782 11,537
in equalisation provision
Trading profit, after change 3,561 4,924 9,894
in equalisation provision
Investment income (note 6) 5,265 6,366 14,159
Net realised losses on (899) (680) (1,786)
investments (note 6)
Unrealised gains/(losses) on 1,200 (2,659) (1,750)
investments (note 6)
Investment expenses and (139) (193) (653)
charges (note 6)
-------- -------- ---------
5,427 2,834 9,970
Allocated investment return (6,120) (5,698) (13,642)
transferred to the technical
account (note 6)
------- -------- --------
Short term fluctuations in (693) (2,864) (3,672)
investment return (note 6)
Other income 3,760 2,448 2,792
Other expenses (6,482) (3,139) (8,902)
--------- -------- --------
Profit on ordinary activities 146 1,369 112
before tax
-------- -------- --------
Comprising:
Operating profit based on
longer term investment return 910 5,091 5,427
continuing activities
Short term fluctuations in (693) (2,864) (3,672)
investment return
Exceptional item: sale of 1,031 - -
long term business
Movement in equalisation (1,102) (858) (1,643)
provision
-------- ------- --------
146 1,369 112
Tax on profit on ordinary (41) (251) (28)
activities
-------- ------- --------
Profit on ordinary activities 105 1,118 84
after tax
Dividends - interim (1,734) (1,728) (1,707)
payable
- final payable - - (3,274)
--------- -------- --------
Retained loss for the period (1,629) (610) (4,897)
-------- -------- --------
Earnings per share:
Basic, based on operating profit 0.5p 2.5p 2.6p
after tax (on longer term
investment return)
Basic, based on profit on 0.1p 0.8p 0.1p
ordinary activities after tax
Diluted, based on profit on 0.1p 0.7p 0.1p
ordinary activities after tax
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2000
Profit on ordinary activities 105 1,118 84
after tax
Revaluation of fixed assets - - (413)
Exchange differences taken to 24 - (91)
reserves
Prior period restatement (note 4) - (1,977) (1,977)
------- ------- -------
Total recognised gains and losses 129 (859) (2,397)
------- ------- -------
Consolidated Balance Sheet at 30 June 2000
30 June 30 June 31 Dec
2000(un- 1999(un- 1999(au-
audited) audited) dited)
£000 £000 £000
Assets
Goodwill 6,829 7,125 6,971
Other intangible assets 14,423 15,163 14,814
Land and buildings 407 1,774 951
Other financial investments 200,187 195,560 228,979
Assets held to cover linked - 2,516 3,016
liabilities
Reinsurers' share of technical 228,098 119,950 159,547
provisions
Debtors 206,169 124,820 147,318
Other assets 40,071 42,161 43,771
Cash at bank and in hand 23,507 32,966 27,602
Prepayments and accrued income 69,917 48,143 56,438
-------- ------- -------
Total assets 789,608 590,178 689,407
-------- ------- -------
Liabilities
Capital and reserves:
Called up share capital 7,225 7,190 7,223
Share premium account 69,062 68,160 69,042
Merger reserve 4,723 4,723 4,723
Capital redemption reserve 33,244 33,244 33,244
Profit and loss account 13,748 20,144 15,353
-------- ------- -------
Shareholders' funds attributable 128,002 133,461 129,585
to equity interests
-------- ------- -------
Fund for future appropriations - 1,702 1,902
Technical provisions 544,136 329,820 448,251
Equalisation provision 7,440 5,553 6,338
Technical provisions for linked - 2,516 3,016
liabilities
Creditors 105,292 105,570 87,615
Provisions for other risks and 25 7,174 1,729
charges
Accruals and deferred income 4,713 4,382 10,971
-------- ------- -------
Total liabilities 789,608 590,178 689,407
-------- ------- -------
Net asset value (before 93.7 96.7 94.1
equalisation provision)
p per share
-------- ------- -------
HISCOX PLC
CONSOLIDATED CASH FLOW STATEMENT
6 6 Year to
months months 31 Dec
to to 1999
30 June 30 June (audited)
2000 1999
(un- (un-
audited) audited)
£000 £000 £000
Net cash inflow from general 8,235 9,355 16,710
business
Net shareholders' cash inflow 2,328 - -
from long term business
Net shareholders' cash inflow - - 12,021
from Lloyd's business
------- ------- -------
Net cash inflow from operating 10,563 9,355 28,731
activities
Interest paid (525) (182) (1,835)
Taxation paid (2,646) (913) (4,102)
Capital expenditure (1,548) (673) 264
Equity dividends paid - - (4,963)
Financing 2,090 (80) (7,724)
------- ------- -------
7,934 7,507 10,371
------- ------- -------
Cash flows were invested as
follows:
Decrease in cash holding (5,049) (10,847) (16,752)
Net portfolio investment:
Shares and units in unit trusts 14,979 10,244 12,623
Debt securities and other fixed 306 4,617 14,513
income securities
Deposits with credit institutions (2,038) 3,423 (271)
Other investments (264) 70 258
------- ------- -------
Net investment of cash flows 7,934 7,507 10,371
------- ------- -------
Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit before taxation
and after interest, based on 910 5,091 5,427
longer term investment return
Depreciation and amortisation of 1,214 1,318 2,899
fixed assets
Increase in general insurance
technical provisions, net of 8,198 3,830 36,610
reinsurance
Increase/(decrease) in amounts 7,342 6,598 (7,622)
owed to agents
(Increase)/decrease in amounts (13,369) (9,527) 3,958
owed by agents
(Increase)/decrease in other (4,743) 5,650 1,481
debtors
Increase/(decrease) in other 5,187 3,436 (23,870)
creditors
Cash received from long term 2,328 - -
business
Cash received from Lloyd's - - 12,021
business
Realised and unrealised (321) (3,339) 3,068
investment (gains)/losses
Short term fluctuations in (693) (2,864) (3,672)
investment return
Loan interest expense 422 184 933
Other non-cash transactions 4,088 (1,022) (2,502)
------- ------- -------
Net cash inflow from operating 10,563 9,355 28,731
activities
------ ------- -------
SEGMENTAL INFORMATION
6 MONTHS TO 30 JUNE 2000 (UNAUDITED)
Gross Gross Gross
premiums claims operating
incurred
earned expenses
£000 £000 £000
Fire and other damage 59,601 (33,634) (22,555)
to property
Third party liability 26,156 (10,830) (9,111)
Marine, aviation and 17,090 (13,004) (5,332)
transport
Reinsurance acceptances 22,376 (15,930) (7,199)
Other 35,169 (14,945) (13,137)
------- ------- -------
160,392 (88,343) (57,334)
------- ------- -------
Rein- Under-
surance writing
balance result*
£000 £000
Fire and other damage to (3,542) (130)
property
Third party liability (3,266) 2,949
Marine, aviation and (294) (1,540)
transport
Reinsurance acceptances (1,654) (2,407)
Other (7,416) (329)
------- --------
(16,172) (1,457)
------- --------
6 MONTHS TO 30 JUNE 1999 (UNAUDITED)
Gross Gross Gross
prem- claims operating
iums incurred
earned expenses
£000 £000 £00
Fire and other damage 48,323 (28,204) (22,541)
to property
Third party liability 17,062 (11,301) (6,823)
Marine, aviation and 14,802 (16,665) (5,228)
transport
Reinsurance acceptances 18,318 (10,624) (4,089)
Other 15,261 (13,234) (5,502)
------ ------- -------
113,766 (80,028) (44,183)
------ ------- -------
Rein- Under-
surance writing
balance result*
£000 £000
Fire and other damage 993 (1,429)
to property
Third party liability (319) (1,381)
Marine, aviation and 6,367 (724)
transport
Reinsurance acceptances (1,821) 1,784
Other 5,309 1,834
-------- --------
10,529 84
--------- ---------
YEAR TO 31 DECEMBER 1999 (AUDITED)
Gross Gross Gross
premiums claims opera-
incurred ting
earned expenses
£000 £000 £000
Fire and other damage 101,046 (59,751) (40,528)
to property
Third party liability 34,994 (24,590) (14,350)
Marine, aviation and 31,306 (42,647) (11,038)
transport
Reinsurance acceptances 49,344 (65,221) (9,020)
Other 47,567 (27,312) (16,987)
------- ------- -------
264,257 (219,521) (91,923)
------- ------- -------
Rein- Underwriting
surance result*
balance
£000 £000
Fire and other damage 4,037 4,804
to property
Third party liability 2,396 (1,550)
Marine, aviation and 19,918 (2,461)
transport
Reinsurance acceptances 19,137 (5,760)
Other (1,180) 2,088
------- --------
44,308 (2,879)
------- --------
*Before longer term investment return, other technical income
and movement in equalisation provision.
6 MONTHS TO 30 JUNE 2000 (UNAUDITED)
Lloyd's Insurance Overseas Total
Business Opera-
Company tions
£000 £000 £000 £000
Profit on ordinary
activities before
taxation
Gross premiums written 146,652 55,241 14,045 215,938
Net premiums earned 43,041 46,926 7,054 97,021
Investment return based 2,955 3,071 94 6,120
on longer term rate of
return
Net claims incurred (17,272) (23,862) (46) (41,180)
Acquisition costs (26,812) (16,167) (6,123) (49,102)
Administration expenses (2,976) (7,430) (134) (10,540)
Long term business result - - - -
-------- ------- ------- -------
Trading result:
Aligned result (1,064) 2,538 845 2,319
Non-aligned result - - - -
Agency and other income 2,194 - 2,879 5,073
Profit commission - - - -
Expenses (1,811) - (3,328) (5,139)
Loan interest (715) - - (715)
Goodwill and capacity (628) - - (628)
amortisation
-------- ------- ------- -------
Operating profit/(loss) (2,024) 2,538 396 910
Short term fluctuations (1,310) 418 199 (693)
in investment return
Profit on sale of long - 1,031 - 1,031
term business
Equalisation provision - (1,102) - (1,102)
-------- ------- ------- -------
Pre tax profit/(loss) (3,334) 2,885 595 146
-------- ------- ------ -------
Managed Insurance Total
Syndi-
cates Company
100% level combined 104.1% 98.8% 102.2%
ratio*
-------- ------- ------
-
* Amounts shown are at the 100% level regardless of ownership of
capacity.
6 MONTHS 30 JUNE 1999 (UNAUDITED)
Lloyd's Insurance Overseas Total
Business Opera-
Company tions
£000 £000 £000 £000
Profit on ordinary
activities before
taxation
Gross premiums written 128,219 47,398 10,106 185,723
Net premiums earned 42,728 39,580 1,391 83,699
Investment return based 3,160 2,472 66 5,698
on longer term rate of
return
Net claims incurred (19,926) (20,818) - (40,744)
Acquisition costs (19,059) (13,835) (1,180) (34,074)
Administration expenses (2,327) (6,734) (29) (9,090)
Long term business result - 293 - 293
-------- ------- ------- ------
Trading result:
Aligned result 4,076 958 248 5,282
Non-aligned result 500 - - 500
Agency and other income 1,428 - 737 2,165
Profit commission 283 - - 283
Expenses (1,262) - (1,169) (2,431)
Loan interest (298) - - (298)
Goodwill and capacity (410) - - (410)
amortisation
-------- ------- ------- ------
Operating profit/(loss) 4,317 958 (184) 5,091
Short term fluctuations (1,638) (1,226) - (2,864)
in investment return
Profit on sale of long - - - -
term business
Equalisation provision - (858) - (858)
-------- ------- ------- ------
Pre tax profit/(loss) 2,679 (1,126) (184) 1,369
-------- ------- ------- ------
Managed Insurance Total
Syndi-
cates Company
100% level combined ratio 107.8% 103.1% 107.1%
------- ------- -------
YEAR TO 31 DECEMBER 1999 (AUDITED)
Lloyd's Insurance Over- Total
Business seas
Company Opera-
tions
£000 £000 £000 £000
Profit on ordinary
activities before
taxation
Gross premiums written 202,042 97,814 23,821 323,677
Net premiums earned 112,420 83,039 5,993 201,452
Investment return based 7,655 5,792 195 13,642
on longer term rate of
return
Net claims incurred (68,751) (43,798) (93) (112,642)
Acquisition costs (40,960) (29,035) (5,145) (75,140)
Administration expenses (5,177) (13,605) (333) (19,115)
Long term business result - 774 - 774
-------- ------- ------ -------
Trading result:
Aligned result 3,712 3,167 617 7,496
Non-aligned result 1,475 - - 1,475
Agency and other income 2,793 - 3,047 5,840
Profit commission (482) - - (482)
Expenses (2,048) - (4,889) (6,937)
Loan interest (707) - - (707)
Goodwill and capacity (1,258) - - (1,258)
amortisation
-------- ------- ------ -------
Operating profit/(loss) 3,485 3,167 (1,225) 5,427
Short term fluctuations (2,338) (1,572) 238 (3,672)
in investment return
Profit on sale of long - - - -
term business
Equalisation provision - (1,643) - (1,643)
-------- ------- ------ -------
Pre tax profit/(loss) 1,147 (48) (987) 112
-------- ------- ------ -------
Managed Insurance Total
Syndi-
cates Company
100% level combined ratio 104.3% 102.6% 102.7%
-------- ------- ------
-
NOTES TO THE INTERIM ACCOUNTS
1. BASIS OF PREPARATION
The unaudited interim accounts have, except as stated below,
been prepared on the basis of the accounting policies consistent
with those set out in the Group's 1999 Report and Accounts. In
accordance with the provisions relating to Insurance Companies
under Schedule 9a of the Companies Act 1985, the accounts
include the transactions, assets and liabilities of the
Syndicates on which certain subsidiary companies participate as
corporate members of Lloyd's accounted for on an annual basis.
As a result of accounting practices at Lloyd's this syndicate
data is not available on a one-year basis in relation to the
interim results for the non-managed syndicate participations of
the Hiscox Select subsidiaries and so the transactions, assets
and liabilities of these participations have been excluded.
The unaudited interim statements, the comparative figures for
the year ended 31 December 1999 and the financial information
contained in these interim results, do not constitute statutory
accounts of the group within the meaning of Section 240 of the
Companies Act 1985.
The auditors have reported on the Report and Accounts for the
year ended 31 December 1999, their report was not qualified and
did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985.
2. EARNINGS PER SHARE
Earnings per share on operating profit are based on the
operating profit after taxation of £655,000 and on the average
number of shares in issue during the current period of
144,471,379.
Earnings per share on ordinary activities are based on the
profit after taxation of £105,000 and on the average number of
shares in issue during the current period of 144,471,379.
Fully diluted earnings per share on ordinary activities are
based on the profit after taxation of £105,000 and on the
average number of shares in issue during the period of
148,459,282, taking into account the options outstanding under
the Employee Option Schemes.
3. DIVIDENDS
An interim dividend of 1.2p (net) per ordinary share has been
declared payable on 10 November 2000 to shareholders registered
on 13 October 2000.
4. PRIOR PERIOD RESTATEMENT
In the year ended 31 December 1999 refinements were made to the
annual accounting model. As a result of this an adjustment of
£1,977,000 was made to the opening reserves for the year ended
31 December 1998.
In order to improve comparability between years, the comparative
figures for the six month period ended 30 June 1999 have been re-
presented to show the underwriting result of Hiscox Insurance
Company (Guernsey) Limited. Previously the net underwriting
result was included within other income and expenses.
5. 100% LEVEL TECHNICAL ACCOUNT
The underwriting activities which are managed by the Group are
shown below at the 100% level regardless of ownership of
capacity.
6 months to 30
June 2000 (unaudited)
Managed Insurance Overseas Total
Syndi- Operation
cates Company
£000 £000 £000 £000
Gross premiums 333,285 55,241 14,045 402,571
written
Net premiums 167,514 50,926 7,059 225,499
written
Net premiums earned 108,340 46,926 7,054 162,320
------ ------- ------ ------
Net claims incurred 48,952 23,862 46 72,860
------ ------- ------ ------
Claims ratio (%) 45.2% 50.9% 44.9%
------- ------- ------
Commission 79,260 16,864 6,097 102,221
Expenses 19,446 7,546 134 27,126
Movement in DAC (27,365) (813) 26 (28,152)
------- ------- ------ ------
Net expenses 71,341 23,597 6,257 101,195
------- ------- ------ ------
Expense ratio (%) 58.9% 47.9% 57.3%
------- ------- ------
Net longer term 3,236 3,071 94 6,401
investment return
------- ------- ------ ------
Technical (8,717) 2,538 845 (5,334)
profit/(loss)
------ ------- ------ ------
Combined ratio (%) 104.1% 98.8% 102.2%
------ ------- ------
6 months to
30 June 1999
(unaudited)
Total
£000
Gross premiums written 363,485
Net premiums written 203,004
Net premiums earned 180,084
-------
Net claims incurred 87,412
-------
Claims ratio (%) 48.5%
------
Commission 92,150
Expenses 26,753
Movement in DAC (29,194)
------
Net expenses 89,709
------
Expense ratio (%) 58.6%
------
Net longer term 5,867
investment return
------
Technical profit/(loss) 8,830
------
Combined ratio (%) 107.1%
------
6.Investment Return
a) The total actual investment return before taxation comprises:
6 months 6 months Year to
to to 31 Dec
30 June 30 June 1999
2000 1999 (audited)
(un- (un-
audited) audited)
£000 £000 £000
Investment return on funds at Lloyd's and other corporate funds:
Investment income 1,572 2,984 4,529
Unrealised gains/(losses) on 846 (1,688) (1,755)
investments
Realised (losses)/gains on (1,031) 21 (63)
investments
-------- -------- -------
1,387 1,317 2,711
-------- -------- -------
Investment return on
syndicate funds:
Investment income 583 704 3,893
Realised losses on (20) (368) (468)
investments
-------- -------- -------
563 336 3,425
-------- -------- -------
Investment return on
insurance company funds:
Investment income 3,110 2,678 5,737
Unrealised gains/(losses) on 354 (971) 5
investments
Realised gains/(losses) on 152 (333) (1,255)
investments
-------- -------- -------
3,616 1,374 4,487
-------- ------- -------
Investment management (139) (193) (653)
expenses
-------- -------- -------
Total investment return 5,427 2,834 9,970
-------- -------- -------
Allocation to the technical (6,120) (5,698) (13,642)
account based on the longer
term rate
-------- -------- -------
Short term fluctuations in
investment return retained in (693) (2,864) (3,672)
the non- technical account
-------- ------- -------
b) Longer term investment return
The longer term return is based on a combination of historical
experience and current expectations for each category of
investments. The longer term return is calculated by applying
the following yields to the weighted average of each category of
assets.
2000 1999
% %
Shares and units in unit 7.0 7.0
trusts
Debt securities and other 6.0 6.0
fixed interest securities
Deposits with credit 6.0 6.0
institutions
c) Comparison of longer term investment return with actual
returns
The actual return on investments is compared below with the
longer term investment return.
6 months ended
30 June 2000
(unaudited)
Funds Share
at of
Lloyd' Synd
s and icates
other
Corp-
orate
Assets
Actual investment return: £000 % £000 %
Shares and units in unit (58) (0.5) (15) (1.7)
trusts
Debt securities and other
fixed interest securities 1,315 6.1 503 3.7
Deposits with credit 118 8.5 65 11.8
institutions
Other - 0.0 10 1.5
----- ----
1,375 563
Longer term investment
return:
Shares and units in unit 759 7.0 61 7.0
trusts
Debt securities and other
fixed interest securities 1,300 6.0 813 6.0
Deposits with credit 83 6.0 33 6.0
institutions
Other - 0.0 - 0.0
----- ----
2,142 907
----- ----
Short term fluctuations
in investment return (767) (344)
---- ----
6 months ended
30 June 2000
(unaudited)
Insu- Total
rance
Company
£000 % £000
Actual investment return:
Shares and units in unit 210 2.6 137
trusts
Debt securities and other
fixed interest securities 3,204 7.9 5,022
Deposits with credit 75 6.0 258
institutions
Other - 0.0 10
----- ----
3,489 5,427
Longer term investment
return:
Shares and units in unit 574 7.0 1,394
trusts
Debt securities and other
fixed interest securities 2,422 6.0 4,535
Deposits with credit 75 6.0 191
institutions
Other - 0.0 -
---- ----
3,071 6,120
---- ----
Short term fluctuations
in investment return 418 (693)
---- ------
Year to
31 December
1999 (audited)
Funds at Share of
Lloyd's Syndicates
and other
Corporate
Assets
£000 % £000 %
Actual investment
return:
Shares and units in 2,320 13.8 (20) (0.9)
unit trusts
Debt securities and
other fixed interest (958) (2.1) 2,202 4.2
securities
Deposits with credit 327 6.0 327 8.6
institutions
Other 681 4.3 871 9.5
------- ------
2,370 3,380
Longer term
investment return:
Shares and units in 1,175 7.0 162 7.0
unit trusts
Debt securities and
other fixed interest 2,793 6.0 3,166 6.0
securities
Deposits with credit 326 6.0 228 6.0
institutions
Other - 0.0 - 0.0
-------- --------
4,294 3,556
-------- --------
Short term
fluctuations in (1,924) (176)
investment return
-------- --------
Year to 31
December 1999 (audited)
Insurance Total
Company
£000 % £000
Actual investment
return:
Shares and units in 1,602 23.5 3,902
unit trusts
Debt securities and
other fixed interest 2,259 2.6 3,503
securities
Deposits with credit 211 7.1 865
institutions
Other 148 8.9 1,700
-------- ------
4,220 9,970
Longer term
investment return:
Shares and units in 478 7.0 1,815
unit trusts
Debt securities and
other fixed interest 5,137 6.0 11,096
securities
Deposits with credit 177 6.0 731
institutions
Other - 0.0 -
--------- -------
5,792 13,642
-------- -------
Short term
fluctuations in (1,572) (3,672)
investment return
-------- -------
REVIEW REPORT BY KPMG AUDIT PLC TO HISCOX PLC
INTRODUCTION
We have been instructed by the company to review the financial
information set out on pages 4 to 11 and we have read the other
information contained in the interim report and considered
whether it contains any apparent misstatements or material
inconsistencies with the financial information.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by, the directors. The Listing Rules of the Financial
Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts
except where they are to be changed in the next annual accounts
in which case any changes, and the reasons for them, are to be
disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in
Bulletin 1999/4: Review of interim financial information issued
by the Auditing Practices Board. A review consists principally
of making enquiries of Group management and applying analytical
procedures to the financial information and underlying financial
data and, based thereon, assessing whether the accounting
polices and presentation have been consistently applied unless
otherwise disclosed. A review is substantially less in scope
than an audit performed in accordance with Auditing Standards
and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial
information.
REVIEW CONCLUSION
On the basis of our review, other than the exclusion of
syndicate data in respect of the syndicate participations of the
Hiscox Select subsidiaries which as described in note 1 is not
available, we are not aware of any further material
modifications that should be made to the financial information
as presented for the six months ended 30 June 2000.
KPMG AUDIT PLC
CHARTERED ACCOUNTANTS
LONDON
27 SEPTEMBER 2000
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