Final Results

Hiscox PLC
25 April 2001

PART 1

HISCOX PLC

Preliminary Results for the year ended 31 December 2000


'The retail business is growing profitably, and rates are rising fast in
Lloyd's'

                                                              2000         1999

Gross written premiums                               £384.7million £323.7million
Operating profit                                       £3.0million   £5.4million
Pre tax profit                                         £3.5million      £112,000
Profit after tax                                       £5.4million       £84,000
Earnings per share                                            3.8p          0.1p
Final dividend                                                2.3p          2.3p
Net asset value per share (before equalisation               96.1p         94.1p
reserve)


Highlights


  * Strategy of building a retail business to balance the volatile Lloyd's
    business is working well.

  * Hiscox Insurance Company improved performance for the fourth consecutive
    year. Premium income up 30% to £127million. Operating profit up 75% to £
    5.5million.

  * Hiscox Syndicate 33 at Lloyd's achieved overall rate increases of 24%
    over the year to March 2001.

  * Gross written premiums from the Hiscox Insurance Company (Guernsey) grew
    34% to £31.9million. Germany and Netherlands moved into profit.

  * The group's retail network expanded through the acquisition of
    Chartwell's regional business in the UK and through distribution
    partnerships in Europe.

  * Group gross written premium income up 19% to £384.7million. Controlled
    gross premium income up by 15% to £616.4million.

  * Good investment performance increased pre-tax profit with investment
    return of £17.3million, £1million ahead of target.

  * The profit after tax increased to £5.4million. The Hiscox Insurance
    Company was carrying forward pre-acquisition tax losses which, now the
    Company is in profit, generated a tax credit.


Robert Hiscox, Chairman Hiscox plc, commented:


'Conditions in Hiscox and the market are better than they have been for years.
We have a thriving retail business which complements our strong Lloyd's
business and the rates are rising. The future looks good.'


The Chairman's statement, Chief Executive's report and the Group's financial
statements as at 31 December 2000 are attached.


For further information:

Hiscox plc
Robert Hiscox                     Chairman                        020 7448 6011
Bronek Masojada                   Chief Executive                 020 7448 6012
Stuart Bridges                    Finance Director                020 7448 6013

The Maitland Consultancy

Philip Gawith                                                     020 7379 5151
Suzanne Bartch                                                    020 7379 5151


Chairman's Report


Result


The result for the year ending December 31st 2000 was an operating profit of £
3.0m (1999: £5.4 m) and a pre-tax profit of £3.5m (1999: £112,000). A tax
credit has increased the post-tax profit to £5.4m (1999: £84,000) and the
earnings per share to 3.8p (1999: 0.1p).


The strategy of building businesses outside Lloyd's to complement the London
Market business written by Hiscox Syndicate 33 in Lloyd's is working well. The
overall result represents a combination of a loss from our Lloyd's operation,
where a better 2000 was not sufficient to cover the losses from the run-off of
the two very difficult years, 1998 and 1999, balanced by a better return from
the Hiscox Insurance Company. In our international operations, there was a
further strong performance from the Hiscox Insurance Company (Guernsey),
whilst the German and Dutch offices made a small profit - three creditable
performances which covered the loss from the French office which continued to
suffer from the aftermath of the December 1999 storms.


Syndicate 33 has addressed the problem areas of its account and is now
benefiting from rising rates. The Hiscox Insurance Company continues to grow
its now profitable account and the overseas offices continue to expand.


We remain acutely aware of our ambition to make a proper return on capital and
thereby to increase the value of the Company for shareholders. Therefore we
must and will deliver a better performance. Valuable lessons have been learnt,
important work has been done, and rates are now going up, so the future looks
good.


The gross premium income controlled by the Group increased to £616.4m (1999: £
537.7m) and the gross premium income applicable to the Company rose to £384.7m
(1999: £323.7m).


Dividend

The Directors propose maintaining the final dividend at 2.3p net (1999: 2.3p
net) per ordinary share making a total dividend for the year of 3.5p net
(1999: 3.5p net). The dividend will be paid on 11 July 2001 to shareholders on
the register on 4 May 2001.


Corporate developments


In December 2000, the Chubb Corporation approached us with an indicative offer
to acquire the balance of the shares in Hiscox plc, following their
acquisition of 27% of the equity in 1998.


Extensive talks took place, culminating in an indicative offer of 210p per
share on 29 January 2001. This was rejected by the board of Hiscox plc as
inadequate as it significantly undervalued the Company. There is a definite
need for specialist insurers that can respond rapidly to the needs of brokers
and clients. We are experts and market leaders in the areas on which we focus,
and believe that our specialisation, focus and speed will yield the best
profits.


Current business developments


Bronek Masojada will cover the business units in detail in his report, so I
will just comment on some significant points.


Hiscox Syndicate 33


The Syndicate underwrites mainly internationally traded business in the London
Market - generally large, complicated or international business which needs to
be shared with other insurers, or needs the international licences or rating
of Lloyd's.


Last year I reported that at the end of the first quarter of 2000, the run-off
of the 1998 and 1999 accounts of Syndicate 33 were developing within
expectations, but the possibility of late reported claims on these accounts
remained. Unfortunately the old maxim that bad years get worse proved true,
and both accounts suffered further losses during the last three quarters.


Syndicate 33 went through a rigorous exercise of cost-cutting, reconstruction
and business pruning in 1999 and the benefits of these actions are now being
seen. The Syndicate underwriters are increasing premium rates and enjoying a
rising market. Feast follows famine in the London Market, and we anticipate a
handsome return from our Lloyd's underwriting in the next few years.


Lessons have been learnt and the Syndicate is stronger for the experience. 32
years of consecutive profits may have dulled the edge; two years of losses
have sharpened and tempered it better than ever. Our ambition is to make
profits throughout the cycle, as we did in the past, and much of the
restructuring has been to that end.


We acquired a further 7% of the capacity in the auctions for an average price
of 3.6p (1999:7.5p), bringing our total holding of capacity in the Syndicate
to 60%. 7% of that capacity has been quota shared to two leading European
reinsurers leaving Hiscox plc with a net 53%.


Hiscox Insurance Company


The Hiscox Insurance Company focuses on two main areas - insurance of the
personal property of high net worth individuals, and insurance of professional
firms, both professional liability and property.


The strategy of balancing the London Market business with retail business
written by the Hiscox Insurance Company is bearing fruit. In 2000, the Company
increased its gross premium income by 30% to £127m. When we acquired the
Company the gross premium income was £60m, and we discarded £30m of that
business, so we have effectively increased from £30m to £127m in four years
partly by acquisition, but also through organic growth achieved by a highly
motivated staff. Sian Fisher deserves the transition to Managing Director from
Chief Underwriting Officer of the Hiscox Insurance Company. The combined loss
ratio has reduced steadily since we bought the Company in 1996, from 118% in
1997 to 98% in 2000, and I am grateful to all the staff for a job well done.


International activities


The Hiscox Insurance Company (Guernsey) increased revenue and profit in 2000
and is a valuable asset. Our French office had performed well under an
onslaught of claims from the storms in December 1999, but brokers and clients
were pre-occupied in 2000 with the aftermath of the storms and new business
was hard to win. The German office goes from strength to strength and made
money in 2000 - a great achievement in a market which is hard to penetrate.
The Dutch office had an excellent start and also made a small profit. We have
formed a joint venture with an underwriting agent in Belgium, and have
partnered with the Generali to use their agents to sell High Net Worth
policies in Austria.


Starting from scratch and building a reputation and a book of business is not
easy and I admire our overseas managers for their skill and fortitude. They
are all building firm foundations for substantial businesses which will bring
great benefit in the future.


Hiscox Online


We have continued to develop an online capability to allow selected people to
buy insurance from us through the internet. We do not believe that this
replaces the brokers at all, but complements them. Much of our online
development is for business to business transactions with our brokers to
reduce costs, but if an insured wants to buy through the internet, we must be
able to accept such business. We have signed agreements to put our online
facility on the office intranets of a number of leading financial institutions
which should be a source of quality business for us.


People


Nicholas Thomson is not standing for re-election to the board of Hiscox plc
and is handing over his role as Director of Underwriting to Robert Childs.
Nicholas is the architect of the underwriting success on which the Company was
built. During his time as underwriter of Syndicate 33 it had an unbroken run
of profits, and he has played a vital role as Director of Underwriting since
stepping down as the active underwriter in 1993. Fortunately we will still
have the wisdom and counsel of Nicholas available within the Group as he is
remaining a director of the trading subsidiaries.


Everyone at Hiscox is committed to the success of the Company and we all feel
setbacks keenly. The reality of cost-cutting and 'reconstruction' has meant
hard decisions, loss of jobs and very hard work. We have had two bad years in
the Syndicate and it has hurt, but we have done what we had to do, as fast as
possible, to cut out the loss-making business. We have a first rate group of
people in the front and back offices of the Syndicate who are devoted to
earning good profits for shareholders (and thereby profit commission for
themselves), and I thank them for their endeavour and spirit. Those spirits
get higher as we win orders at higher prices.


Outside the London Market, we also have first rate and determined teams who
are building businesses often in a new way or area for us, and I am proud of
and grateful for the enterprising spirit they show and for the success they
are having.


Finally


The approach from the Chubb Corporation made us focus even harder on the
future of your Company. We liked what we saw, and believe that our targets are
well achievable and that the profits will justify our independence. This extra
incentive to an already totally committed Company gives me great confidence in
the future.


Robert Hiscox

Chairman

25 April 2001


Chief Executive's Report


Robert has given you an overview of the business. The purpose of my report is
to give you more detail of the operational and financial performance of the
Group.


The result for 2000 is not good, but is within our expectations. A fourth
successive year of improving performance within our retail business, conducted
largely by the Hiscox Insurance Company, has mitigated the effect of difficult
conditions experienced by Syndicate 33.


My report gives an overview of the Group's operations first in terms of
business strategy by market segment and then the financial performance of the
legal entities contained within the Group.


Business strategy by market segment


During the year our Group's controlled premium income grew to £616.4m, a
growth of 14.6%. Our strategy is to grow the retail part of our business to
half of the Group which will enable us to balance our volatile London Market
business with more stable retail business. Retail now comprises 26% of the
Group controlled premium income. As Hiscox plc provides capital for 53% of
Syndicate 33, retail now represents 41% of the income to the Company.


In each of the areas in which we specialise our market position differs
slightly. Our approach to each is reviewed below:


  * London Market Reinsurance: Last year I said that our aim in this area
    was to continue to offer cover whilst others were withdrawing, allowing us
    to earn above average profits per pound of premium written as the market
    hardens. After a very difficult 1999, one of the worst catastrophe years
    in history, this team is now benefiting from rising rates and tighter
    conditions. This trend is continuing in 2001.


  * London Market Insurance: The book of business and expense base of this
    division has been significantly restructured during the course of the last
    three years. In 1998 our hull, energy and cargo income within the division
    was £56m. In 2000 this was reduced to £24m. Expenses were also reduced. In
    response to rises in reinsurance costs and the poor loss experience in the
    market, rates are rising in almost all areas, and we expect to benefit
    from this during 2001 and beyond.


  * ATMT: This business unit focuses on the insurance of aerospace,
    technology, media and telecommunications businesses on behalf of both
    Syndicate 33 and the Hiscox Insurance Company. Creating this unit has
    given a global reach to the technology and media teams which previously
    focussed on the UK alone. This broader scope has provided us with more
    growth opportunities, and despite the collapse of the dotcom stocks,
    interest and demand for this insurance remains high.


  * Affluent Assureds: A total premium income of £198.4m, makes this the
    single biggest segment within our Group. Despite recent stock market
    hiccups, we expect to see continued growth in this area. Each regional
    office within our Group has a team which specialises in the insurance of
    affluent individuals and their personal possessions. In London, the team
    in Syndicate 33 is also able to offer additional specialties such as the
    insurance of yachts, kidnap and ransom and bloodstock. In our efforts to
    expand our distribution capability we have built an e-commerce platform
    which, as Robert highlights in his report, allows us to make our products
    accessible through the internet. We are also building distribution
    ventures with other insurers, and in both Germany and Austria the tied
    agency forces of some large insurers are actively selling Hiscox products.


    We are working to create a coherent approach to this market across the
    Group by sharing knowledge, experience and expertise, though we remain
    alive to local tastes and market conditions. Flexibility is a key element
    of our distinctiveness and we will use this to differentiate ourselves
    from our competitors.


  * Professional Insurances: In 1994 we began building a team to meet the
    professional indemnity needs of specialist professional services firms
    such as IT consultants, advertising agencies, management consultants, PR
    firms and other similar businesses. The team and their approach has been
    very successful and we are now expanding the range of products available
    to meet the full property and liability insurance needs of these firms.
    Products will be available on a modular basis, so clients will be able to
    buy a product which suits them and transparently pay the right premium for
    the right cover. This team has been a particular beneficiary of our
    purchase of the Chartwell regional offices and the de-mutualisation of the
    Solicitor's Indemnity Fund. Our gross written premium grew from £36.1m to
    £57.5m, a growth of 59%. We expect this to continue in the future, but not
    at such a rapid rate. We are now taking our first steps to expand the
    concept into our European offices.


  * Local Niches: In each market in which we operate we identify smaller
    niches which we address with specialist intermediaries and brokers. In the
    UK, our Property Owners area had a difficult year as we experienced a
    higher than normal level of losses, but our Affinity business performed
    well. In January 2001, we have added to this segment with the purchase of
    the Construction and General Guarantee Insurance Company in Ireland which
    focuses on surety bonds.


Group Financial Performance


Group operating profit in 2000 declined to £3.0m (1999: £5.4 m). Group pre-tax
profit improved to £3.5m (1999: £112,000) and post tax profits have increased
to £5.4m (1999: £84,000). The results are commented on below:


  * The strong growth in profits of Hiscox Insurance Company and our
    international businesses from £1.9m to £6.8m offset the losses of £3.8m in
    our Lloyd's business. As a result our Group operating profits were £3.0m.


  * An actual investment return better than the assumed rate of return used
    in determining the operating profit has resulted in a positive investment
    fluctuation of £1m (1999: loss £3.7m). Contributions to the government
    mandated equalisation provisions have increased to £2.3m (£1.6m)
    reflecting the growth in our property account. Exceptional gains total £
    1.8m. £0.8m of this was generated from the sale of the life fund, whilst
    the balance is due to a gain from the sale of converting names third party
    capacity. In all, these items contribute a net £0.5m (1999: loss £5.3m) to
    our pre-tax profit of £3.5m.


  * The move to profitability of Hiscox Insurance Company means that we have
    taken a tax credit for losses incurred under previous ownership, leading
    to a post tax profit for the group of £5.4m.


Financial Performance


The financial performance of the Group is segmented into three areas, our
Lloyd's business, the Hiscox Insurance Company and our international
businesses.


Lloyd's Business Performance


The Lloyd's business comprises our share of the underwriting result of
Syndicate 33, the run-off of non aligned third party capacity, the investment
income from our corporate names that support the underwriting on the
Syndicate, Hiscox Syndicates Ltd. (the managing agency which manages the
Syndicate), and Hiscox Investment Management.


Our Lloyd's business combined ratio deteriorated from 104.3% in 1999 to
105.9%. The movement in combined ratio is reflected in the trading loss of £
2.0m (1999: profit £3.7m).


The majority of the poor performance came from our London Market divisions,
both direct and reinsurance, with the marine, energy and cargo accounts the
major drains on profitability. As outlined previously, we have restructured
the business by reducing our costs and shrinking our book. The Syndicate is
now achieving rate increases which averaged 24% over the last 12 months, and
gross loss ratios are improving significantly.


2000 is the last year in which we will be participating on non aligned third
party syndicates. The run-off of these accounts has shown a profit of £0.9m,
reflecting the conservative reserving approach which we took when we acquired
Hiscox Select in 1998. We also finalised the Names' conversion scheme which
had been created by Hiscox Select. The board decided to call 50% of the money
due under the conversion stock, raising £3.5m net of fees and pipeline losses
attributable to converting Names. This was satisfied by the issue of 3.4m
shares at a price of 102.6p per share.


Amortisation costs have grown slightly as we increased our ownership of
Syndicate 33. Loan costs have also grown as we provide the related funds at
Lloyd's. Other income and expenses include the net cost of running Hiscox
Investment Management and certain central costs, such as our initial
e-commerce costs which grew during the year, but are not expected to be
repeated.


The Hiscox Insurance Company


The Hiscox Insurance Company has delivered an improved performance for the
fourth consecutive year. A combined ratio of 97.7%, improving steadily from
118% in 1997, against the trend of the insurance cycle, must place its
performance amongst the best in the UK industry. This generated an improved
trading result of £5.5m (1999: £3.2m). This strong improvement has been
accomplished at the same time as premium income growth of 30% in 2000. This
growth was achieved by a combination of underlying organic growth and the
benefits of a small acquisition made during the year.


Within the Hiscox Insurance Company, the Professional Insurances division had
a very good year. Its combined ratio is under 100% and growth has been good.
The High Net Worth household account has had a difficult year. The area
under-performed as several years of rating decline took their toll. Rates were
put up in January 2000 and again in 2001. As highlighted earlier, the Property
Owners account suffered an unusually high level of losses whilst the Affinity
account again performed well.


The major strategic change in the business was the acquisition of the regional
business of Chartwell. This brought offices and teams in Glasgow, Leeds and
Birmingham, together with a small book of professional indemnity business.
Reflecting our strategic goals, we are investing in these offices to
accelerate our retail expansion. Initially we expect expenses to grow faster
than income, holding back short-term profit growth within Hiscox Insurance
Company, but over the medium term the offices will make a valuable
contribution to the Group.


International Business


The international businesses comprise a series of underwriting agencies in
continental Europe which develop business largely on behalf of the Hiscox
Insurance Company, though a certain amount is conducted on behalf of Syndicate
33. It also includes the Hiscox Insurance Company (Guernsey).


Our international business has continued to grow, though underlying financial
performance has been mixed:


  * The Hiscox Insurance Company (Guernsey) had another good year. We have
    had strong premium growth and the underlying profit levels have improved.
    The majority of this business is reinsured into Syndicate 33, so success
    in Guernsey has helped the performance of Syndicate 33.


  * Our German and Dutch operations have enjoyed a further year of strong
    growth, with premium income rising by 76.1% and 52.3% respectively. Their
    underwriting performance has contributed in part to the Hiscox Insurance
    Company's success. Taking into account both underwriting profits generated
    for Hiscox Insurance Company and local agency costs both offices were
    profitable.


  * France had a more difficult year. Growth slowed following the impact of
    the Martin and Lothar storms and losses continued. Firm action has been
    taken to improve the rating of the business.


We have expanded our international scope with the creation of a joint venture
in Belgium and the acquisition of the Construction and General Guarantee
Insurance Company in Ireland.


Investments


We outsource the management of our funds to third party experts who are
monitored by our team at Hiscox Investment Management. During 2000 our
external managers did well making a total return on group assets of 6.5%. This
is a good performance during a difficult year. This performance allowed us to
report a positive fluctuation relative to the longer-term rates assumed in
determining our operating profits. Group net assets per share (before
equalisation provision) have increased to 96.1p per share (1999: 94.1p).


In addition to their monitoring role, the team at Hiscox Investment Management
is also responsible for the investment of a series of sub-funds of the S&F
Hiscox OEIC, some of which is marketed to outside investors. The most
important of these funds is the Hiscox Insurance Portfolio (HIP). This fund,
as its name suggests, is focused on investment in stocks in the insurance
industry on a global basis. During 2000 the HIP fund achieved a return of
47.5%. This made it the top performing International Financial Sector unit
trust/OEIC and the second best performer out of 422 in the International
Sector.


Balance Sheet


During 2000 we negotiated a series of reinsurance quota shares with top rated
European insurers to help fund the expansion of the Group.


Within Hiscox Insurance Company we have arranged a series of quota shares
which allow us to cede parts of specific portfolios to retain a balanced
overall book. We are investigating the need for a whole account quota share to
ensure that we can continue to expand this business as rates harden and growth
continues. We have also arranged quota share re-insurances of our corporate
names. Under these arrangements the respective reinsurers provide us with
Funds at Lloyd's in return for a share of the profits or losses of Syndicate
33. This has allowed us to increase our ownership of Syndicate from 53% to
60%, though due to the quota shares our economic interest remains at 53%. All
the quota share reinsurances include profit commissions, so that if we perform
we will share in the upside, but the risk on the downside is mitigated.


In addition to these quota shares we retain a syndicated letter of credit from
a group of top quality banks to support some of our underwriting on Syndicate
33.


We will continue to expand these third party sources of capital, though we
need to retain a balance between them and our own capital.


In Conclusion


Last year I said that our business strategy relies on the attraction and
retention of good people. This year has tested all of them - and I am proud to
see the progress that we have made thanks to their endeavours. The recent
approach from the Chubb Corporation has tested our resolve and we are
determined to continue building Hiscox into a first class business - respected
for its people, its customer and market focus and its business performance.


For the first time in several years I feel that we have the wind to our backs
in all areas of the Group so I look forward to a year of real progress.


Bronek Masojada

Chief Executive Officer

25 April 2001



 
FINANCIAL STATEMENTS

Consolidated Profit and Loss Account (unaudited)Technical Account - General
Business for the year ended 31 December 2000
 

                                                                              
                                                 Notes        2000        1999
                                                              £000        £000
  Earned premiums, net of reinsurance                                         
  Gross premiums written                             4     384,736     323,677
  Outward reinsurance premiums                           (124,049)    (78,306)
  Net premiums written                                     260,687     245,371
  Change in the gross provision for unearned              (23,838)    (59,420)
  premiums                                                                    
  Change in the provision for unearned                       4,601      15,501
  premiums, reinsurer's share                                                 
  Change in the net provision for unearned                (19,237)    (43,919)
  premiums                                                                    
  Earned premiums, net of reinsurance                      241,450     201,452
  Allocated investment income transferred          4,5      16,222      13,642
  from the non-technical account                                              
  Claims incurred, net of reinsurance                                         
  Claims paid:                                                                
  Gross amount                                           (220,628)   (138,747)
  Reinsurers' share                                        104,887      47,214
  Net claims paid                                        (115,741)    (91,533)
  Change in the provision for claims:                                         
  Gross amount                                            (20,181)    (80,774)
  Reinsurers' share                                          8,556      59,665
  Change in the net provision for claims:                 (11,625)    (21,109)
  Claims incurred, net of reinsurance                4   (127,366)   (112,642)
  Other technical income                             4       1,184         774
  Net operating expenses                                 (120,462)    (91,689)
  Movement in equalisation provision                 4     (2,309)     (1,643)
  Balance on the technical account                           8,719       9,894
 
Consolidated Profit and Loss Account (Unaudited)Non-Technical Account for the
year ended 31 December 2000
 

                                                                              
                                                   Notes       2000       1999
                                                               £000       £000
  Balance on the technical account                            8,719      9,894
  Investment income                                    5     14,688     14,159
  Net realised gains/(losses) on investments           5        238    (1,786)
  Unrealised gains/(losses) on investments             5      3,005    (1,750)
  Investment management expenses and charges           5      (666)      (653)
                                                       5     17,265      9,970
  Allocated investment return transferred to           5   (16,222)   (13,642)
  the technical account                                                       
  Short term fluctuations in investment return         5      1,043    (3,672)
  Other income                                                8,340      2,792
  Other expenses                                           (14,615)    (8,902)
  Profit on ordinary activities before tax                    3,487        112
  Comprising:                                                                 
  Operating profit based on longer term                4      2,950      5,427
  investment return                                                           
  Short term fluctuations in investment return       4,5      1,043    (3,672)
  Exceptional item: sale of long term business       4,8        846          -
  Exceptional item: profit on sale of non            4,8        957          -
  aligned Lloyd's capacity                                                    
  Movement in equalisation provision                   4    (2,309)    (1,643)
                                                              3,487        112
  Tax on profit on ordinary activities                        1,943       (28)
  Profit on ordinary activities after tax                     5,430         84
  Dividends - Interim paid                                  (1,708)    (1,707)
  Dividends - Final payable                                 (3,404)    (3,274)
                                                            (5,112)    (4,981)
  Retained profit/(loss) for the year                           318    (4,897)
  Earnings per share:                                                         
  - Basic, based on operating profit after tax         6       3.5p       2.6p
  (on longer term investment return)                                          
  - Basic, based on profit on ordinary                 6       3.8p       0.1p
  activities after tax                                                        
  - Diluted, based on profit on ordinary               6       3.8p       0.1p
  activities after tax                                                        
 
All operations of the Group are continuing.

In accordance with the amendment to FRS 3 published in June 1999 no note of
historical cost profits has been prepared as the Group's only material gains
and losses on assets relate to the holding and disposal of investments.
 
Consolidated Statement of Total Recognised Gains and Losses (Unaudited)
 

                                                                         
                                                  Notes    2000      1999
                                                           £000      £000
       Profit on ordinary activities after tax            5,430        84
       Revaluation of tangible fixed assets                   -     (413)
       Exchange differences taken to reserves                50      (91)
       Prior period restatement                               -   (1,977)
       Total recognised gains and losses                  5,480   (2,397)
 
Consolidated Balance Sheet (Unaudited)at 31 December 2000
 

                                                                              
                                                     Notes      2000      1999
                                                                £000      £000
  Assets                                                                      
  Intangible assets                                                           
  Goodwill                                                     6,634     6,971
  Other intangible assets                                     17,773    14,814
                                                              24,407    21,785
  Investments                                                                 
  Land and buildings                                             437       951
  Other financial investments                            7   263,655   228,979
                                                             264,092   229,930
  Assets held to cover linked liabilities                          -     3,016
  Reinsurers' share of technical provisions                                   
  Provision for unearned premiums                             27,197    22,078
  Long term business provision                                     -       849
  Claims outstanding                                         148,746   136,620
                                                             175,943   159,547
  Debtors                                                                     
  Debtors arising out of direct insurance                    135,830   100,191
  operations                                                                  
  Debtors arising out of reinsurance operations               65,662    47,127
  Other debtors                                               47,407    37,081
                                                             248,899   184,399
  Other assets                                                                
  Tangible assets                                              6,132     6,690
  Cash at bank and in hand                                    38,466    27,602
                                                              44,598    34,292
  Prepayments and accrued income                                              
  Accrued interest                                             2,465     3,275
  Deferred acquisition costs                                  51,721    47,171
  Other prepayments and accrued income                         5,199     5,992
                                                              59,385    56,438
  Total assets                                               817,324   689,407
 
Consolidated Balance Sheet (Unaudited)at 31 December 2000
 

                                                                              
                                                     Notes      2000      1999
                                                                £000      £000
  Liabilities                                                                 
  Capital and reserves                                                        
  Called up share capital                               10     7,400     7,223
  Share premium account                                 10    72,474    69,042
  Merger reserve                                        10     4,723     4,723
  Capital redemption reserve                            10    33,244    33,244
  Profit and loss account                               10    15,721    15,353
  Shareholders' funds attributable to equity                 133,562   129,585
  interests                                                                   
  Fund for future appropriations                                   -     1,902
  Technical provisions                                                        
  Provision for unearned premiums                            167,596   142,658
  Long term business provision                                     -    15,191
  Claims outstanding                                         303,352   290,402
  Equalisation provision                                       8,647     6,338
                                                             479,595   454,589
  Technical provisions for linked liabilities                      -     3,016
  Provisions for other risks and charges                         655     1,729
  Creditors: amounts falling due within one year                              
  Creditors arising out of direct insurance                   75,547    33,405
  operations                                                                  
  Creditors arising out of reinsurance operations             87,123    19,507
  Other creditors including taxation and social               30,775    31,935
  security                                                                    
                                                             193,445    84,847
  Creditors: amounts falling due after one year                               
  Other creditors                                                762     2,768
  Accruals and deferred income                                 9,305    10,971
  Total liabilities                                          817,324   689,407
 
Consolidated Cash Flow Statement (Unaudited)for the year ended 31 December
2000
 

                                                                              
                                                   Notes       2000       1999
                                                               £000       £000
  Net cash inflow from general business                      40,019     16,710
  Net shareholders' cash inflow from Lloyd's          d)      1,284     12,021
  business                                                                    
  Net cash flow from operating activities             a)     41,303     28,731
  Interest paid                                       e)      (982)    (1,835)
  Taxation paid                                             (6,654)    (4,102)
  Capital expenditure                                 e)    (4,394)        264
  Acquisitions and disposals                          e)        846          -
  Equity dividends paid                                     (4,982)    (4,963)
  Financing                                           e)      3,345    (7,724)
                                                             28,482     10,371
  Cash flows were invested as follows:                                        
  Increase/(decrease) in cash holding                 f)        895   (16,752)
  Net portfolio investment:                                                   
  Shares and units in unit trusts                     f)     18,019     12,623
  Debt securities and other fixed income              f)   (19,132)     14,513
  securities                                                                  
  Deposits with credit institutions                   f)     28,891      (271)
  Other investments                                   f)      (191)        258
  Net investment of cash flows                               28,482     10,371

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