Issue of Equity

Hiscox PLC
22 November 2001



FOR IMMEDIATE RELEASE 22 November 2001



  NOT FOR RELEASE PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
      CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR THE REPUBLIC OF IRELAND

                                  HISCOX PLC

 Proposed Open Offer of 3 New Ordinary Shares for every 10 existing Ordinary
                                    Shares

                            at 126 pence per share

Highlights

Hiscox plc ('Hiscox'), the specialist insurer active in Lloyd's and the
European retail market, is pleased to announce details of an Open Offer:


  * 44.5 million New Ordinary Shares to be issued at 126 pence per share on
    the basis of 3 New Ordinary Shares for every 10 existing Ordinary Shares,
    to raise approximately £54.2 million net of expenses;

  * the Open Offer has been underwritten by ING Barings save in respect of
    12.0 million New Ordinary Shares, which Chubb has irrevocably undertaken
    to take up in full;

  * the purpose of the Open Offer is to provide the Group with additional
    capital to enable it to take advantage of the strong growth and excellent
    rating environment that both the Hiscox Insurance Company and Hiscox's
    Lloyd's businesses are currently experiencing.

Robert Hiscox, Chairman of Hiscox, said:


         'This capital raising will give us the extra muscle to continue to
    grow the Group both through Hiscox Insurance Company and Syndicate 33 and
    to take advantage of the strongest market conditions for many years'.

This summary should be read in conjunction with the detailed announcement
which follows.

For further information, please contact:

Robert Hiscox/Bronek Masojada Tel: [phone]

Hiscox plc

Ben Money- Coutts/Simon Edwards Tel: [phone]

ING Barings

Philip Gawith/Suzanne Bartch Tel: [phone]

The Maitland Consultancy





Introduction

The Board of Hiscox has today announced an Open Offer of 44,461,435 New
Ordinary Shares at 126 pence per share to raise approximately £54.2 million,
net of expenses. The Open Offer has been underwritten by ING Barings in
respect of 32,440,515 New Ordinary Shares and Chubb (which as at the Record
Date and 21 November 2001 held 40,069,734 Ordinary Shares representing 27.0
per cent. of the existing issued ordinary share capital of Hiscox) has
irrevocably undertaken to subscribe for its entitlement pursuant to the Open
Offer amounting to the remaining 12,020,920 New Ordinary Shares.

Strategy

The Board's strategy for the Group is to build a successful Europe-based
insurer known for its specialist policies, customer focus and financial
performance. This strategy is built on the complementary foundations of
Hiscox's business at Lloyd's, conducted through Syndicate 33, and its retail
insurance business conducted outside Lloyd's through Hiscox Insurance Company
Limited ('Hiscox Insurance Company').

The Group endeavours to write profitable business where most appropriate.
Syndicate 33 underwrites mainly internationally traded business in the London
Market - generally large or complex business which needs to be shared with
other insurers or needs the international licences of Lloyd's. The Group's
participation in Syndicate 33's performance is achieved through direct
underwriting on its own account and through Hiscox Syndicates Limited, which
manages Syndicate 33 in consideration for an agency fee and profit commission.
This London Market business is balanced by Hiscox Insurance Company, which
focuses on two main areas - insurance of the personal property of affluent
individuals and insurance of professional firms.

Syndicate 33 and Hiscox Insurance Company are supported by the Group's
international activities and Hiscox Connect. The international activities
comprise Hiscox Insurance Company (Guernsey) Limited, which conducts offshore
insurance, and various European offices which act as underwriting agents for
both Hiscox Insurance Company and Syndicate 33. Hiscox Online, a Hiscox
Connect venture which was launched in 2000, facilitates the purchase of
insurance from Hiscox Insurance Company directly through the internet.

It is the intention of the Board to continue to increase the Group's
underwriting participation in Syndicate 33 whilst at the same time growing the
business of Hiscox Insurance Company to represent at least 50 per cent. of the
Group's overall net premium income over the medium term. However, the Board
will adjust capital allocation between the Lloyd's and non-Lloyd's activities
to take advantage of varying market conditions from time to time.

Background to and reasons for the Open Offer

The Board believes that current market conditions afford a favourable
opportunity to expand the business. Insurance rates are rising strongly and
despite recent levels of inward investment into the industry, the Board
believes there remains a worldwide shortage of insurance and reinsurance
capacity. This, in conjunction with the current low interest rate and
investment return environment, is helping to increase rates further. Against
this general market background, the purpose of the Open Offer is to provide
the Group with additional capital to enable it to take advantage of the strong
growth and excellent rating environment that both the Hiscox Insurance Company
and Hiscox's Lloyd's businesses are currently experiencing.

The net proceeds of approximately £54.2 million are expected to be used to
provide capital to Hiscox Insurance Company to fund its continued rapid growth
while maintaining its financial rating, to provide additional support for the
underwriting at Lloyd's through Syndicate 33 and to provide greater financial
flexibility to the Group. The net proceeds will be allocated approximately £20
million to Hiscox Insurance Company and approximately £20 million to the
Lloyd's business. The balance of the proceeds of the Open Offer of
approximately £14.2 million will be retained at Group level to ensure
financial flexibility and the continued financial robustness of the Group.

Hiscox Insurance Company

Hiscox Insurance Company experienced growth of 34 per cent. in gross written
premium during the first six months of 2001 and at the same time achieved a
combined ratio of 99.1 per cent. This growth has been achieved by focusing on
two main areas: household insurance and associated risks for affluent
individuals, and commercial insurance for service-based professional firms and
media and technology companies. It has also been achieved by broadening Hiscox
Insurance Company's distribution channels, with new offices in Birmingham,
Leeds and Glasgow, overseas representation in Austria, Belgium, France,
Germany, Holland and the Republic of Ireland and a direct online portfolio.
The Board believes that Hiscox Insurance Company's market share in its chosen
areas remains relatively small and that there is room for considerable further
growth to be achieved.

A contributory factor to the success of Hiscox Insurance Company has been its
achievement of a BBB+ rating from Standard & Poor's and A- Strong from AM
Best. In order to continue to grow the business, an additional capital
injection into the business is required to maintain the ratings. Accordingly,
Hiscox intends to invest approximately £20 million from the proceeds of the
Open Offer in Hiscox Insurance Company.

The Lloyd's Business

After three extremely difficult underwriting years during 1998, 1999 and 2000,
the Lloyd's market has enjoyed steady and continuous insurance premium rate
rises during 2001. Rate rises have been further stimulated by the reduced
availability of reinsurance, which has also become more expensive. This has
reduced the underwriting capacity of many market participants, thereby
reducing competitive pressures, and in turn raised rates further. In Syndicate
33's case this is illustrated by the fact that, as at 31 October 2001, its
relative aggregate risk exposure was only 81 per cent. of what it had been 12
months earlier yet the relative aggregate premium received for these risks was
12 per cent. higher, an effective net increase in premium per £1 of risk
underwritten of 38 per cent. The withdrawal of underwriting capacity from the
market and the rate rises have also provided Syndicate 33 with the opportunity
to write more premium.

Underwriting conditions have been further enhanced following the terrorist
attack in the United States of America on 11 September 2001. Virtually every
category of risk that Syndicate 33 underwrites is now experiencing even
stronger rate rises than had been the case prior to 11 September 2001.

The Board believes that these market conditions afford the Group an
opportunity to grow the business and enhance the profitability of Hiscox's
Lloyd's business by increasing the capacity of Syndicate 33 and the Group's
percentage share of Syndicate 33. Since the terrorist event of 11 September
2001, HSL has already increased the premium income limit of Syndicate 33 for
the current year of account from £360 million to £400 million plus an
additional allowance for certain reinstatement premiums and announced its
intention to increase this further for the 2002 year of account to £504
million. Lloyd's has confirmed that Syndicate 33's risk based capital ratio
will remain at the minimum of 40 per cent. for 2002.

The Group owns 60 per cent. of the capacity of Syndicate 33 for the 2001 year
of account, 7 per cent. of which is protected by quota share reinsurance.
Taking into account the £3.9 million of capacity the Group has acquired during
the recent Lloyd's auctions at 0.1p per £1 of capacity purchased, but
excluding any return of capacity which may yet occur from those unrelated
names who are unable to continue underwriting on Syndicate 33 in 2002, the
Group currently owns 61 per cent. of Syndicate 33's capacity. Based upon
Syndicate 33's planned capacity of £504 million for the 2002 year of account,
the Group's underwriting participation at Lloyd's for that year will therefore
be £307 million (2001: £217 million). It is expected that £40 million of this
capacity will be protected by quota share reinsurance. With the continuation
of the risk based capital ratios at 40 per cent., the Group has the financial
resources, through a combination of its own funds, bank letter of credit
facilities and third party quota share arrangements to maintain its share of
underwriting on Syndicate 33. However, meeting these requirements and funding
the Group's share of Syndicate 33's losses arising on the 1999 and 2000 years
of account, payable in 2002 and 2003 respectively, will draw on the full
financial resources of the Group, limiting its future financial flexibility.
Accordingly, the Board intends to allocate approximately £20 million of the
Open Offer proceeds to the support of Syndicate 33 underwriting.

The World Trade Center Losses ('WTC Losses')

The terrorist attack of 11 September 2001 has had a substantial effect on the
Group's business. The current estimated loss suffered by Hiscox is £30
million, equivalent to 14p per Ordinary Share after tax. This estimate is
based on the Group's knowledge as at 21 November 2001 (being the latest
practicable date before prior to this Aannouncement) which is incomplete. It
is possible that facts or circumstances will come to light in the future which
may significantly alter that estimate. The assumptions and methodology
underlying the estimate of the WTC Losses are set out in the Appendix to this
announcement.

The WTC Losses should, to an extent, be mitigated by two factors: subrogation
of liabilities and the much higher premium rates achievable in the market
since 11 September 2001.

Syndicate 33 is already exploring the subrogation opportunities that may be
open to it. Typically, if a property loss is caused by a third party,
subrogation can lead to substantial recovery of the value of the claim from
the third party's liability insurers. As Syndicate 33 has primarily incurred
property losses, it should be a beneficiary of such subrogation recoveries if
a third party liability can be established. There are many legal and practical
issues to be resolved before it will be possible accurately to assess the
level of such recoveries that Syndicate 33 may make on the WTC Losses and no
account of possible successful subrogation actions has been taken in arriving
at the current estimated loss to Hiscox of £30 million.

The increased level of Syndicate 33's trading activity since 11 September 2001
should also help offset the full impact of the WTC Losses. Syndicate 33
initially had an underwriting capacity of £360 million for 2001. Prior to the
terrorist attack of 11 September 2001, it expected to utilise 95 per cent. of
this capacity. The rate increases which Syndicate 33 has experienced post 11
September 2001 have been such that the existing premium income limit would
have been insufficient. Syndicate 33 applied to Lloyd's for, and on 16 October
2001 was granted, an increase in its capacity to £400 million plus an
additional allowance for certain reinstatement premiums for the 2001 year of
account. This increase of £40 million will allow Syndicate 33 to write more
business at the higher rates now prevailing.

One of the requirements for syndicates trading in the USA is the creation of
trust funds in favour of the ultimate insured or reinsured. These trust funds
require that losses are funded at between 30 and 100 per cent. of gross losses
for the period from first advice of the loss to payment of the loss. These
funding requirements are revised on a quarterly basis and on 12 November 2001,
the date on which Lloyd's required funding to be in place for the quarter
ended 30 September 2001, Syndicate 33 met its full funding requirement for its
US trust funds. The Directors believe that Syndicate 33 has access to
sufficient resources to meet the full 100 per cent. funding requirements which
are likely to relate to the WTC Losses. Consequently, the Directors believe
that Syndicate 33, in the absence of other significant or catastrophic losses,
will not require a cash call to Syndicate 33 members, including Hiscox
Dedicated Corporate Member Limited. It is therefore currently expected that
the cashflow effect upon Hiscox due to the years of account affected by the
WTC losses will not crystallise until 30 June 2002 for WTC Losses specific to
the 1999 year of account, 30 June 2003 for those specific to the 2000 year of
account and 30 June 2004 for those specific to the 2001 year of account.

Syndicate 33 forecasts

Set out below are the 1999 and 2000 Open Year Forecasts for Syndicate 33 as at
30 September 2001.

These forecasts remain consistent with those previously announced on 29 August
2001 other than to the extent that they have been impacted by the WTC Losses.

Syndicate 33 forecast results as a percentage of capacity


Year of Account      Forecast as          Forecast as at           Capacity

                   at 30 June 2001       30 September 2001

     1999         (6.5)% to (11.5)%      (7.5)% to (12.5)%       £360 million
     2000          3.0% to (2.0)%         0.0% to (5.0)%         £360 million

The current total estimated loss for Syndicate 33 arising from the terrorist
attack is £60 million. This estimate is unchanged since 18 October 2001 when
Hiscox announced its estimate of the WTC Losses.

Current trading and prospects

Prior to 11 September 2001, insurance rates were rising rapidly in the London
Market. Following this tragic attack, underwriting market conditions
experienced by Syndicate 33 have improved further. To take advantage of these
market conditions, Hiscox is increasing Syndicate 33's capacity to £504
million for the 2002 underwriting year of account. The Board expects that rate
rises and reduced competition will provide the opportunity to write the
additional premium in existing specialist areas. Syndicate 33 does not
currently intend to enter any significant new classes of business in 2002.

Conditions in the reinsurance markets mean that Syndicate 33 is likely to
write smaller per-risk limits. Its 2002 business plan has taken this into
account.

Hiscox Insurance Company is also continuing to enjoy strong growth in gross
written premium income whilst achieving a combined ratio within its target
range of 95 to 98 per cent. Hiscox Insurance Company does not currently intend
to enter any significant new classes of business in 2002 and it expects that
rate rises and reduced competition will provide the opportunity to write
additional premium in existing specialist areas.

As reported within the interim results on 25 September 2001, the Group's
investment return has lagged the assumed longer term rate of return. However,
the value of the Group's investment portfolio has not been materially
adversely affected by the general decline in world financial markets since the
beginning of the current financial year.

As at 1 January 2001, Hiscox had £114.6 million of funds committed to Lloyd's.
Of this amount, £51.6 million was committed by way of investments. The actual
value of these investments was, at 1 January 2001, £54.7 million. As at 31
October 2001, the commitments were unchanged and the actual value of the
investments was £52.2 million.

The Directors believe that the insurance market is the strongest for many
years and expects such conditions to continue through 2002 to the benefit of
the Group's overall trading performance.

Dividend policy

The Board announced at the time of the interim results on 25 September 2001
that, in consideration of developments arising from the World Trade Center
attack, it had deferred deciding what level of dividend, if any, to pay in
respect of the six months ended 30 June 2001. In view of the scale of the WTC
Losses and the unprecedented underwriting opportunities that the Board
believes currently exist, the Board has decided that it would be more
appropriate to retain capital in the business and not to pay a dividend for
the current financial year.

Assuming that the Company has sufficient distributable reserves, the Board
expects the Company to resume interim and final dividend payments for the 2002
financial year and thereafter, in line with its historic progressive dividend
policy.

Sale of Hiscox Shares

Hiscox Holdings Limited ('Hiscox Holdings'), a wholly owned subsidiary of
Hiscox, currently owns 2.1 million Ordinary Shares, a legacy from Hiscox
Holdings' investment in Hiscox Dedicated Insurance Fund plc in 1993. The Board
intends to sell 1.0 million of these Ordinary Shares at the Issue Price if the
Open Offer becomes unconditional and reinvest the proceeds in the Group
alongside the proceeds from the Open Offer.

Financial effects of the Open Offer

The Board believes that the Open Offer will significantly strengthen the
Group's balance sheet, thereby providing it with greater financial flexibility
and the ability to raise further finance to fund the current expansion of the
Group. The Open Offer will enhance net asset value per Ordinary Share based
upon the net asset value of 98.0 pence per Ordinary Share as at 30 June 2001
(published in the unaudited interim results) and the net inflow to Hiscox of
121.8 pence per New Ordinary Share.

There are a number of risk factors relating to funding of the insurance
activities of Hiscox which are set out in full in the prospectus.

Principal terms and conditions of the Open Offer

44,461,435 New Ordinary Shares will be issued under the Open Offer to raise
approximately £54.2 million, after expenses. The issue price of 126 pence per
share represents a 9.4 per cent. discount to the closing middle market price
of 139 pence per share on 21 November 2001, the last business day before the
announcement of the Open Offer.

Qualifying Shareholders are being offered New Ordinary Shares at a price of
126 pence per New Ordinary Share on the following basis:

         3 New Ordinary Shares for every 10 existing Ordinary Shares

held at the close of business on 14 November 2001 and so in proportion for any
other number of Ordinary Shares then held.

The Open Offer is conditional, inter alia, upon:


        (i)     the passing of the resolutions to be proposed at the
        extraordinary general meeting of the Company to be held at 11.00 a.m.
        on 17 December 2001 at the offices of Hiscox plc at 1 Great St.
        Helen's, London, EC3A 6HX;

        (ii)     the underwriting agreement between the Company and ING
        Barings dated 22 November 2001 having become unconditional in all
        respects (save for the condition relating to Admission) and not having
        been terminated in accordance with its terms; and

        (iii)      Admission having occurred.

The New Ordinary Shares, when issued and fully paid, will rank pari passu in
all respects with existing issued Ordinary Shares.

Application has been made to the UK Listing Authority and to the London Stock
Exchange for the New Ordinary Shares to be admitted to the Official List and
to trading on the London Stock Exchange's market for listed securities. It is
expected that Admission will become effective and dealings in New Ordinary
Shares will commence at 8.00 a.m. on 18 December 2001.

Intentions of Directors and certain Shareholders

Certain Directors, senior employees and connected parties, who hold in
aggregate 39,032,922 Ordinary Shares, representing 26.3 per cent. of the
Existing Ordinary Share Capital of the Company, have undertaken not to take up
their entitlements in respect of 11,611,487 New Ordinary Shares. These New
Ordinary Shares will be placed by ING Barings with institutional investors at
the Issue Price.

Certain Directors, senior employees and connected parties, who hold in
aggregate 2,605,736 Ordinary Shares, representing 1.8 per cent. of the
Existing Ordinary Share Capital of the Company, have undertaken to take up
their entitlements in respect of 479,144 New Ordinary Shares.

Chubb currently owns 40,069,734 Ordinary Shares, representing 27.0 per cent.
of the Existing Ordinary Share Capital of the Company. Chubb has irrevocably
undertaken to take up its entire entitlement to 12,020,920 New Ordinary
Shares. In addition, ING Barings has agreed that Chubb will sub-underwrite
5,361,754 New Ordinary Shares representing 2.8 per cent. of the total enlarged
issued share capital of the Company following the Open Offer.

All of the above persons have irrevocably undertaken to vote in favour of the
Resolutions in respect of their entire holdings of 80,371,872 Ordinary Shares,
representing 54.2 per cent. of the total.

Extraordinary General Meeting

Notice will be given to Shareholders of an EGM to be held at the offices of
Hiscox plc at 1 Great St. Helen's, London EC3A 6HQ at 11.00 a.m. on 17
December 2001, at which the resolutions necessary to increase the Company's
authorised share capital, to grant the Directors authority to allot shares and
to display statutory pre-emption rights for the purpose of the Open Offer will
be put to Shareholders for approval.

Expected timetable of principal events

Record date for the Open Offer                       Wednesday 14 November 2001

Latest time and date for splitting of application forms    3.00 p.m. Tuesday 11
(to satisfy bona fide market claims)                              December 2001

Open Offer closes                                         3.00 p.m. Thursday 13
                                                                  December 2001

Latest time for receipt of Application Form and payment   3.00 p.m. Thursday 13
in full under the Open Offer                                      December 2001

Latest time for receipt of forms of proxy                11.00 a.m. Saturday 15
                                                                  December 2001

Extraordinary General Meeting                              11.00 a.m. Monday 17
                                                                  December 2001

Expected commencement of dealings in the New Ordinary      8.00 a.m. Tuesday 18
Shares                                                            December 2001

CREST members accounts credited                             Tuesday 18 December
                                                                           2001

Expected despatch of certificates in respect of New        Thursday 27 December
Ordinary Shares                                                            2001



Further information

Full details of the Open Offer, together with the procedure for application
and the notice of EGM are contained in the prospectus which will be posted to
shareholders today. Words and expressions defined in the prospectus shall bear
the same meanings in this announcement.

Certain statements made in this announcement are forward looking statements.
Such statements are based on current expectations and are subject to a number
of risks and uncertainties that could cause actual results and performance to
differ materially from any expected future results or performance, express or
implied, by the forward looking statements. Factors that might cause forward
looking statements to differ materially from actual results include, among
other things, regulatory and economic factors. The Company assumes no
responsibility to update any of the forward looking statements contained
herein.

This announcement does not constitute an offer of securities for sale in the
United States. The information contained herein is not for publication or
distribution to persons in the United States. The New Ordinary Shares have not
been and will not be registered under the US Securities Act of 1933 (the
'Securities Act') and may not be offered or sold in the United States unless
they are registered with the US Securities and Exchange Commission or pursuant
to an exemption from the registration requirements of the Securities Act.
There will be no public offering of the New Ordinary Shares in the United
States.

ING Barings is regulated in the United Kingdom by The Securities and Futures
Authority Limited, is acting exclusively for the Company and no one else in
connection with the Open Offer and will not be responsible to anyone other
than the Company for providing the protections afforded to customers of ING
Barings, or for giving advice in relation to the transaction or any other
matters referred to in this announcement.

                                   APPENDIX

    ASSUMPTIONS AND METHODOLOGY UNDERLYING THE ESTIMATE OF THE WTC LOSSES

Introduction

The terrorist attack of 11 September 2001 has resulted in a number of claims
being made against Syndicate 33 as a result of insurance and reinsurance
policies. These claims and the Group's assessment of future claims development
will have a material effect on the Group's business. The current projected
estimate of net loss to Hiscox is £30 million, equivalent to 14p per Ordinary
Share after tax. The situation is unprecedented and as such the extent of the
gross and net losses to the Group is difficult to assess with the degree of
confidence which is usual for insurance losses; facts or circumstances will
come to light which may affect these estimates.

Estimate of WTC Losses

The Group's exposure to the WTC Losses arises predominantly from its
participation in Syndicate 33. The current total estimated gross loss to
Syndicate 33 is approximately US$440 million. The Directors understand that
Syndicate 33 expects to recover from its own reinsurance protections
approximately US$350 million, net of reinstatement premiums payable to
reinsurers to reinstate cover for future losses. The net loss of approximately
US$90 million to Syndicate 33 equates to approximately £60 million, assuming
an exchange rate of £1:US$1.49. This exchange rate is the rate adopted by
Lloyd's as at 31 December 2000.

Over 80 per cent. of Syndicate 33's gross exposure to the WTC Losses emanates
from its direct property account and property reinsurance account. Over half
of Syndicate 33's overall property exposure results from the direct property
account. The balance of the losses is spread over the remainder of Syndicate
33's non-marine business lines, which include aviation business. The
assessment of the direct property losses other than where buildings have been
totally destroyed is difficult and therefore the estimate uncertain because so
few buildings losses have yet been quantified by professional loss adjusters.
Therefore, Syndicate 33 initially considers the assureds' computations of
their own losses. It is the Directors' belief that these computations are
likely to prove unreliable. Hiscox has estimated what the Directors believe is
an appropriate discount or premium on these claims advices, based on past
experience and additional information received.

The process of arriving at estimations of inwards reinsurance claims is
significantly more fraught than arriving at estimations of directly insured
losses. This is because Hiscox and Syndicate 33 have to rely upon either the
direct insurer's own estimates or the intermediate reinsurer's estimates, in
the cases of reinsurance and retrocession respectively. Put simply, the closer
the proximity of Syndicate 33 to the direct loss insurance contract, the
easier it is for Syndicate 33 and the Directors to arrive at an estimate of
the loss. Nevertheless a complete assessment at this stage remains very
difficult.

97 per cent. of Syndicate 33's reinsurance is placed with counterparties which
are rated A grade or better (by international rating agencies) and 75 per
cent. with companies rated AA or AAA. 89 per cent. of this reinsurance is
placed outside Lloyd's. A general provision for bad debts of US$4.5 million
has been made by Syndicate 33 in relation to the WTC Losses, greater than that
required by Lloyd's, and the Directors consider this to be adequate.

Further assumptions underlying the estimate of the WTC Losses

In arriving at the estimate of the WTC Losses, the Directors have also made
the following assumptions:

*      that the terrorist attack in New York City on 11 September 2001 was one
       occurrence and also the aircraft impacts on the WTC are one occurrence;

*      that the aviation losses in respect of the aircraft that crashed in
       Pennsylvania and in the Pentagon are two occurrences;

*      that there will be no new large claim advised to Syndicate 33;

*      that no one major reinsurer will fail;

*      that all Syndicate 33's reinsurers will reinstate their reinsurances
       with Syndicate 33 in accordance with the contract conditions;

*      that Syndicate 33 will have no material contractual disputes with any
       of its reinsurers which cannot be resolved in the normal course of       
       business;

*      in arriving at the net loss estimate to Hiscox of £30 million, the
       Directors have made no positive assumptions regarding subrogation        
       recoveries, i.e. the net subrogation position has been assumed to be     
       £nil;

*      war exclusions on policies do not apply;

*      the WTC Losses have been caused by terrorist action; and

*      that Hiscox would receive no financial support from the US or UK
       Governments.

Methodology

The WTC Losses are centrally handled at Hiscox by a specially formed task
group headed by the Group Operations Director. This task group now meets twice
weekly to discuss developments relating to the WTC Losses.

Policyholder claims

Risks are reviewed on an individual basis using information presented to the
claims department, to the underwriting department and generally available
through the media.

Estimates of gross and net exposure made by the task group are reviewed by
Hiscox senior management.

Details of all exposures are centrally maintained.

Reinsurance recoveries

Individual reinsurers involved are notified of their potential losses and
regularly updated. This is to ensure that the reinsurers perform their
obligations under the reinsurance contract to supply cash or letters of credit
on behalf of Syndicate 33 to the relevant U.S. claims trust fund.

In addition the exposure to each company is measured and the company's credit
worthiness assessed using, inter alia, rating agency reports and publicly
available financial information. This is to enable a bad debt assessment to be
made.

Subrogation actions

All possible subrogation opportunities are being investigated and where
appropriate lawyers have been instructed. Expert witnesses have also been
retained.