Hiscox Ltd · LSE:HSX
Hiscox — FY2010 Earnings Presentation
45 slides from Hiscox's earnings presentation, 2011
Slide 1: There's a new way of doing things: Hiscox Ltd preliminary results
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Slide 2: A resilient result
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Slide 3: Strategic focus
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Slide 4: Strategic partnership
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Slide 5: Financial performance
Mn HISCOX Financial performance
Slide 6: A good result
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Slide 7: Segmental analysis
pÉÖãÉåí~ä=~å~äóëáë PN=aÉÅÉãÄÉê=OMNM PN=aÉÅÉãÄÉê=OMMV içåÇçå= rh=~åÇ= fåíÉêJ `çêéçê~íÉ= içåÇçå= rh=~åÇ= fåíÉêJ `çêéçê~íÉ= j~êâÉí bìêçéÉ= å~íáçå~ä= `ÉåíêÉ===== qçí~ä= j~êâÉí bìêçéÉ= å~íáçå~ä= `ÉåíêÉ===== qçí~ä= ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM ¡MMM dêçëë=éêÉãáìãë=ïêáííÉå RTOITQU QRQISVO QM
Slide 8: Solid investment performance
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Slide 9: High quality and well diversified portfolio
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Slide 10: Portfolios - USD bond portfolio
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Slide 11: Portfolios - GBP, EUR and CAD bond portfolios
mçêíÑçäáçë=J d_mI=bro=~åÇ=`^a=ÄçåÇ=éçêíÑçäáçë= ~ë=~í=PNëí aÉÅÉãÄÉê=OMNM d_m=éçêíÑçäáçW=¡RRUã= dîí ^^^ ^^ ^ ___ __= qçí~ä aìê~íáçå B B B B B B B ãçåíÜë √ eáÖÜ=èì~äáíó dçîÉêåãÉåí=áëëìÉÇ= PNKP PNKP NNKU √ pÜçêí=Çìê~íáçå dçîÉêåãÉåí=ëìééçêíÉÇG QNKS NKR MKO QOKP NNKP `çêéçê~íÉë OKQ QKR UKQ PKT MKT OMKT NP
Slide 12: Available capital decides risk limits
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Slide 13: Fascinating financial facts
c~ëÅáå~íáåÖ=Ñáå~åÅá~ä=Ñ~Åíë √ OMNN=ëóåÇáÅ~íÉ=Å~é~Åáíó – PP=Ççïå=íç=¡VMMã=EOMNMW=¡NÄåF – PSOQ=ìé=íç=¡ORMã=EOMNMW=¡NRMãF – SNMQ=Ççïå=íç=¡PTã=EOMNMW=¡QRãF= √ oÉëÉêîÉ=êÉäÉ~ëÉë=çÑ=¡NPPã=EOMMVW=¡NPVãF √ `~éáí~ä=áå=_ÉêãìÇ~=~åÇ=dìÉêåëÉó=J ANIPPOã √ fåÅêÉ~ëÉÇ=Ä~åâ=Ñ~Åáäáíó=íç=ATRMã=EOMMVW=ARORãGF √ pçäîÉåÅó=
Slide 14: Underwriting: An excellent performance
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Slide 15: Total Group controlled premium 2010
^å=~ÅíáîÉäó=ã~å~ÖÉÇ=ÄìëáåÉëë JNKNB qçí~ä=dêçìé=ÅçåíêçääÉÇ=éêÉãáìã=OMNMW=¡NISTNã ¡RNSã OMNM=dtm vÉ~ê=çå=óÉ~ê=ÖêçïíÜ= áå=äçÅ~ä=ÅìêêÉåÅó j~êáåÉ kçåJã~êáåÉ HPKOB ¡OUOã HOQKSB JVKNB ¡OSOã ¡ORMã mêçÑÉëëáçå~ä= háÇå~é=~åÇ=ê~åëçã eçãÉ=~åÇ= äá~ÄáäáíáÉë= ^îá~íáçå ÅçåíÉåíë `çåíáåÖÉåÅó= bêêçêë=~åÇ= qÉêêçêáëã= JO
Slide 16: Underweight exposure for 2010 catastrophe events
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Slide 17: Rating index levels
fåÇÉñ=äÉîÉä=B M OM QM SM UM NMM NOM NQM cÉÄ=MR=J==g~å=MS ^éê=MR=J==j~ê=MS gìå=MR=J==j~ó=MS ^ìÖ=MR=J==gìä=MS lÅí=MR=J==pÉé=MS aÉÅ=MR=J==kçî=MS cÉÄ=MS=J==g~å=MT ^éê=MS=J==j~ê=MT gìå=MS=J==j~ó=MT ^ìÖ=MS=J==gìä=MT fåëìê~åÅÉ lÅí=MS=J==pÉé=MT aÉÅ=MS=J==kçî=MT cÉÄ=MT=J==g~å=MU ^éê=MT=J==j~ê=MU gìå=MT=J==j~
Slide 18: Reinsurance purchased - move to more pro-rata
oÉáåëìê~åÅÉ=éìêÅÜ~ëÉÇ=Ó ãçîÉ=íç=ãçêÉ=éêçJê~í~ nìçí~=ëÜ~êÉ=ÄÉåÉÑáíë PUB PPB √ dççÇ=ìëÉ=çÑ= QPB RRB íÜáêÇJé~êíó=Å~éáí~ä bñÅÉëë=çÑ=äçëë SMB √ cÉÉë=~åÇ=éêçÑáí= Åçããáëëáçåë SOB STB √ cäÉñáÄáäáíó=J Åçëí= RTB äáåâÉÇ=íç=ÄìëáåÉëë= nìçí~=ëÜ~êÉ QMB QRB îçäìãÉë OMMS OMMT OMMU OMMV OMNM NT
Slide 19: Business performance
Mn HISCOX Business performance
Slide 20: Gross written premiums for the year ended 31 December 2010
^ÅíáîÉ=ã~å~ÖÉãÉåí=ÇêáîÉë=ëÉäÉÅíáîÉ=ÖêçïíÜ dêçëë=ïêáííÉå=éêÉãáìãë=Ñçê=íÜÉ=óÉ~ê=ÉåÇÉÇ=PN=aÉÅÉãÄÉê=OMNM OMNM= OMMV= `Ü~åÖÉ dêçïíÜ= ¡ã ¡ã B áå=äçÅ~ä= ÅìêêÉåÅó= B eáëÅçñ=içåÇçå=j~êâÉí RTOITQU SSPIMPQ ENPKSF ENPKQF eáëÅçñ=fåíÉêå~íáçå~ä - eáëÅçñ=_ÉêãìÇ~ NVSIQQQ NSTIQQN NTKP NRKS - eáëÅçñ=dìÉêåëÉó= UMIRSU U
Slide 21: Hiscox London Market
eáëÅçñ=içåÇçå=j~êâÉí dêÉ~í=ìåÇÉêïêáíáåÖ=~åÇ=ÇáëÅáéäáåÉ √ j~àçê=éêçÑáí=ÇêáîÉêW=éêçÑáí=ÄÉÑçêÉ=í~ñ=¡NONKQã= EOMMVW=¡NTVKVãF √ oÉÇìÅÉÇ=íçé=äáåÉ=ÇìÉ=íç=ÑçÅìë=çå=ã~êÖáå=çîÉê= îçäìãÉ √ råÇÉêïÉáÖÜí=ÉñéçëìêÉ=Ñçê=ã~àçê=Å~í~ëíêçéÜÉë √ ^îÉê~ÖÉ=ê~íÉ=êÉÇìÅíáçå=çÑ=JNKRB=çå=g~å=êÉåÉï~ä= ÄìëáåÉëë √ ^îá~íáçå=íÉ~ã=ã~Ç
Slide 22: Hiscox UK and Hiscox Europe
eáëÅçñ=rh=~åÇ=eáëÅçñ=bìêçéÉ dççÇ=ÖêçïíÜ=~åÇ=éêçÑáíë eáëÅçñ=rh eáëÅçñ=bìêçéÉ cìää=óÉ~ê= cìää=óÉ~ê= cìää=óÉ~ê= cìää=óÉ~ê= OMNM OMMV OMNM OMMV ¡MMM ¡MMM €MMM €MMM dêçëë=éêÉãáìãë=ïêáííÉå POTIMQR PMPIVST dêçëë=éêÉãáìãë=ïêáííÉå NQSISSP NPNIRRR råÇÉêïêáíáåÖ=êÉëìäí NSINSS TIPMM råÇÉêïêáíáåÖ=êÉëìäí SIOPU ENR
Slide 23: Hiscox UK and Hiscox Europe
eáëÅçñ=rh=~åÇ=eáëÅçñ=bìêçéÉ dççÇ=ÖêçïíÜ=~åÇ=éêçÑáíë eáëÅçñ=rh eáëÅçñ=bìêçéÉ √ dççÇ=ÖêçïíÜ=~åÇ=ê~íÉ=êáëÉë √ m~åJbìêçéÉ~å=~ééêç~ÅÜ=é~óë= ÇáîáÇÉåÇë √ NMMIMMM=ÇáêÉÅí=ÅìëíçãÉêë – pÜ~êÉÇ=ã~å~ÖÉãÉåí= √ bÑÑáÅáÉåÅó=éêçÖê~ããÉ=é~óáåÖ= âåçïäÉÇÖÉ ÇáîáÇÉåÇë – iáëÄçå=ëÉêîáÅÉ=ÅÉåíêÉ √ ¡OSã=çÑ=ÑêÉÉòÉ=äçëëÉë=Ó √ fåîÉ
Slide 24: Hiscox International
eáëÅçñ=fåíÉêå~íáçå~ä √ eáëÅçñ=_ÉêãìÇ~ – _ÉåÉÑáíáåÖ=Ñêçã=èìçí~=ëÜ~êÉ=ëìééçêí – dççÇ=ÇáëÅáéäáåÉ √ eáëÅçñ=dìÉêåëÉó – dêçïáåÖ=éêçÑáí~ÄäÉ=äáåÉë=EÑáåÉ=~êíI=hCoF=ëÜêáåâáåÖ= ïÜÉêÉ=ê~íÉë=~êÉ=ìåÇÉê=éêÉëëìêÉ=Eéáê~ÅóF= √ eáëÅçñ=rp^ – oÉëéçåÇÉÇ=íç=~=íçìÖÜ=ã~êâÉí=ïáíÜ=~=êÉJÑçÅìë= çÑ=íÜÉ=ÄìëáåÉëë – aáêÉÅí=ÄìëáåÉëë
Slide 25: Strategy and outlook
Mn HISCOX Strategy and outlook
Slide 26: Summary - a robust business
pìãã~êó=Ó ~=êçÄìëí=ÄìëáåÉëë • Weathered exceptional year for catastrophes • Delivered a good return in a tough market – Profit before tax £211m – Return on equity 16.5% – Investment return £99m* • Invested in growth in retail businesses GbñÅäìÇÉë=ÇÉêáî~íáîÉ=êÉíìêåK OR
Slide 27: Leverage expertise to build US brand
iÉîÉê~ÖÉ=ÉñéÉêíáëÉ=íç=ÄìáäÇ=rp=Äê~åÇ OS
Slide 28: Outlook: Building value for the long-term
lìíäççâW _ìáäÇáåÖ=î~äìÉ=Ñçê=íÜÉ=äçåÖJíÉêã fåíÉêå~íáçå~ääó= Local specialty íê~ÇÉÇ=äáåÉë lines √ j~áåí~áå=ÇáëÅáéäáåÉ= √ dêçï=ÄÉíïÉÉå= Ó ã~êÖáå=çîÉê= RJNRB îçäìãÉ √ `çåíáåìÉ=íç=ÑçÅìë= √ cçÅìë=çå=êáëâ= çå=êÉÇìÅáåÖ= Profit Value ~åÇ=~ÖÖêÉÖ~íÉ= ÉñéÉåëÉë ã~å~ÖÉãÉåí generator creator √ aÉäáîÉê=çå=Äê~åÇ= éê
Slide 29: Appendices
^ééÉåÇáÅÉë √ píê~íÉÖáÅ=ÑçÅìë √ ^=ëóãÄáçíáÅ=êÉä~íáçåëÜáé √ _ìëáåÉëë=íêÉåÇë √ dÉçÖê~éÜáÅ=êÉ~ÅÜ √ _ìáäÇáåÖ=~=Ä~ä~åÅÉÇ=ÄìëáåÉëë √ eáëÅçñ=iíÇ=êÉëìäíë √ eáëÅçñ=içåÇçå=j~êâÉí=ê~íáåÖ=áåÇÉñ √ eáëÅçñ=rh=~åÇ=bìêçéÉ=ê~íáåÖ=áåÇÉñ √ içåÇçå=j~êâÉí=éêÉãáìã=îëK=ÉñéçëìêÉ=áåÇÉñ √ _çñéäçí=~åÇ=ïÜáëâÉê=Çá~Öê~ã=çÑ=eáëÅçñ=
Slide 30: Strategic focus
píê~íÉÖáÅ=ÑçÅìë qçí~ä=dêçìé=ÅçåíêçääÉÇ=áåÅçãÉ=Ñçê=OMNM= NMMB=Z=¡NISTNã= içÅ~ä=Éêêçêë=~åÇ=çãáëëáçåë ~åÇ=ÅçããÉêÅá~ä NPB qÉÅÜ=~åÇ=ãÉÇá~=Éêêçêë= ~åÇ=çãáëëáçåë PB oÉáåëìê~åÅÉ= PNB ^êí=~åÇ= NTB éêáî~íÉ=ÅäáÉåí= QB i~êÖÉ=éêçéÉêíó QB VB däçÄ~ä=Éêêçêë= SB QB péÉÅá~äíó=Ó âáÇå~é=~åÇ=ê~åëçãI= ~åÇ=çãáëëáçåë= VB Å
Slide 31: A symbiotic relationship
^=ëóãÄáçíáÅ=êÉä~íáçåëÜáé fåíÉêå~íáçå~ääó= Local specialty íê~ÇÉÇ=äáåÉë lines √ i~êÖÉê=éêÉãáìãI= √ mêÉãáìã=ÖêçïíÜ= Å~í~ëíêçéÜÉ= ÄÉíïÉÉå=RJNRB= ÉñéçëÉÇ éÉê=~ååìã √ pÜêáåâë=~åÇ= √ m~óë=ÇáîáÇÉåÇë Éñé~åÇë=~ÅÅçêÇáåÖ= Profit Value generator creator √ _ê~åÇ=ÄìáäÇë= íç=ê~íÉë ëíêçåÖ=ã~êâÉí= √ bñÅÉëë=éêçÑáíë=
Slide 32: Business trends
_ìëáåÉëë=íêÉåÇë JNKNB qçí~ä=dêçìé=ÅçåíêçääÉÇ=éêÉãáìã=OMNMW=¡NISTNã ¡RNSã OMNM=dtm vÉ~ê=çå=óÉ~ê=ÖêçïíÜ= áå=äçÅ~ä=ÅìêêÉåÅó j~êáåÉ kçåJã~êáåÉ HPKOB ¡OUOã HOQKSB JVKNB ¡OSOã ¡ORMã mêçÑÉëëáçå~ä= háÇå~é=~åÇ=ê~åëçã eçãÉ=~åÇ= äá~ÄáäáíáÉë= ^îá~íáçå ÅçåíÉåíë `çåíáåÖÉåÅó= bêêçêë=~åÇ= qÉêêçêáëã= JOUKSB HMKOB çã
Slide 33: Geographic reach
dÉçÖê~éÜáÅ=êÉ~ÅÜ _ÉêãìÇ~ e~ãáäíçå bìêçéÉ rh ^ãëíÉêÇ~ã _áêãáåÖÜ~ã _çêÇÉ~ìñ `çäÅÜÉëíÉê _êìëëÉäë dä~ëÖçï `çäçÖåÉ iÉÉÇë aìÄäáå içåÇçå e~ãÄìêÖ j~áÇÉåÜÉ~Ç iáëÄçå j~åÅÜÉëíÉê ióçå j~ÇêáÇ rp^ jìåáÅÜ ^êãçåâ m~êáë ^íä~åí~ `ÜáÅ~Öç dìÉêåëÉó h~åë~ë=`áíó pí=mÉíÉê=mçêí içë=^åÖÉäÉë kÉï=vçêâ=`áíó i~íáå=^ãÉêáÅ~å= p~å=
Slide 34: Building a balanced business
_ìáäÇáåÖ=~=Ä~ä~åÅÉÇ=ÄìëáåÉëë _ÉêãìÇ~ eáëÅçñ=rp^ eáëÅçñ=içåÇçå=j~êâÉí=J oÉí~áä eáëÅçñ=rh eáëÅçñ=içåÇçå=j~êâÉí=J sçä~íáäÉ eáëÅçñ=dìÉêåëÉó eáëÅçñ=bìêçéÉ 1800 1600 dêçëë=ïêáííÉå=éêÉãáìãë=E¡MMMF 1400 1200 1000 800 600 400 200 0 1991* 1992* 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 35: Hiscox Ltd results
eáëÅçñ=iíÇ=êÉëìäíë ¡MMM OMNM OMMV OMMU OMMT OMMS OMMR OMMQ dêçëë=éêÉãáìãë=ïêáííÉå NIQPOISTQ NIQPRIQMN NINQTIPSQ NINVUIVQV NINOSINSQ USNINTQ UNSISMV kÉí=éêÉãáìãë=ïêáííÉå NINPNISOT NINRTIMOP UVUIPVQ VTQIVNM VTRIPVT SUNIOPS TMQIMUR kÉí=éêÉãáìãë=É~êåÉÇ NINPNINRU NIMVUINMO VOUIMVR VSRINVM UUUIUOU SVPIOVV
Slide 36: Hiscox London Market rating index
index level % M NMM OMM PMM QMM RMM SMM TMM UMM VMM gìäVU=íç=gìåVV kçîVU=íç=lÅíVV j~êVV=íç=cÉÄMM gìäVV=íç=gìåMM kçîVV=íç=lÅíMM j~êMM=íç=cÉÄMN gìäMM=íç=gìåMN j~êáåÉ=~åÇ=ÉåÉêÖó kçîMM=íç=lÅíMN j~êMN=íç=cÉÄMO gìäMN=íç=gìåMO kçîMN=íç=lÅíMO j~êMO=íç=cÉÄMP mêçéÉêíó gìäMO=íç=gìåMP kçîMO=íç=lÅíMP j~êMP=íç=cÉ
Slide 37: Hiscox UK and Europe rating index
index level % M OM QM SM UM NMM NOM NQM NSM cÉÄJMM=íç=g~åJMN gìåJMM=íç=j~óJMN lÅíJMM=íç=pÉéJMN cÉÄJMN=íç=g~åJMO gìåJMN=íç=j~óJMO lÅíJMN=íç=pÉéJMO rh=ÅçããÉêÅá~ä=äáåÉë cÉÄJMO=íç=g~åJMP gìåJMO=íç=j~óJMP lÅíJMO=íç=pÉéJMP cÉÄJMP=íç=g~åJMQ gìåJMP=íç=j~óJMQ lÅíJMP=íç=pÉéJMQ cÉÄJMQ=íç=g~åJMR rh=éÉêëçå~ä=äáå
Slide 38: London Market premium vs. exposure index
içåÇçå=j~êâÉí mêÉãáìã=îëK=ÉñéçëìêÉ=áåÇÉñ bñéçëìêÉ mêÉãáìã PSO OVO OUT OTP ORO OQT OQU OQN NVR NSP NRP NPR NQM NOS NOS NNQ NMM UV NMM UQ TT TN OMMM OMMN OMMO OMMP OMMQ OMMR OMMS OMMT OMMU OMMV OMNM OMMM OMMN OMMO OMMP OMMQ OMMR OMMS OMMT OMMU OMMV OMNM PT
Slide 39: Boxplot and whisker diagram of Hiscox Ltd net loss
_çñéäçí=~åÇ=ïÜáëâÉê=Çá~Öê~ã=çÑ= eáëÅçñ=iíÇ=åÉí=äçëë=EAãF içã~=mêáÉí~=nì~âÉ=ASÄå=ã~êâÉí= eìêêáÅ~åÉ=^åÇêÉï=ARSÄå=ã~êâÉí= rééÉê=VRB TMM kçêíÜêáÇÖÉ=nì~âÉ=AOQÄå=ã~êâÉí eìêêáÅ~åÉ=h~íêáå~=ARMÄå=ã~êâÉí eìêêáÅ~åÉ=fâÉ=J ANTÄå==ã~êâÉí= LäçïÉê=RB äçëë=OR=óÉ~ê=êÉíìêå=éÉêáçÇ= äçëë=QM=óÉ~ê=êÉíìêå=éÉêáçÇ äçëë=NR=óÉ
Slide 40: Realistic disaster scenarios
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Slide 41: GWP geographical and currency split
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Slide 42: Group reinsurance security
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Slide 43: Reinsurance as a % of GWP
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Slide 44: Glossary of terms
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Slide 45: Glossary of terms
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