Slide 1: Hiscox Ltd Interim results
Hiscox Ltd Interim results For the six months ended 30 June 2024
Slide 2: H1 2024 results: Strong profitability and sustained positive momentum
H1 2024 results Strong profitability and sustained positive momentum Sustained growth in ICWP ($m) Robust ISR in a more active loss Strong H1 investment result ($m) environment ($m) 2,813 2,723 2,617 152 241 221 122 140 H1 22 H1 23 H1 24 H1 22 H1 23 H1 24 H1 22 H1 23 H1 24 -214 Strong profit before
Slide 3: Capital allocation philosophy
Capital allocation philosophy Sustaining growth, maintaining resilience and returning excess to shareholders INVESTMENT IN RESILIENCE AND BALANCE SHEET GROWTH AND FLEXIBILITY EFFICIENCY EFFICIENCY Big-ticket property BSCR† Capital return paid in period NICWP* ($m) ($m) 40% Dividends paid 206% 200% 1
Slide 4: Hiscox Retail: Solid profitability and improved growth momentum
Hiscox Retail Solid profitability and improved growth momentum Retail ICWP (% of portfolio excluding DirectAsia) Change since H1 2023 (% in CCY) Change since H1 2023 (% in CCY) US DPD 8.8% Europe 8.5% US DPD 22% Europe 30% COR* COR* 96.2% COR* 96.2% 93.8% Change since H1 2023 (% in CCY) US Change si
Slide 5: Retail growth: Initiatives driving performance
Retail growth Initiatives driving performance Distribution • Roll-out of broker and customer portals in Europe • New distribution deals in UK and Europe • US DPD partner onboarding Brand and customer journey • Compounding benefit of global brand spend • New campaigns in USA and Europe later this yea
Slide 6: Hiscox London Market
Hiscox London Market Managing micro-cycles across the portfolio to deliver excellent underwriting results ICWP (% of portfolio) Change since H1 2023 (%) Change since H1 2023 (%) Household Terrorism Major property Personal accident Alternative risk Crisis management Kidnap and ransom Flood 19% Proper
Slide 7: Hiscox Re & ILS
Hiscox Re & ILS Excellent profitability and net growth as attractive market conditions persist Re (excluding ILS) net ICWP (% of portfolio) Change since H1 2023 (%) Change since H1 2023 (%) Risk Property – North America Marine Specialty Property – Specialty, North risk and America marine 40% COR* 77
Slide 8: Big-ticket strategy delivering high-quality growth and earnings
Big-ticket strategy delivering high-quality growth and earnings Sustainable lower volatility returns Hiscox Syndicate 33 delivers consistent profitability over last three years compared to peers* 0.00 0.01 0.02 0.03 Less volatile‡ 0.04 Lower profitability, lower volatility Higher profitability, lowe
Slide 9: Technology and Hiscox's expertise creates competitive advantages
Technology and Hiscox’s expertise… …creates competitive advantages Hiscox technology Drivers of capabilities competitive advantage Digital connectivity Ease and speed of doing business Market-leading capabilities Auto underwriting Deep customer understanding Data and analytics Risk selection and pri
Slide 10: Financial performance
ay HISCOX Financial performance
Slide 11: Group financial performance
Group financial performance Strong profitability and sustained growth • Sustained growth, ICWP 30 June 2024 30 June 2023 Year-on-year increased by $90m, $m $m up 3.3% Premiums • Strong and consistent Insurance contract written premium 2,812.9 2,723.3 3.3% profit contribution from Net insurance contr
Slide 12: Hiscox Retail: Profit and growth momentum continues
Hiscox Retail Profit and growth momentum continues • Retail growth within 30 June 2024 30 June 2023* Year-on-year 5-15% target range, $m $m contributing $77m to Group ICWP growth Premiums • Continued momentum Insurance contract written premium 1,335.3 1,258.3 6.1% in US DPD and Europe • Step up in u
Slide 13: Hiscox London Market: Excellent underwriting results continue
Hiscox London Market Excellent underwriting results continue • 4ppt improvement 30 June 2024 30 June 2023* Year-on-year in ICWP growth in $m $m discrete Q2 Premiums • Proactive management of micro-cycles across Insurance contract written premium 648.3 667.1 -2.8% the portfolio Net insurance contract
Slide 14: Hiscox Re & ILS
Hiscox Re & ILS Underwriting and fee income result in excellent profits • Strong net ICWP growth of 30 June 2024 30 June 2023 Year-on-year 10.5% as additional capital $m $m deployed to seize attractive market conditions Premiums • Strong insurance service Insurance contract written premium 829.3 797
Slide 15: Investment performance
Investment performance Strong investment result Cash and bond income net of fees ($m) Gains/(losses) on debt and fixed • Investment result $152.4m, income holdings ($m) return of 1.9% year-to-date – coupon income and cash returns up nearly 50% 150 7 year-on-year -33 -8 • Reinvestment yield on 102 -2
Slide 16: Claims discounting impact on profit and COR
Claims discounting impact on profit and COR Net impact on profit of $26m $m 83 -79* 22 HY 2024 258 H1 2024: H1 2024: at higher H1 2024: on 284 weighted average end of previous average rates of 4.8% guidance of increased $120m to $150m by 0.3% Estimate using Expected unwind Sensitivity ($m) to FY 202
Slide 17: Reserves: Balance sheet remains strong
Reserves Balance sheet remains strong $m • Prudent reserving Best estimate philosophy Events not in data remains unchanged Risk adjustment • Confidence level at 82nd percentile – within target range of 82nd confidence 75th-85th percentile level percentile 83rd confidence – demonstrates continued lev
Slide 18: Reserve releases
Reserve releases $51m positive reserve development Reserve releases as % of opening net reserves • Reserve releases 1.3% of the undiscounted IFRS 4 IFRS 17* opening balance • Inflation assumptions in pricing and reserving 2.2% models remain strong 1.9% 1.9% 1.8% 1.7% 1.3% H1 2020 H1 2021 H1 2022 H1
Slide 19: Very strong capital generation
Very strong capital generation Strong balance sheet driving growth and capital returns Bermuda solvency capital requirement (BSCR)* • Strong capital generation 16% • Regulatory and ratings capital position remains strong -11% after buyback -4% 212% -7% • Post loss scenario 206% position firmly withi
Slide 20: Underwriting
ay HISCOX Underwriting
Slide 21: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance H1 2024 Group ICWP (year-on-year in constant currency) • Retail commercial continues year-on-year +6% compound growth $1,023m • Positive art and private client Professional +3% momentum continues liability $841m •
Slide 22: Rate environment remains positive
Rate environment remains positive Claims inflation tracking lower than assumptions Compound rate change, indexed to 2018 Assumed vs. measured inflation Core London Market Catastrophe reinsurance Retail Assumed inflation* Measured inflation† 200 180 160 140 120 100 80 2018 2019 2020 2021 2022 2023 20
Slide 23: An active H1 for claims
An active H1 for claims Being here for our customers is what we do Baltimore bridge disaster Dubai flash floods Hurricane Beryl Specialty High-value household Professional indemnity 22
Slide 24: Striving for excellence in underwriting management
Striving for excellence in underwriting management Understanding, managing and pricing Retail nimbleness Majority auto-underwritten, allows us to execute at scale Big ticket optionality Technical excellence Diverse portfolio with ability to Understanding the risk dynamically allocate capital landsca
Slide 25: Portfolio composition and effective management
Portfolio composition and effective management Driving performance through the cycle Combined operating ratio* • Ten-year average Group 170 combined operating ratio of 93.0% excluding Covid 160 and 94.6% including 150 • Retail performance least volatile with Re & ILS most 140 • Group result moderate
Slide 26: Forward-looking focus for underwriting
Forward-looking focus for underwriting What’s on the horizon for the next 12 months Emerging trends Future of underwriting Disciplined profitable growth • AI, climate and transition are • Further enhancing our capabilities • Manage the market cycle across the biggest all products • Considering how A
Slide 27: Closing remarks
ay HISCOX Closing remarks
Slide 28: Outlook
Outlook • The Group’s diversified business portfolio is well positioned to deliver high-quality earnings in 2024 • Retail growth momentum continues to build gradually in H2 as management initiatives take effect; this momentum is not expected to be linear • London Market to return to moderate growth
Slide 29: Appendices
Appendices • Geographical reach • Portfolio – asset mix • Hiscox investment case • Portfolios – USD debt and fixed income holdings • Long-term growth • Portfolios – GBP and other currencies debt and • Power of an actively managed portfolio fixed income holdings • Hiscox sustainability strategy • Bus
Slide 30: Geographical reach
Geographical reach 32 offices in 14 countries UK Guernsey Birmingham Europe Colchester St Peter Port Amsterdam Glasgow Berlin London Bordeaux Maidenhead USA Bermuda Brussels Manchester Atlanta Hamilton Cologne York Chicago Latin American Dublin Los Angeles gateway Frankfurt New York City Miami Hambu
Slide 31: Hiscox investment case
Hiscox investment case Balanced portfolio of large and complex risks SME and personal lines Delivers profits and capital Significant structural generation for reinvestment growth opportunity Delivers underwriting profit Delivers stable profit and capital-light fee income generation and growth Attrac
Slide 32: Long-term growth
Long-term growth Group premium ($m) Hiscox Re & ILS Hiscox UK Hiscox Special Risks Hiscox Asia Hiscox London Market Hiscox Europe Hiscox USA 5,000 4,500 Hiscox London Market Hiscox Re & ILS Insurance contract written premiums ($m)† 4,000 3,500 3,000 2,500 2,000 Hiscox Retail 1,500 1,000 500 0- 2003
Slide 33: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance H1 2024 Group ICWP (year-on-year in constant currency) +6% $1,023m Professional liability +3% $841m Errors and omissions Private directors and officers’ liability Property Cyber Commercial small Marine package Tech
Slide 34: Hiscox sustainability strategy
Hiscox sustainability strategy We aim to be a great We want to give people We are committed to We continually adapt We are committed place to work, attracting, and businesses the doing business in the to an evolving risk to having a positive nurturing and retaining confidence to realise right way th
Slide 35: Sustainability strategy in action
Sustainability strategy in action • Maintained the same • 2023 we assessed • Embedded a programme • We continue to adapt • Continued monitoring employee engagement and enhanced the of work to align with our underwriting of emissions and score as 2022, 82%. way we deliver for our CSRD in our EU entit
Slide 36: Hiscox ESG materiality map
Hiscox ESG materiality map Key Manage and monitor: topics of relatively lower Ongoing importance: topics of ongoing Priority: current mission-critical sustainability impact at the point of assessment, but which are importance due to their influence on our strategy, topics due to their potential to i
Slide 37: Demonstrating capital resilience
Demonstrating capital resilience Strongly capitalised across all bases As at 30 June 2024 • Strongly capitalised above all regulatory, economic, $3.18bn available capital and management bases • BMA’s Bermuda Solvency Capital Economic Regulatory Requirement (BSCR) is Solvency II equivalent • BSCR est
Slide 38: Group performance
Group performance Six months to 30 June 2024 Constant currency ICWP ICWP change ICWP change $m % % Hiscox Retail 1,335.3 6.1 5.0 Hiscox UK 427.4 7.0 4.3 Hiscox Europe 400.4 9.5 8.5 Hiscox USA 476.5 2.9 2.9 Hiscox Asia 31.0 2.3 3.6 Hiscox London Market 648.3 (2.8) (3.1) Hiscox Re & ILS 829.3 3.9 3.5
Slide 39: Segmental analysis
Segmental analysis 30 June 2024 30 June 2023 Hiscox Hiscox Hiscox London Hiscox Corporate Group Hiscox London Hiscox Corporate Group Retail Market Re & ILS Centre Total Retail* Market* Re & ILS Centre Total $m $m $m $m $m $m $m $m $m $m Insurance contract premium written 1,335.3 648.3 829.3 ‒ 2,812.
Slide 40: Hiscox Ltd results
Hiscox Ltd results $m 30 June 2024 30 June 2023 31 December 2023 Insurance contract premiums written 2,812.9 2,723.3 4,598.2 Net insurance contract premiums written 2,027.2 1,945.6 3,555.8 Insurance service result 240.7 221.4 492.3 Investment return 152.4 121.8 384.4 Profit before tax 283.5 264.8 62
Slide 41: Realistic disaster scenarios
Realistic disaster scenarios April 2024 Hiscox Group – losses shown as percentage of gross and net written premium Gross loss Industry loss Net loss return period Japanese windstorm 2% 6% $20bn 1 in 50 year Japanese earthquake 5% 16% $50bn 1 in 400 year Gulf of Mexico windstorm 17% $200bn 1 in 60 ye
Slide 42: Non-natural catastrophe extreme loss scenarios
Non-natural catastrophe extreme loss scenarios Changing portfolios, changing risk • As our casualty businesses continue to grow, we develop extreme loss scenarios to better understand and manage the associated risks • We have included more loss scenarios to illustrate other non-natural catastrophe e
Slide 43: Boxplot and whisker diagram of modelled Hiscox Ltd net loss
Boxplot and whisker diagram of modelled Hiscox Ltd net loss ($m) April 2024 Lower 5%- upper 2011 Tohoku Quake – $25bn market 95% range Superstorm Sandy – $20bn market Loma Prieta Quake – $6bn market Hurricane Andrew – $56bn market Northridge Quake – $24bn market Hurricane Katrina – $50bn market Mode
Slide 44: ICWP geographical and currency split
ICWP geographical and currency split H1 2024 geographical split H1 2024 currency split North America GBP Other USD Western Europe (excl. UK) CAD and other Worldwide EUR UK 17.1% 18.8% 19.2% 7.1% 3.2% 48.0% 17.6% 58.8% 10.2% 43
Slide 45: Group reinsurance security
Group reinsurance security Reinsurance assets at H1 2024 of $2.3bn H1 2024 reinsurance protections* (FY 2023: $2.1bn) First loss exposure by rating AAA and collateralised Collateralised AA AA range† A A range Other/non rated ILS 0.3% 0.7% 22.1% 26.7% 28.7% 50.0% 21.0% 50.5% *Reinsurance placements i
Slide 46: Reinsurance
Reinsurance Ceded as a percentage of ICWP/GWP* Reinsurance receivables as a percentage of total assets* 28.2 27.0 26.3 33.5 24.3 31.8 31.7 23.5 30.8 22.6 28.6 27.9 26.9 20.1 25.9 25.6 19.0 18.8 23.5 22.7 21.7 21.0 19.4 19.3 19.2 19.0 19.0 13.4 12.3 12.1 11.7 11.6 11.0 10.6 10.3 10.2 *2008-2021 under
Slide 47: Investment result
Investment result Return of $152m (2023: $122m) 30 June 2024 30 June 2023 Asset Asset allocation Return Return allocation Return Return % % $m % % $m Debt and fixed income holdings £ 10.4 11.7 $ 59.9 56.3 Other 10.0 10.4 Total 80.3 1.9 118.3 78.4 1.6 90.5 Equity and investment funds 2.7 5.0 10.4 4.2
Slide 48: Portfolio – asset mix
Portfolio – asset mix High quality, short duration portfolio Investment portfolio $8.0bn as at 30 June 2024 Asset allocation Debt and fixed income Debt and fixed holdings credit quality income currency Debt and fixed income holdings Gvt.* USD Cash and cash equivalents AAA GBP Equity and investment f
Slide 49: Portfolio – USD debt and fixed income holdings
Portfolio – USD debt and fixed income holdings As at 30 June 2024 Portfolios: $4.8billion BB and AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 17.4 0.1 0.3 1.2 19.0 1.3 Government supported* 0.1 0.9 0.3 0.2 0.1 1.6 2.3 Asset backed 9.2 9.2 1.0 Mortgage backed agen
Slide 50: Portfolio – GBP and other currencies debt and fixed income holdings
Portfolio – GBP and other currencies debt and fixed income holdings As at 30 June 2024 GBP portfolios: BB and $830 million AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 31.6 31.6 1.7 Government supported* 0.5 2.9 0.8 4.2 1.8 Corporates 1.0 3.0 27.6 30.0 0.4 62.0 2
Slide 51: Business segments
Business segments Hiscox Retail Hiscox Re & ILS Hiscox Retail brings together the results of the Group’s Hiscox Re & ILS is the reinsurance division of the Hiscox retail business divisions in the UK, Europe, the USA and Group, combining the underwriting platforms in Bermuda Asia. Hiscox UK and Hisco