Slide 1: Hiscox Ltd Preliminary results
Slide 2: Strategy update
MN HISCOX Strategy update
Slide 3: Strategy execution delivers record profit
2023 results Strategy execution delivers record profit • Hiscox diversified portfolio delivers record profits at excellent pre-tax RoE of 21.8%* • Strong profitability and capital generation supports: – more capital allocation to big-ticket growth and investment in retail – robust balance sheet and
Slide 4: Record profitability resulting in capital return
2023 results Record profitability resulting in capital return Sustained growth in NICWP ($m) Strong ISR ($m) growth with Record investment result ($m) improved COR of 89.8% 10.7%* 36% 384 3,556 492 3,226 361 2022 2023 2022 2023 2022 2023 (187) Record profit before tax ($m) Highest ROE in seven years
Slide 5: Capital allocation philosophy
Capital allocation philosophy Growth, financial resilience and flexibility INVESTMENT IN RESILIENCE AND BALANCE SHEET GROWTH AND FLEXIBILITY EFFICIENCY EFFICIENCY • Invest in long-term • Maintain strong • Pay out progressive structural growth solvency and dividend opportunities in retail liquidity •
Slide 6: Retail opportunity: market drivers are powerful
Retail opportunity Market drivers are powerful New business formation has accelerated over the last five years SMEs 33 million1 SMEs increasingly do business and purchase insurance online 15.4 million2 5.5 million3 New professions and green economy are creating more opportunities for growth 1US smal
Slide 7: Hiscox Retail
Hiscox Retail Took management action to accelerate profitable growth Retail ICWP (% of portfolio excluding DirectAsia) Change since 2022 (% in CCY) Change since 2022 (% in CCY) US DPD Europe Launched US workers’ Building broker portals compensation partnership US DPD Europe 22% 26% Rolling out
Slide 8: Big-ticket opportunity
Big-ticket opportunity Long-term enduring opportunity Lloyd’s is the best market for emerging risks $1.8 trillion investment in Hiscox technological innovation expands our green energy underwriting capabilities transition, up 17%* Access to multiple sources of capital in Re & ILS *2023 estimate, Blo
Slide 9: Hiscox London Market
Hiscox London Market Disciplined cycle management results in growth and profits ICWP (% of portfolio) Change since 2022 (%) Change since 2022 (%) Major property Terrorism Household Kidnap and ransom Crisis Flood management Personal accident 17% Alternative risk† Product recall Commercial lines Prope
Slide 10: Hiscox Re & ILS
Hiscox Re & ILS Seizing the opportunity: high quality growth, excellent profits Re (excluding ILS) net ICWP (% of portfolio) Change since 2022 (%) Change since 2022 (%) Property – Specialty North America Marine Specialty, risk and Risk marine Property – 28% North America COR* 41% 69.8% Change since
Slide 11: Technology as a strategic enabler
Technology as a strategic enabler Building the business of the future Easier to do Superior risk Efficiency and business with selection scalability 10
Slide 12: Financial performance
MN HISCOX Financial performance
Slide 13: Group financial performance
Group financial performance High quality growth delivering profits 31 December 31 December Year-on-year • Net growth 10.7% 2023 2022* in constant currency $m $m • Strong and improved COR Premiums Insurance contract written premium 4,598.2 4,355.4 5.6% • Insurance service result approaching $0.5bn Ne
Slide 14: Hiscox Retail: strong earnings
Hiscox Retail Strong earnings 31 December 31 December Year-on-year • Retail ICWP growth of 2023 2022* 4.2% in constant currency $m $m • 10.6% ICWP Premiums growth in Europe in constant currency Insurance contract written premium 2,368.5 2,273.1 4.2% • US DPD accelerating to 9.2% in H2 Net insurance
Slide 15: Hiscox London Market
Hiscox London Market Disciplined cycle management leads to sustained profitability 31 December 31 December Year-on-year • Net ICWP growth 2023 2022* accelerated in H2 $m $m – deployed incremental capital Premiums – benefitted from opportunities in Insurance contract written premium 1,243.4 1,114.7 1
Slide 16: Hiscox Re & ILS
Hiscox Re & ILS Excellent net growth and superb combined ratio 31 December 31 December Year-on-year • Deployed capital into hard 2023 2022* market to generate high $m $m quality growth Premiums • Lowest combined ratio since 2016 Insurance contract written premium 986.3 967.6 1.9% • Record ILS profit
Slide 17: Investment performance
Investment performance Higher rates led to improved returns in 2023 Cash and bond income net of fees ($m) Gains/(losses) on debt and fixed • Investment result $384.4m income holdings ($m) (2022: ($187.3m)), return of 5.2% YTD (2022: (2.6%)) – coupon income and 51 132 cash returns doubled 230 (97) –
Slide 18: Claims discounting impact on profit and COR
Claims discounting impact on profit and COR Net impact on profit is low at $14 million $144m ($131m)* $1m 2023: weighted 2023: in line 2023: on 2023 average of 4.8% with guidance average rates of $110m-$140m increased by $612m just 0.03% $626m Estimate using Expected unwind Sensitivity ($m) to weigh
Slide 19: Reserves
Reserves Proactive reserve management $m • Prudent reserving Best estimate philosophy unchanged Events not in data • Liabilities average duration Risk adjustment 1.9 years 83rd confidence • Continue to reserve level percentile proactively 77th confidence level percentile • Confidence level towards $
Slide 20: Reserve releases
Reserve releases $123m positive reserve development Reserve releases as % of opening net reserves • Reserve releases positive across all segments IFRS 4 IFRS 17* after strengthening reserve buffers 5.5% • Consistent reserve philosophy demonstrated by history of releases 3.7% 3.4% 1.0% 0.9% 2019 2020
Slide 21: Accident year loss development net of LPT
Accident year loss development net of LPT All years trending down Net loss development* by accident year • Net of LPT, releases across all prior 2019 2020 2021 2022 Average of all years accident years 1.05 • LPTs provide benefit to all accident years 1.00 0.95 0.90 0.85 0.80 0.75 0.70 Year 1 Year 2
Slide 22: Very strong capital generation
Very strong capital generation Deployed capital into favourable market conditions Estimated Bermuda solvency capital requirement (BSCR) • Capital generation more than 2x of capital (7%) consumed by growth 35% 212% • Regulatory and ratings capital position remains strong 199% • Bermuda DTA not includ
Slide 23: Remain strongly capitalised post capital return
Remain strongly capitalised post capital return Post capital return in line with historic levels Pro-forma Bermuda solvency capital requirement • Pro-forma BSCR post capital return is 212% (4%) very strong (8%) • Consistent with 200% historical levels • Post loss scenario position comfortably within
Slide 24: Underwriting
MN HISCOX Underwriting
Slide 25: Underwriting portfolio
Underwriting portfolio Disciplined growth delivering strong profits 2023 Group written premium (constant currency) London Market ICWP $4,598.2m; Net ICWP $3,555.8m • Effective cycle management, delivering Hiscox Re & ILS Hiscox London Market Hiscox Retail strong net growth and 2,500 ICWP NICWP ICWP
Slide 26: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance 2023 Group ICWP (year on year in constant currency) • Retail commercial continues year on year +5% compound growth $1,787m • Reinsurance gross moderated by Professional ILS outflows liability • Strong retail art an
Slide 27: Aggregate rate momentum continues
Aggregate rate momentum continues Assumed inflation remains elevated Compound rate* change, indexed to 2018 Annual assumed claims inflation† Core London Market Catastrophe reinsurance Retail Core London Market Catastrophe reinsurance Retail 200 180 160 140 120 100 80 2018 2019 2020 2021 2022 2023 20
Slide 28: Social inflation
Social inflation Managing the risk over the life of a policy Risk selection Reserving philosophy Managing the tail • Re & ILS exited • Maintain mean loss • Purchase selective casualty reinsurance picks in the initial retrospective in 2019 years despite reinsurance to reduce favourable experience the
Slide 29: Retail profitable growth
Retail profitable growth Capturing the opportunity Customers • New and enhanced products • Servicing more needs • Digital marketplace Profitable Underwriters growth • Create capacity • Utilise authority • Expand appetite Partners • Easy to do business • Client service excellence • Expanded footprint
Slide 30: Big ticket effective cycle management
Big ticket effective cycle management Managing risk and opportunity Evaluation and Key metrics adaptation KPIs, tolerances and triggers are vital Soft market strategies are best set in a hard market at peak profitability Execution and Triggers and communication tolerances Underwriters have an optimi
Slide 31: Natural catastrophe risk
Natural catastrophe risk Managing volatility US hurricane mean modelled $m loss adjusted for US CPI (5-10 year and 100-250 year) 5-10 year Inflated 100-250 year Inflated 600 500 400 Millions 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 30
Slide 32: Artificial intelligence and technology in underwriting
Artificial intelligence and technology in underwriting Evolving the business for the future Augmented underwriting Emerging risk Business opportunity • Customer experience • Insured • New products • Risk selection and pricing • Third party • Emerging sectors • Operational leverage • Bad actor • Exis
Slide 33: Closing remarks
MN HISCOX Closing remarks
Slide 34: Outlook
Outlook • The Group is well positioned to deliver high quality growth and earnings across the portfolio • Retail outlook is positive – strong start to 2024 – expect to deliver full-year 2024 growth within the 5% to 15% target range, and – to operate within the 89%-94% combined ratio range; will cont
Slide 35: Appendices
MN HISCOX Appendices
Slide 36: Appendices
Appendices • Geographical reach • Investment result • Hiscox investment case • Portfolio – asset mix • Strategic focus • 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
Slide 37: Geographical reach
Geographical reach 34 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 Chesapeake Latin American Dublin Chicago gateway Frankfurt Dallas Miami Hamburg Asia
Slide 38: 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 39: Strategic focus
Me Strategic focus HISCOX Insurance contract written premium for 2023 Total ICWP = $4,598.2 million Big-ticket business Retail business Larger premium, globally traded, catastrophe-exposed business Smaller premium, locally traded, relatively less volatile written mainly through Hiscox London Market
Slide 40: Long-term growth
Long-term growth Group premium ($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 41: Power of an actively managed portfolio
Power of an actively managed portfolio Continuing to benefit from strategy of balance Insurance contract written premium 31 December 2023: $4,598.2m +5% $1,787m Professional liability Errors and omissions Private directors and officers’ liability +5% $1,011m Cyber Property Commercial small package T
Slide 42: Hiscox sustainability strategy
Hiscox sustainability strategy Five-pillar approach with Group Executive Committee oversight 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 posit
Slide 43: Embedding sustainability in our business
Embedding sustainability in our business Investments Underwriting Operations • Established processes: annual ESG • Balanced approach to supporting • Continued embedding of SBTi-aligned reviews of investment managers, the net-zero transition: net-zero GHG targets; improving and net-zero wording in se
Slide 44: 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 45: Demonstrating capital resilience
Demonstrating capital resilience Strongly capitalised across all bases As at 31 December 2023 • Strongly capitalised above all regulatory, economic, $3.32bn available capital and management bases • BMA’s Bermuda Solvency Capital Economic Regulatory Requirement (BSCR) is Solvency II equivalent • BSCR
Slide 46: Group performance
Group performance Year to 31 December 2023 Constant currency ICWP ICWP change ICWP change $m % % Hiscox Retail 2,368.5 4.2 4.2 Hiscox UK 793.8 2.0 2.4 Hiscox Europe 606.7 11.2 10.6 Hiscox USA 909.4 1.0 1.0 Hiscox Asia 58.6 19.3 17.4 Hiscox London Market 1,243.4 11.5 12.7 Hiscox Re & ILS 986.3 1.9 4.
Slide 47: Segmental analysis
Segmental analysis 31 December 2023 31 December 2022 (restated) 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 2,368.5 1,243.4 986.3 – 4,5
Slide 48: Hiscox Ltd results
Hiscox Ltd results $m 2022 2023 (restated) 2021 2020 2019 Insurance contract premiums written 4,598.2 4,355.4 Net insurance contract premiums written 3,555.8 3,225.5 Insurance service result 492.3 360.9 Investment return 384.4 (187.3) 51.2 197.5 223.0 Profit/(loss) before tax 625.9 275.6 190.8 (268.
Slide 49: Realistic disaster scenarios
Realistic disaster scenarios January 2024 Hiscox Group – losses shown as percentage of gross and net written premium Gross loss Industry loss Net loss return period Japanese windstorm 2% 7% $20bn 1 in 50 year Japanese earthquake 4% 18% $50bn 1 in 400 year Gulf of Mexico windstorm 17% 54% $200bn 1 in
Slide 50: Non-natural catastrophe extreme loss scenarios
Non-natural catastrophe extreme loss scenarios Changing portfolios, changing risk • As our casualty businesses continue to grow, we develop extreme loss scenarios to better understand and manage the associated risks • We have included more loss scenarios to illustrate other non-natural catastrophe e
Slide 51: Boxplot and whisker diagram of modelled Hiscox Ltd net loss
Boxplot and whisker diagram of modelled Hiscox Ltd net loss ($m) January 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 Mo
Slide 52: ICWP geographical and currency split
ICWP geographical and currency split FY 2023 geographical split FY 2023 currency split North America GBP Other USD Western Europe (excl. UK) CAD and other Worldwide EUR UK 19.2% 17.4% 20.1% 3.8% 5.8% 48.7% 16.3% 58.7% 10.0% 51
Slide 53: Group reinsurance security
Group reinsurance security Reinsurance assets at FY 2023 of $2.1bn 2023 reinsurance protections* (FY 2022: $2.5bn) First loss exposure by rating AAA and collateralised Collateralised AA AA range A A range† Other ILS 0.2% 0.4% 25.6% 26.9% 25.0% 25.0% 49.6% 47.3% *Reinsurance placements in force at 13
Slide 54: Reinsurance
Reinsurance Written premium – ceded as a percentage of gross* Reinsurance assets as a percentage of total assets* 28.2 27.0 26.3 33.5 24.3 31.8 31.7 30.8 22.6 26.9 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 IFRS 4; 2
Slide 55: Investment result
Investment result Return of $384m (2022: -$187m) 31 December 2023 31 December 2022 (restated) Asset Asset allocation Return Return allocation Return Return % % $m % % $m Debt and fixed income holdings £ 12.1 11.6 $ 57.3 55.2 Other 10.0 9.5 Total 79.4 5.4 317.9 76.3 (3.2) (169.1) Equity and investmen
Slide 56: Portfolio – asset mix
Portfolio – asset mix High quality, short duration portfolio Investment portfolio $8.0bn as at 31 December 2023 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 investme
Slide 57: Portfolio – USD debt and fixed income holdings
Portfolio – USD debt and fixed income holdings As at 31 December 2023 Portfolios: $4.6 billion BB and AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 20.1 0.1 0.3 1.3 21.8 1.6 Government supported* 0.8 0.3 0.3 0.2 1.6 2.0 Asset backed 10.3 10.3 1.0 Mortgage backed a
Slide 58: Portfolio – GBP and other currencies debt and fixed income holdings
Portfolio – GBP and other currencies debt and fixed income holdings As at 31 December 2023 GBP portfolios: BB and $961 million AAA AA A BBB below and Total Duration % % % % unrated % years % Government issued 17.4 17.4 0.7 Government supported* 7.8 4.8 1.0 13.6 1.7 Corporates 3.5 3.2 31.2 29.9 1.2 6
Slide 59: Simplified illustration of unwind of claims discounting
Simplified illustration of unwind of claims discounting In this simplified approach the unwind is calculated using the average position of reserves during the period, whilst assuming linearity of losses and payments within a 12-month period. Under these assumptions the average reserve is equivalent
Slide 60: 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