JOURNEY
PLANNER
How the Hiscox
approach to learning
and development is
shaping the experts and
leaders of tomorrow.
INTELLIGENT
INSURANCE
How Hiscox is using technology and
data to differentiate its offering.
CUSTOM MADE
Lifting the lid on customer centricity.
STATES OF PLAY
Mary Boyd, our new Chief Executive
Officer of Hiscox USA, on the
schoolbook that changed her life, the
importance of building retail capabilities,
and the competitive nature of the small
business insurance sector.
Hiscox Ltd
Report and Accounts 2024
If your business
suffers a
cyberattack,
Hiscox could
help get you
back on track.
The CEO (me)
had to talk to
the Head of IT (me)
about the person
who clicked that
dodgy link (also me).
Subject to already holding a relevant Hiscox policy, and subject to policy eligibility, terms and conditions.
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report‑and-accounts-2024
As a Bermuda-incorporated
company, Hiscox is not subject to
the UK Companies Act. However,
the material provisions of Section
172 of the UK Companies Act
are substantively covered by the
Bermuda Companies Act, which
is the applicable legislation that
the Company is required to comply
with under Bermuda law. As a
company listed on the London
Stock Exchange, we comply
with the requirements set out in
the UK Corporate Governance
Code 2018 and the Listing Rules
and Disclosure & Transparency
Rules of the UK Financial Conduct
Authority. Our remuneration report
is consistent with UK regulations.
Any additional disclosures over
and above these requirements,
have been made for the benefit of
shareholders, on a voluntary basis.
Writing our next chapter
2
Highlights of the year
4
At a glance
6
A strategy that creates value
8
A balanced business
9
Clear priorities
20
The world around us
22
Actively managing risk
26
Our key performance
indicators (KPIs)
A closer look
28
Chief Executive’s report
42
Risk management
52
Stakeholder engagement
56
Sustainability
64
People
74
Task Force on Climate‑related
Financial Disclosures (TCFD)
Governance
90
Governance summary
92
Board of Directors
94
Group Executive
Committee (GEC)
96
Chair’s letter to shareholders
98
Corporate governance
104 Compliance with the UK
Corporate Governance
Code 2018
106 Nominations and Governance
Committee report
110 Audit Committee report
114 Risk Committee report
116 Directors’ report
119 Directors’ responsibilities
statement
119 Advisors
Remuneration
121 Remuneration Committee
report
124 Summary of remuneration
arrangements
126 Directors’ remuneration report
140 Implementation of the
remuneration policy for 2025
143 Other remuneration matters
152 Remuneration policy
Financial summary
166 Independent auditor’s report
174 Consolidated income statement
174 Consolidated statement of
comprehensive income
175 Consolidated statement of
financial position
176 Consolidated statement of
changes in equity
177 Consolidated cash
flow statement
178 Notes to the consolidated
financial statements
243 Alternative performance
measures (APMs)
245 Five-year summary
246 Glossary
Life at Hiscox
We are a growing, global business, offering
everything from small business insurance to
insurance‑linked securities, and that means
no two days at Hiscox are the same. In the
pages that follow, find out more about life at
Hiscox in 2024.
Page referrals within the report
Case studies
STATES OF
PLAY
Meet Mary Boyd, our new
Chief Executive Officer of
Hiscox USA.
See pages 38 to 41.
JOURNEY
PLANNER
How the Hiscox approach
to learning and development
is shaping the experts and
leaders of tomorrow.
See pages 70 to 73.
INTELLIGENT
INSURANCE
How Hiscox is using
technology and data
to differentiate its offering.
See pages 48 to 51.
CUSTOM
MADE
Lifting the lid on
customer centricity.
See pages 60 to 63.
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
1
Hiscox Ltd Report and Accounts 2024
Highlights of the year
Financial
performance
$685.4m
Profit before tax of $685.4 million
(2023: $625.9 million).
89.2%*
Undiscounted combined ratio of 89.2%
(2023: 89.8%).
19.8%*
Return on equity of 19.8%
(2023: 21.8%).
Non-financial
achievements
$4,766.9m*
Insurance contract written
premium of $4,766.9 million
(2023: $4,598.2 million).
82%
High global employee engagement
score maintained for the third
consecutive year.
9%
Reduction in Scope 1 and 2 emissions
across the Group during 2024
(vs 2020 baseline).
72
A retail claims transactional net
promoter score (NPS)† for 2024 that
reflects customers’ high satisfaction with
our claims experience (see page 130).
57%
Over half of our London Market
sabotage and terrorism business
is now supported by our AI-lead
underwriting solution.
The Group has delivered another year of
excellent results. Our retail businesses
continue to build growth and earnings
momentum, while our big-ticket
portfolio has shown proactive cycle
management, as well as underwriting
discipline, to deliver strong results in
an active loss year. We’ve been there
for our customers, we’ve innovated
in what we do and how we do it, and
we’ve attracted and retained top talent.”
Aki Hussain
Group Chief Executive Officer
*Represents alternative performance measure
(APM) used by the Group. APM definitions used
by the Group are included within the consolidated
financial statements on page 229.
†As measured by an independent third party across
the UK, Europe and US retail businesses.
2
Hiscox Ltd Report and Accounts 2024
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
Key moments in 2024
January
Celebrated 30 years in partnership with Control Risks,
through which we offer a market-leading insurance
and crisis response service.
April
Hiscox Re & ILS launched CyberShock, an
industry‑first cyber catastrophe consortium.
Celebrated a decade in directors and officers’
(D&O) insurance.
March
Announced $150 million share buyback programme.
June
Mary Boyd appointed Chief Executive Officer
of Hiscox USA.
Read more on pages 38 to 41.
November
Hiscox Retail’s first multi-country deal with a
leading digital MGA in Europe went live.
December
Hiscox Europe surpassed the €600 million
premium mark.
July
Hiscox Spain launched new business protection
product – the first packaged insurance product
on the market for SMEs.
Read more on page 62.
August
Hiscox London Market went live with our
generative AI‑enhanced lead underwriting
model in collaboration with Google Cloud,
writing sabotage and terrorism risks.
Read more on page 49.
September
AI-enhanced new business automation solution
went live in Hiscox UK, reducing quote handling
times by 40%.
Hiscox London Market launched new Personnel
Security Plus product – complementing existing
kidnap and ransom (K&R) cover with new perils
such as cyber stalking and social engineering.
Hiscox UK’s high-value-household product
launched on e-trading platform, Acturis.
Hiscox Germany completed its adoption of a new
core administration system, as we continue to build
a scalable technology infrastructure across Europe.
Writing our next chapter
Highlights of the year
A closer look
Governance
Remuneration
Financial summary
3
Hiscox Ltd Report and Accounts 2024
At a glance
About us
Where we are
Hiscox is a global, specialty insurer, listed on
the London Stock Exchange and headquartered
in Bermuda. We have grown from our roots
as a niche Lloyd’s of London underwriter into
a diversified international insurance group
operating across direct‑to‑consumer, broker and
partner‑distributed retail insurance; large and
complex commercial insurance; reinsurance and
insurance‑linked strategies. We have a distinctive
brand, energised and ambitious teams, a strong
balance sheet, and plenty of room to grow in each
of our chosen markets and lines of business.
We currently employ over 3,000 people
worldwide across 13 countries and 32 offices.
We serve almost 1.7 million retail customers across
the UK, Europe and the USA, and we remain
one of the largest and longest-standing Lloyd’s
of London syndicates.
1.
Belgium
2.
Bermuda
3.
France
4.
Germany
5.
Guernsey
6.
Ireland
7.
Luxembourg
8.
The Netherlands
9.
Portugal
10.
Spain
11.
Singapore
12.
UK
13.
USA
32
offices
13
countries
1.7m
customers
3,000+
employees
4
Hiscox Ltd Report and Accounts 2024
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
Our purpose
Our vision
Our values
We give people and businesses the confidence
to realise their ambitions. To do this, we provide
differentiated products and services that address
our customers’ needs, delivered by our talented,
energetic and connected teams. Success is
measured in our reputation, financial performance,
and customer attraction and retention.
For Hiscox to be the leading specialist
insurer in material markets – not the biggest,
but the most respected. We want to be known
by customers for being true to our word, by our
employees as a great place to work and grow
for those who are ambitious and talented, and
as an industry leader in growth, profits and
value creation.
Human
Clear, fair and inclusive.
Connected
Together, build
something better.
Integrity
Do the right thing,
however hard.
Ownership
Passionate, commercial
and accountable.
Courage
Dare to take a risk.
Writing our next chapter
At a glance
A closer look
Governance
Remuneration
Financial summary
5
Hiscox Ltd Report and Accounts 2024
People
and culture
Brand
Underwriting
Technology
Capital
H
is
c
o
x
L
o
n
d
o
n
M
a
r
k
e
t
H
i
s
c
o
x
R
et
a
il
:
d
i
gi
ta
l
H
i
s
c
o
x
R
e
t
ai
l:
t
r
a
d
it
i
o
n
al
H
i
s
c
o
x
R
e
&
I
L
S
•
Global risks through
Lloyd’s platform.
•
Heritage of deep
technical expertise.
•
Leading the market in applying
technology to distribution
and underwriting.
Delivers profi ts and capital
generation for reinvestment
•
Small and micro businesses.
•
Digitally traded, with
low-cost distribution
and auto-underwriting.
•
Partnership management
capability through
digital connectivity.
Signifi cant structural
growth opportunity
•
Specialist reinsurance
capability.
•
Holistic risk insights.
•
Expert alternative
capital manager.
Delivers underwriting profi t
and capital-light fee income
•
Focus on SMEs, not
traded digitally.
•
Leadership in specialist lines.
•
Long-term broker partnerships.
Delivers stable profi t
generation and growth
Balanced portfolio of large and complex risks
SME and personal lines
A strategy that creates value
We have a unique
business mix
Read more on page 8.
The Hiscox Group comprises three business units
facing different opportunities and challenges,
but with a common set of capabilities and the
capital support required for success.
Attractive and
sustainable
returns for
shareholders
Long-term profitable growth
Progressive dividend
Attractive and sustainable ROE
Operational leverage
Managed volatility delivering
lower cost of capital
6
Hiscox Ltd Report and Accounts 2024
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
We leverage our
differentiated
offering
Global reach
We are an international business, but we invest in local market knowledge and
experience to truly understand the markets we operate in and provide relevant
products and services. This gives us a unique breadth of expertise, serving
customers from sole traders to multinational companies and ILS investors.
Specialist products
In every part of the Hiscox Group, we focus on providing products and services that
differentiate us. These range from high-value home insurance and fine art – areas
where we have deep foundations to build on – to small business, flood, and kidnap
and ransom – where innovative products and service set us apart.
Claims experience
Being true to our word is the cornerstone of our claims service. Each customer
and claim is different, which is why we have embedded experienced claims
teams with specialist product knowledge in every part of our business.
Talented and highly skilled people
The quality of our people is a crucial factor in our continuing success.
Their expertise, energy and commitment drive our reputation for quality
and professionalism. In return, we aim to provide a work environment that
brings out the best in everybody and rewards hard work.
Powerful brand
We have invested significantly over many years to build a recognised and
renowned brand. Our distinctive marketing campaigns are developed from a
deep understanding of our customers and positively contribute to consumer
buying decisions.
We create
value for all our
stakeholders
Read more on pages 52 to 55.
$1.4bn*
returned to shareholders over the
last ten years.
$2bn
paid out to customers in claims
in 2024.
82%
High employee engagement score in
2024, for the third consecutive year.
Two-thirds
We currently lead on two-thirds of
the London Market business we write
through Syndicate 33.
Hiscox is truly distinctive within the
sector, thanks to our mix of big-ticket
and retail businesses, as well as how
and where we operate. This allows us
to effectively manage the insurance
cycle, as our big-ticket businesses
have done excellently in 2024, with
sustainable value creation in mind.”
Paul Cooper
Group Chief Financial Officer
*Includes share buybacks and all special,
ordinary, and Scrip Dividends paid to shareholders
since 1 January 2015. Excludes the final dividend
proposed for 2024.
Writing our next chapter
A strategy that
creates value
A closer look
Governance
Remuneration
Financial summary
7
Hiscox Ltd Report and Accounts 2024
Group
Structure
Proposition
Distribution
Customer
SMEs
SMEs
High net worth
Direct and
partners
Direct
Brokers
Brokers
Commercial
Commercial
High-value
personal lines
Re & ILS
Retail†
USA
UK
Europe
SMEs
High net worth
Direct
Brokers
Commercial
High-value
personal lines
London Market
Insurers and
reinsurers
Corporates
Brokers
Brokers
Property
Marine and
specialty
Property
Marine, specialty
and energy
ILS*
Casualty
Crisis
management
A balanced business
Hiscox Retail
Read more on pages 30 to 32.
Hiscox London
Market
Read more on pages 32 to 33.
Our big-ticket insurance business uses the global licences, distribution network
and credit rating of Lloyd’s to insure clients throughout the world with large, and
often complex, insurance needs. This business is written through a number of
our syndicates including Syndicate 33, one of the largest syndicates at Lloyd’s of
London. Our product range includes property, marine and energy, casualty and
other specialty insurance lines. We now lead on more open market risks, with
a combination of underwriting and digital expertise that differentiates us.
Our reinsurance and ILS business serves clients worldwide in different ways.
Hiscox Re is our global reinsurance business, written out of London and Bermuda
and offering property, specialty, cyber, marine and aviation, and risk excess of
loss reinsurance products, as well as retrocessional cover. Hiscox ILS is our
alternative investment manager, which manages capital for third parties through
insurance‑linked strategies.
Our retail operations focus on specialist areas of personal lines, such as high‑value
homes and fine art, and commercial lines including emerging professions, media
and tech, and small business insurance. We aim to be available however customers
choose to purchase – whether that’s through a broker, via our website or over the
phone. With each of our retail operations at different stages of maturity, we are
focused on building scale as the size of our addressable markets is huge, so we
continue to invest in our brand, distribution and technology.
Hiscox Re & ILS
Read more on page 33.
Structure
†DirectAsia is no longer regarded as part
of the core Hiscox Retail portfolio and is
classified as a disposal group held for sale
in the financial statements.
*Includes ILS, quota share and catastrophe
bond funds.
8
Hiscox Ltd Report and Accounts 2024
Writing our next chapter
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Governance
Remuneration
Financial summary
3.
Operational maturity
2.
Technical excellence
4.
Connected and
energised teams
5.
Customer centricity
1.
Profi table growth and
managed volatility
Business priorities
Risk adaptation
We continually adapt to an
evolving risk landscape.
People
We aim to be a great place
to work, attracting, nurturing
and retaining talent.
Impact
We are committed to having
a positive impact.
Governance
We are committed to doing
business in the right way.
Customers
We want to give people and
businesses the confidence to
realise their ambitions.
Clear priorities
Our sustainability
strategy
We want to be here for the long term,
for our customers, colleagues and
communities, operating in a sustainable
way for the future.
Read more on pages 56 to 59.
Business priorities 2025
Read more on pages 10 to 19.
Every part of our business has huge
growth potential, which we’ll realise
through our laser focus on managing
volatility, continued technical excellence,
evolving operational maturity, attracting
and retaining great talent, and most
importantly putting the customer at
the heart of everything we do.”
Joanne Musselle
Group Chief Underwriting Officer
Writing our next chapter
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Remuneration
Financial summary
9
Hiscox Ltd Report and Accounts 2024
Profitable growth and
managed volatility
1.
Our focus has remained on achieving
targeted growth and sustained
profitability in big-ticket through
effective cycle management and
managed volatility, at the same time
as pursuing structural growth in retail,
where we have continued to increase
our share in large and fragmented
markets. During 2024, the Group
delivered a record profit before tax of
$685.4 million (2023: $625.9 million)
and a strong undiscounted combined
ratio of 89.2% (2023: 89.8%) despite
the active loss environment.
As our business continues to grow,
we will look to leverage the power of
the Hiscox Group and the strength
of its diversification. In retail, we will
continue to utilise both our expertise and
recognised brand to achieve profitable
growth in our existing markets, where
our market shares remain modest
and the structural growth opportunity
remains significant. In big-ticket, we will
continue to optimise our underwriting
portfolios and maintain our disciplined
growth philosophy as we continue to
prioritise portfolio resilience.
Technical excellence
2.
We have continued to advance our data
and technology strategies to support
decision-making, share expertise
across our infrastructure and build
strong foundations for future innovation.
This includes a continued focus on
the alignment of underwriting, claims,
reserving and pricing, and progress in
removing some of the frictions of manual
trading to unlock both efficiencies and
opportunities for growth – as we have
done during 2024 by launching Lloyd’s
first lead underwriting model enhanced
by generative AI, in collaboration with
Google Cloud. While we have started
with sabotage and terrorism, we will
move to other more complex lines of
business over time.
Building on work delivered in 2024,
we will continue to strengthen our
data and analytics muscle and
accelerate our data transformation as
we look to build a data‑driven culture
that supports more targeted and agile
decision‑making (see pages 48 to 51).
Operational maturity
3.
We made further progress in improving
our expense ratio and continue to
take steps towards realising the
benefits of scale thanks to process
automation enabled by technological
deployments, and heightened
governance over our change spend.
This includes the introduction in 2024
of a new source‑to‑pay solution which
is transforming the way we interact
with third parties (see page 55). We
have also embedded our enterprise
portfolio management function, which
manages our change portfolio and
is bringing greater rigour to prioritisation
and capital allocation decisions, and the
effectiveness of delivery.
In the year ahead, we will continue
to build our change management
maturity with an emphasis on prioritising
high-impact initiatives and benefit
realisation. Our transition to a global,
scalable model will be underpinned by a
culture of process excellence to uncover
opportunities to further increase
operational leverage and drive scale.
Connected and
energised teams
4.
We are proud of our progress
in 2024, which resulted in us
maintaining our high engagement
score of 82% for the third consecutive
year (see page 27). We have continued
to invest in our employee value
proposition, which this year included
further empowering our people’s
personal growth and professional
excellence with a revamped Hiscox
Learning Hub and a new partnership
with LinkedIn Learning (see pages
70 to 73).
We remain committed to cultivating
a highly engaged and inclusive
workforce to help us deliver
exceptional service to our customers.
We will continue to invest in upskilling
our talent through focused learning
pathways – with a particular focus on
leadership capabilities – and critically
reviewing the skills we need both
today and tomorrow.
Customer centricity
5.
In line with our ambition of becoming a
leading customer-centric organisation,
we continue to put our customers at
the heart of our business by further
evolving our customer relationship
management (CRM) capabilities and
identifying where we can maximise
value to our customers across their
lifecycles. During 2024, this included
improvements to our faster payment
capabilities in claims; an enhanced
broker pipeline management capability
which is positively aiding adoption
rates across open market sales
teams; and a refined customer insights
approach which is boosting alignment
between marketing and sales activity.
Over the year ahead, we will deepen
our focus on reducing friction in
customer journeys and refining our
services to deliver timely, personalised
customer support. This will include
further exploring our use of AI in both
our big-ticket and retail businesses,
and considering new opportunities to
add real value at critical moments of
the customer journey.
The world around us
Economic
instability
Geopolitical
volatility
Evolving ESG
expectations
Globally disinflation has continued,
but the risk remains that inflation
reignites due to tariffs, trade wars or
supply chain disruption. The major
global economic challenge currently is
growth, which remains relatively low.
Regardless of how the macroeconomic
environment develops, our geographic
diversification provides resilience, and
our prudent investment approach limits
exposure to short-term market volatility.
Geopolitical tensions have persisted
over the year, and the new US
administration could lead to a
recalibration of foreign policy and
security globally. Our big-ticket
business has continued to rigorously
manage the small levels of exposures
in regions most impacted by conflict,
such as the Middle East, while our
domestic‑focused retail businesses
are not directly impacted by current
conflicts. In Europe, government crises
and associated uncertainty in Germany
and France are depressing business
confidence and creating barriers to
Regulation and broader stakeholder
expectations relating to environmental,
social and governance factors continue
to develop, and we remain committed
to addressing our responsibilities in
this area. We have introduced a new
stand‑alone, Group-wide human rights
policy, aligned with the United Nations
Guiding Principles on Business and
Human Rights, and we have been
preparing for the first CSRD disclosures
in our European business.
For more information, see pages
56 to 59.
growth. Nevertheless, we believe we
still have strong opportunities to grow
in Europe, given our currently modest
market share.
7
Hiscox currently operates in seven
countries across Continental Europe.
The environment we operate in continues to change at pace. Key themes we are monitoring to ensure we remain well positioned
to manage associated risks and opportunities are outlined below.
20
Hiscox Ltd Report and Accounts 2024
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Remuneration
Financial summary
The impact of a
changing climate
New
technologies
The battle
for talent
2024 was the warmest year
since records began and has
been characterised by a host of
devastating natural disasters. This
includes five hurricanes making landfall
in the USA, flooding in Spain, Germany
and central Europe, and a number of
weather events in Canada. Despite the
more active loss environment, natural
catastrophe losses were within our
expectations for 2024.
We have extensive history and expertise
in analysing the impact of natural
catastrophes, and we recognise
the need to continue to develop this
further as the impacts of climate
change intensify. This year we have
introduced a climate dashboard,
monitored by our Sustainability
Steering Committee, to track our
performance against our climate risk
appetite and relevant targets.
For more information, see pages
74 to 88.
The capabilities of AI and the pace
of adoption have both increased
rapidly over the past year. We
are focused on making the most of
the efficiencies and insight AI can
generate via a number of projects, for
example through our market-leading
collaboration with Google Cloud, while
ensuring that appropriate safeguards
are in place (see pages 48 to 51).
In addition, we are closely monitoring
the impact AI could have on our
customers and their risk profiles as
they adopt it within their own business
processes. The power of AI can also
be deployed maliciously, and our cyber
teams continue to track how AI will
amplify cyber threats both now and in
the future.
The quality of our people is a
crucial factor in our continuing
success. We’re proud that in 2024
we’ve continued to maintain our high
employee engagement scores for the
third consecutive year. Nevertheless,
recruiting specialist talent remains a
challenge and we continue to evolve
our employee proposition so we
can attract and retain exceptional
people. There are global shortages
of experience and expertise impacting
various sectors – not only our own, but
also those we insure – and we continue
to follow this trend closely.
For more information, see pages
64 to 69.
620
In 2024, we attracted 620 new
colleagues to Hiscox.
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21
Hiscox Ltd Report and Accounts 2024
Actively managing risk
As well as broader risks posed by economic and societal dynamics, as an insurance group we are exposed to a number of
specific risks that relate to the nature of our business and operations. The key risks outlined below constitute the emerging
and principal risks required under the UK Corporate Governance Code 2018.
The risk
Risk landscape and how we manage the risk
Strategic risk
The possibility of adverse outcomes
resulting from ineffective business
plans and strategies, decision-making,
resource allocation or adaptation to
changes in the business environment.
The Group’s continuing success
depends on how well we understand
our clients, markets and the various
internal and external factors affecting
our business, and having a strategy in
place to address risks and opportunities
arising out of this. Not having the right
strategy could have a detrimental impact
on profitability, capital position, market
share and reputation.
We consider strategic risks in a holistic way, to better prepare our
business for emerging threats, shifting trends, and opportunities in
the environment in which we operate. During 2024, we have remained
vigilant to potential adverse impacts of economic, geopolitical, social,
technological and regulatory developments on our Group strategy – for
more information, see pages 20 to 21. Our Group strategy has clarity of
focus on consistent delivery from our big‑ticket businesses, accelerated
growth in retail digital and balanced growth in retail traded, and we
continue to focus on its execution.
The external environment remains complex and uncertainties persist,
but our robust strategy means that, despite the external headwinds,
there is still tremendous opportunity for Hiscox in each of our
chosen segments.
Underwriting risk
The risk that insurance premiums prove
insufficient to cover future insurance
claims and associated expenses. Likely
causes include failing to price policies
adequately for the risk exposed, making
poor risk selection decisions, allowing
insurance exposures to accumulate
to an unacceptable level, or accepting
underwriting risks outside of agreed
underwriting parameters. This includes
people, process and system risks
directly related to underwriting, and
considers emerging external risks such
as climate, geopolitical and changing
customer trends.
We continue to focus on maintaining and improving, where needed, the
quality and balance of our portfolios, strengthening our pricing and risk
selections, and growing where the opportunities are commensurate
with the risk. During the year, we continued to navigate a set of
complex external conditions impacting underwriting risk. These ranged
from a continued volatile geopolitical environment (notably, the ongoing
Russia-Ukraine war and the conflict in the Middle East), macroeconomic
shifts (with inflationary pressures lingering and sluggish economic growth
in the UK and Europe), emerging societal trends (such as increased
propensity to litigation), and the impact of climate change.
Our active monitoring of economic and social inflation, impact from
supply chain disruptions, the heightened threat of cyber attacks, and
emerging litigation trends, has continued to allow Hiscox to respond
promptly, ensuring our pricing keeps pace with costs. We continue to
monitor and evolve our view of property exposure risks from natural
catastrophes influenced by climate change through our set of realistic
disaster scenarios (see pages 45 to 46). Our underwriting exposure
remains well within our Board-approved risk appetite levels and, in 2024,
our business units have managed the cycle very well.
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Financial summary
We continue to evolve our risk
management strategies and, in
2024 we strengthened our existing
approach including in areas such as
AI governance.”
Fabrice Brossart
Group Chief Risk Officer
The risk
Risk landscape and how we manage the risk
Reserving risk
The Group makes financial provisions
for unpaid claims, defence costs and
related expenses to cover liabilities both
from reported claims and from ‘incurred
but not reported’ (IBNR) claims.
Reserving risk relates to the possibility
of unsuitable case reserves and/or
insufficient outstanding reserves being
in place to meet incurred losses and
associated expenses, which could affect
the Group’s future earnings and capital.
Our consistent and prudent reserving philosophy serves to manage
the risk of insufficient reserves to cover claims cost and associated
expenses. The Group’s reserve levels remain resilient and we continue
to monitor and respond to the volatile macroeconomic environment
through maintaining and enhancing processes focused on reviewing
our key assumptions against emerging experience and explicitly
allowing further reserve margins for uncertainty. Close monitoring of
developments will continue in 2025.
Credit risk
There remains a threat of global
recession, which could, in turn,
increase default risk. There is also the
risk of a reinsurance counterparty being
subject to a default or downgrade,
or that for any other reason they may
renege on a reinsurance contract or
alter the terms of an agreement. The
Group buys reinsurance as a protection,
but if our reinsurers do not meet their
obligations to us, this could put a strain
on our earnings and capital and harm
our financial condition and cash flows.
Similarly, if a broker were to default,
causing them to fail to pass premiums
to us or pass the claims payment to a
policyholder, this could result in Hiscox
losing money.
Many of our counterparties face the same external conditions as we do.
We closely monitor our counterparty exposures on a regular basis, and
our credit exposures remain within the Group’s risk appetite. We also take
into account the economic outlook in our decision-making on outwards
reinsurance purchasing.
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23
Hiscox Ltd Report and Accounts 2024
The risk
Risk landscape and how we manage the risk
Market risk
There is the threat of unfavourable or
unexpected movements in the value
of the Group’s assets or the income
expected from them. This includes risks
related to investments, for example,
losses within a given investment
strategy, exposure to inappropriate
assets or asset classes, or investments
that fall outside of authorised strategic
or tactical asset allocation limits.
While the economic environment has remained volatile, the higher returns
that we enjoyed in 2023 on our fixed income portfolio, driven by interest
rate increases, have continued through 2024.
The Group also maintains modest exposure to selected non-fixed
income investments which provide diversification benefits to the overall
portfolio. We continue to look at incrementally improving long-term risk
and capital-adjusted outcomes through further diversification across the
wider investment universe.
Liquidity risk
The risk of being unable to meet
customer or other third-party payment
obligations from available resources as
they fall due. This could result in higher
than expected costs in selling assets
or raising money quickly to meet our
obligations.
The Group’s liquidity risk appetite is designed to ensure that appropriate
cash resources are maintained to meet obligations as they fall due, both
in business-as-usual and stressed circumstances. This is measured
using a liquidity coverage ratio, which compares liquidity sources to
stress-tested liquidity requirements.
The Group’s liquidity position remains robust and we have access to
further liquidity through our revolving credit facility and the debt capital
markets if needed.
Regulatory, legal and tax governance
This relates to the risk that the business
fails to act, or is perceived to have failed
to act, in accordance with applicable
legal, regulatory, and tax requirements
in all of the jurisdictions where the Group
operates. The regulatory, legal and tax
environment continues to be complex,
with frequent changes in rules and
expectations which increase complexity
in this area.
We monitor the regulatory, legal and tax compliance landscape for
emerging changes to local and international laws and regulations in the
jurisdictions in which we operate. Areas of regulatory development that
we have continued to work on during the year have included Solvency II
(notably Bermuda Solvency II equivalence status and proposed changes
to the application of Solvency II in the UK), proposed insurer resolution
regimes in Bermuda and the UK, and the EU Digital Operational
Resilience Act (DORA).
In relation to tax developments, 2024 saw acceleration towards
implementation of the OECD’s Global Anti-Base Erosion Model Rules
(Pillar Two). An internal project is progressing on track to ensure that
we are able to comply with the incoming rules.
We invest in proactive engagement with all of our regulators, including
through our participation in the annual college of supervisors, hosted
by the Bermuda Monetary Authority (BMA), which is an opportunity to
update all of our regulators together on strategic developments across
the Group.
Climate change-related risk
This relates to the range of complex
physical, transition and liability risks
arising from climate change. It includes
the risk of higher claims as a result
of more frequent and more intense
natural catastrophes; the financial risks
which could arise from the transition
to a low-carbon economy; and the risk
that those who have suffered loss from
climate change might then seek to
recover those losses from others who
they believe may have been responsible.
Climate change-related risk is not
considered a stand-alone risk, but a
cross-cutting risk with the potential
to amplify each existing risk type.
We continue to monitor climate change-related risk through a number
of lenses, including underwriting selection, pricing, multi-year view of
natural catastrophe risk, asset types, and developments in potential
climate litigation. Every year we run a range of realistic disaster
scenarios, in line with emerging trends and updated with our in-house
climate research. We utilise investment ESG dashboards for each of
our insurance carriers and have an overarching sustainability strategy
for the Group which includes greenhouse gas reduction targets. More
information on how we manage climate change-related risks can be
found in our TCFD disclosure on pages 74 to 88.
24
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Financial summary
The risk
Risk landscape and how we manage the risk
Operational risk
This is the risk of direct or indirect loss
resulting from internal processes,
people or systems, or from external
events. It includes cyber security risk,
which is a constant threat due to the
evolution of attack tools and methods,
fuelling the ongoing challenge of
maintaining the systems and processes
necessary to protect the confidentiality,
integrity or availability of information
and data. Operational risk covers
the potential for financial losses, and
implications from a legal, regulatory,
reputational or customer perspective.
Risks from people, process, systems and external events are closely
monitored by senior executives across the business.
We continue to evolve our operational risk management processes
including our defences against, and response to, information security
and cyber threats. Our information security policy is updated annually
and approved by the Board. The policy sets out the Group’s approach
and commitment to information security, including the Group’s
requirements for a robust approach to protect, preserve and manage
the confidentiality, integrity and availability of the Group’s information
assets and information systems (including technology infrastructure).
It is supported by a suite of other policies. We also buy insurance
against liabilities including but not limited to those related to cyber
and information security risks.
We regularly reassess our information security standards and
methodologies to ensure appropriate governance and consistency has
been applied to our approach. In 2024, we also introduced an artificial
intelligence (AI) standard to ensure we have appropriate governance
and controls around our own use of AI. Our approach to information
security risk management extends to third-party providers, so through
our procurement and claims teams we ensure third parties receive
notification of the security requirements expected of them upon
contract signing and at contract renewal.
In 2024, we enhanced our approach to the annual Risk and Control
Self Assessment exercise, defining more quantitative criteria and
implementing a Governance, Risk and Control system.
2024 also saw a continued focus on Group-wide crisis management
response planning, which included performing a series of crisis
simulations to test and enhance the response plans that are embedded
across business areas and functions including business continuity plans,
surge plans, people plans and communication plans.
Talent and capabilities risk is actively managed. We continue to monitor
and adapt our hybrid working policies and practices to ensure that our
workforce is equipped with the necessary skills and tools to succeed,
and we are pleased to have maintained a high level of employee
engagement in 2024 (see page 27).
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Governance
Remuneration
Financial summary
25
Hiscox Ltd Report and Accounts 2024
2024
2023
2022
685.4
625.9
275.6
2024
2023
2022
1,086.4
951.1
764.5
2024
2023
2022
4,766.9
4,598.2
4,355.4
2024
2023
2022
3,675.6
3,555.8
3,225.5
2024
2023†
2022
183.2
162.7
73.8
2024
2023
2022
89.2
89.8
91.1
2024
2023†
2022
19.8
21.8
10.1
2024
2023
2022
2021
2020
43.1
37.5
36.0
34.5
0.0
A very good year
Net asset value
per share*
1,086.4¢
Return on equity*
19.8%
Undiscounted
combined ratio*
89.2%
Basic earnings
per share
183.2¢
Insurance contract
written premium*
$4,766.9m
Net insurance contract
written premium*
$3,675.6m
Profit before tax
$685.4m
Financial KPIs
Ordinary dividend
43.1¢
*Represents alternative performance measure
(APM) used by the Group. APM definitions used
by the Group are included within the consolidated
financial statements on page 229.
†Excludes Bermuda deferred tax asset (DTA).
Including Bermuda DTA, basic earnings per share
was 206.1 cents and return on equity was 27.6%.
26
Hiscox Ltd Report and Accounts 2024
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Financial summary
2024
2023
2022
2021
2020
4.7
4.7
4.6
4.8
4.8
2024
2023
2022
2021
2020
82%
82%
82%
64%
68%
2024
2023
2022
2021
-9%
-16%
-0.1%
-11%
2024
2023
2022
80
82
80
2024
2023
2022
2021
2020
16.5%
16.0%
16.0%
19.1%
21.2%
2024
2023
2022
2021
2020
94%
90%
92%
92%
92%
UK gender pay gap
16.5%
In the UK, we have been annually disclosing our
UK gender pay gap since 2017, and continue to
focus on closing the gap over time. We recognise
the importance of diversity, equity and inclusion
(DEI) disclosure in driving progress, and more
information on our gender/sex and ethnicity
data can be found on pages 66 to 68.
See connected and energised teams.
Employee engagement
82%
We are proud to have maintained our high
employee engagement score for the third
consecutive year in 2024. Our people value our
evolved listening strategy, which now includes
quarterly pulse surveys that provide us with more
real-time feedback on what is working well and
where we may need to make a change.
See connected and energised teams.
Reducing Scope 1
and 2 emissions
-9%
As part of our focus on being a responsible
business, we have committed to achieving a 50%
reduction in our Scope 1 and Scope 2 emissions
by 2030, against a 2020 adjusted baseline.
While this is a multi-year programme of work,
and progress is unlikely to happen in a straight
line, our 2024 priorities included the adoption
of renewable energy in many of our offices and
ongoing engagement with our landlords to realise
environmental efficiencies (see pages 84 to 85).
Germany customer
satisfaction 80
Germany is our largest operation in Continental
Europe, and here we monitor how likely customers
and their brokers are to recommend Hiscox after
making a claim, based on their experience of our
service and support. With a transactional net
promoter score range from -100 to +100, we are
pleased to consistently sustain very high levels
of customer satisfaction.
See customer centricity.
US customer reviews
using Feefo 4.7/5
In the USA, we ask customers to review their
experience of Hiscox post-purchase. We do this
using Feefo, which has a five-star rating system,
and are pleased to maintain such high scores
year after year, even as the business grows.
See customer centricity.
Non-financial performance
UK customer
satisfaction 94%
In the UK, customers who speak to one of our
insurance experts in our customer experience
centre in York are asked to rate their experience
of Hiscox at the end of the call. Whether they
have phoned for advice, a quote, to purchase a
new policy or make changes to an existing one,
their feedback helps us to constantly improve
our service.
See customer centricity.
Data only available from 2022.
Table denotes reduction vs the 2020 baseline
each year. Data only available from 2021.
Writing our next chapter
Our key performance
indicators (KPIs)
A closer look
Governance
Remuneration
Financial summary
27
Hiscox Ltd Report and Accounts 2024
Positive growth momentum
High-quality growth underpins second
consecutive year of record profits
The Group has delivered another year of
strong results, and we closed the year
with improving growth momentum and
excellent profitability. ICWP increased
3.7% or $168.7 million, as Retail growth
accelerated in the final quarter to
over 7% in constant currency, and we
continued to deploy more capital in
the big-ticket businesses. The Group’s
strong undiscounted combined ratio
of 89.2% (2023: 89.8%) is a testament
to our disciplined underwriting. The
investment result of $383.9 million
(2023: $384.4 million) made another
meaningful contribution to profitability.
The record profit before tax of
$685.4 million (2023: $625.9 million),
up 9.5% on last year’s record profits,
with strong returns delivered by each
business segment, demonstrates the
strength of the Group as we move
forward to capture the opportunities
ahead of us.
Growth momentum building
In Retail, we are achieving broad‑based
growth. The UK business is benefitting
from management actions taken over the
last few years which have reinvigorated
Chief Executive’s
report
The Group has delivered
another set of excellent
results and a second
consecutive year of
record profits.
Aki Hussain
Group Chief Executive Officer
Hiscox Ltd
the brand, added distribution capability
and applied technology to improve
service to brokers, leading to its strongest
rate of growth since 2018. In Europe,
we have expanded our distribution and
rolled out new technology to grow our
market presence. In the USA within
digital, partnerships and direct (DPD),
the direct business is achieving strong
double-digit growth; and in partnerships,
the trend of more moderate flows
across some established partnerships
from the second and third quarters has
continued into the fourth quarter. While
the US broker premiums continued to
decline, the growth gap is narrowing
as the business benefits from several
initiatives already launched, with
more in the pipeline to deliver further
improvements to performance next year.
We are continuing to invest in our brand,
distribution and product development to
build on the current positive momentum.
Our big-ticket businesses have
demonstrated our cycle management
expertise and underwriting discipline,
delivering robust profitability in an
active loss year. While we are seeing
more competition in property, market
conditions remain attractive, and we
28
Hiscox Ltd Report and Accounts 2024
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Financial summary
Our big-ticket
businesses have
demonstrated our cycle
management expertise
and underwriting
discipline, delivering
robust profitability in
an active loss year.”
are deploying incremental capital
where we see the best risk-adjusted
returns. We are continuing to invest in
our capabilities to support longer-term
growth and efficiency by increasingly
digitising our internal processes and
augmenting our underwriting using AI.
Delivering shareholder returns
Our capital allocation philosophy is
to deploy capital for profitable growth
while maintaining a strong balance
sheet and paying a progressive
dividend. The Group is delivering on
its promise, and we are achieving
high-quality growth, as momentum
in our Retail business accelerates
combined with selective growth in
big-ticket. In 2024, this resulted in
substantial capital generation, an
excellent return on equity of 19.8%
and an estimated BSCR of 225%. The
combination of earnings momentum,
and substantial capital generation from
our big-ticket businesses creates the
flexibility to pursue multiple growth
opportunities and enable a step-up
of our progressive dividend, with the
final dividend per share increasing by
19.6%, as well as an additional special
capital return of $175 million via a share
buyback. This is consistent with our
commitment to return excess capital to
shareholders. These actions reinforce
the Group’s confidence in our strategy
and our ability to capture the significant
opportunity ahead.
People are critical to our success
Our people are the cornerstone of our
business, and I am deeply proud that, for
the third year running, we have sustained
a high employee engagement score
in the 80s. We continue to nurture our
deep internal talent while adding new
expertise throughout the organisation,
including at senior management level.
In Retail, Mary Boyd was appointed
as Hiscox USA Chief Executive Officer
back in June; and in January 2025,
Shali Vasudeva joined as Group Chief
Operations and Technology Officer.
I would also like to take a moment to
remember our late Chair, Jonathan
Bloomer, and his wife Judith who
tragically died during the year. Jonathan’s
deep experience, sharp intellect, and
strong personal values combined with
humour and humility were an asset to the
Group, and something I deeply valued.
He is dearly missed.
Business performance
Hiscox Retail1
Hiscox Retail comprises our retail
businesses around the world: Hiscox
UK, Hiscox Europe, Hiscox USA
and DirectAsia. In this segment, our
entrepreneurial culture, specialist sector
and class of business knowledge,
brand, and market-leading distribution
platforms reinforce our strong market
position in an increasingly digital world.
Hiscox Retail ICWP grew by 5.1% in
constant currency to $2,504.6 million
(2023: $2,357.3 million), improving on
the prior year. This is driven by continued
good growth in Europe and US DPD,
and building momentum in the UK, while
the contraction in US broker is slowing.
Rates in Retail, a less cyclical business,
increased by 2% across our markets, as
inflationary pressures abated.
We are making good progress in brand
and distribution initiatives across all
of our Retail businesses. In 2024, we
won nine new distribution deals in
the UK, signed our first multi-country
deal with a leading digital MGA in
Europe, and onboarded 17 new
digital partners in the USA. Our brand
campaign in the UK won 18 awards
and, more importantly, is contributing
to growth. We also continue to innovate
with technology, having rolled out
artificial intelligence (AI) solutions in
both UK art and private client (APC)
and Irish commercial lines, with more
projects underway. These initiatives
are improving quality, efficiency and
speed of distribution and helping
build growth momentum, which year
on year accelerated to over 7% in the
final quarter.
The Retail insurance service
result of $246.5 million is a 39.0%
increase on prior year, leading to
an undiscounted combined ratio
improvement of 2.8 percentage points
to 93.6% (2023: 96.4%). To achieve this
level of profitability while continuing
to increase investment into growth is
a pleasing result. We will continue to
invest in marketing, technology and
distribution to capture the structural
growth opportunities ahead of us.
Our unique Retail business, specialist
underwriting and investment over recent
years position us well to ensure that all
roads lead to Hiscox for our customers.
Hiscox UK
Hiscox UK provides commercial
insurance, locally traded specialty
insurance, as well as personal lines
cover, including high-value household,
fine art and luxury motor.
Hiscox UK grew ICWP by 5.8% in
constant currency to $864.0 million
(2023: $793.8 million). Momentum
accelerated in the year as the business
continues to benefit from management
actions aimed at reinvigorating
the brand, improving distribution
production, and enhancing customer
service through technology.
Hiscox Retail
2024
$
20231
$
Insurance contract written premium
2,504.6
2,357.3
Net insurance contract written premium
2,296.6
2,187.9
Insurance service result
246.5
177.4
Investment result
200.1
200.2
Profit before tax
298.5
256.0
Combined ratio (%)
88.9
91.8
Undiscounted combined ratio (%)
93.6
96.4
1K&R business written through Syndicate 33 has been transferred from Hiscox USA to
Hiscox London Market. 2023 financials have been restated to report on a consistent basis.
30
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Financial summary
UK APC delivered double-digit growth,
with particularly strong momentum in
the broker channel as we capitalised
on attractive market opportunities. This
was supported by the implementation
of an AI-enhanced new business
automation solution in September. The
new business AI tool, in combination
with our e-trade digital capabilities, has
reduced handling times by up to 40%,
while also allowing for over half of all
personal lines quotes to be processed
automatically, freeing up underwriters
to focus on business development and
writing larger and more complex risks.
Commercial lines growth has been
supported by the successful brand
campaign and nine new broker
distribution deals going live, with
a further seven to launch in 2025.
This supports our confidence
in the sustainability of the UK’s
positive momentum.
The UK brand campaign has been
widely recognised within the UK
marketing and advertising industry
this year, winning 18 separate industry
awards to date for effectiveness,
strategy, creativity and execution.
Importantly, we have seen tangible
benefits from the campaign, with a 46%
increase in branded search and an over
50% increase in click-through rates in
UK Direct. In UK broker, feedback shows
that intermediaries value the quality of
the Hiscox brand on their panel.
Hiscox Europe
Hiscox Europe provides commercial
insurance for micro- to medium-sized
businesses, especially in the growing
technology and non-regulated business
sectors, and personal lines cover
including high-value household, fine
art and classic car.
Hiscox Europe ICWP increased by 7.6%
in constant currency to $656.5 million
(2023: $606.7 million). The business
continues to expand its distribution,
our pan-European partnership with a
leading specialist digital MGA is now live
and a new bancassurance relationship
with one of the largest banks in Iberia
launched in the fourth quarter.
Our technology transformation remains
on track, building scalable infrastructure
across Europe. Germany is fully live
on the core administration system,
and in France, commercial business
is also live on the new system while
work is underway to onboard APC.
We also launched new distribution
portals in France, Germany and Iberia
which provide enhanced self-service
functionality and a better customer
journey, allowing the business to benefit
from an improved quote-to-bind ratio,
more efficient customer interactions,
and greater speed to market of
new propositions.
Hiscox USA1
Hiscox USA focuses on
underwriting commercial risks,
with distribution through brokers,
partners and direct-to-consumer
using a wide range of trading models
– traditional, service centre, portals
and application programming
interfaces (APIs). Our aspiration
is to build America’s leading small
business insurer.
Hiscox USA ICWP increased by 2.5%,
with sustained growth in US DPD offset
by US broker contraction.
US DPD grew by 7.6% to $542.7 million
(2023: $504.4 million). The direct
business grew at a double-digit rate,
while partnerships achieved robust
In 2024, we won nine new distribution
deals in the UK, signed our first
multi‑country deal with a leading
digital MGA in Europe, and onboarded
17 new digital partners in the USA.”
Hiscox Retail
31
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Financial summary
growth, albeit at a lower rate, as the
trend of more moderate flows across
some established partners from the
second and third quarters persisted
into the fourth quarter. The majority of
partners continue to deliver good levels
of growth and we continue to expand
and diversify our network with, 17 new
partners onboarded in 2024.
US broker ICWP decreased by 4.0% to
$378.2 million (2023: $393.8 million). The
contraction is narrowing, with growth
emerging in some of the largest lines. To
accelerate growth, we have launched a
number of initiatives aimed at improving
retention and conversion rates as well
as creating more opportunities for
cross-selling products.
Hiscox Asia
On 18 December 2024, Hiscox
completed the sale of DirectAsia
Thailand. The remainder of the
DirectAsia business is non-core for
the Group.
Hiscox London Market1
Hiscox London Market uses the
global licences, distribution network,
and credit rating of Lloyd’s to insure
clients throughout the world.
Hiscox London Market ICWP of
$1,229.5 million (2023: $1,254.6 million)
declined by 2.0%, reflecting our proactive
cycle management within casualty and
exit from the space market. The drag
from these reduced in the fourth quarter
as the business returned to growth,
driven by attractive market opportunities
in property and crisis management.
Rate increases for the year were 2%,
with cumulative rate increases of 74%
since 2018.
Growth in property has been driven
by commercial lines, where rate has
increased by 8%, partially offset by
flood, following the decision not to
renew a binder. This capacity has
since been fully redeployed and will
earn through over the course of 2025.
Overall, despite increasing competition
leading to some rate softening, market
conditions remain attractive.
Within crisis management, there has
been significant growth in terrorism,
driven by increasing demand and
improving rates. With 57% of our
sabotage and terrorism business
now supported by our AI-enhanced
lead underwriting solution, our team
can spend more time on business
development and underwriting more
complex risks within the market. The
wider roll-out of the tool is progressing
well and we have started to implement
the capabilities in major property with
the aim of launching an AI-enhanced
solution in 2025. The success of our
AI adoption has been recognised
within the market, with the Hiscox/
Google Cloud collaboration winning
‘Excellence in AI’ at the British
Insurance Technology Awards.
Marine, energy and specialty
was impacted by our decision to
reduce our line size in space before
ultimately exiting the class due to
terms and conditions lagging the
evolving nature and complexity of
the risk. In casualty, we continue
to manage the cycle following rate
reductions of 8% in cyber and 9% in
D&O, while using improving rate in
general liability to decrease line size
and reduce exposures.
The undiscounted combined ratio
of 88.6% (2023: 83.7%) marks the
fifth consecutive year that Hiscox
Hiscox London Market
2024
$
20231
$
Insurance contract written premium
1,229.5
1,254.6
Net insurance contract written premium
879.7
918.3
Insurance service result
141.3
178.8
Investment result
113.3
113.6
Profit before tax
215.0
262.7
Combined ratio (%)
83.9
79.1
Undiscounted combined ratio (%)
88.6
83.7
1K&R business written through Syndicate 33 has been transferred from Hiscox USA to
Hiscox London Market. 2023 financials have been restated to report on a consistent basis.
With 57% of our sabotage and
terrorism business now supported by
our AI-enhanced lead underwriting
solution, our team can spend more
time on business development and
underwriting more complex risks
within the market.”
Hiscox London Market
Hear more from Aki on our
2024 full-year results.
32
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London Market has reported an
undiscounted combined ratio in the 80s,
achieved despite the backdrop of an
active loss year, including Hurricanes
Milton and Helene, and a number of
man-made losses.
Hiscox Re & ILS
Hiscox Re & ILS comprises the Group’s
reinsurance businesses in London
and Bermuda and insurance-linked
securities (ILS) activity written through
Hiscox ILS.
Hiscox Re & ILS surpassed the
$1 billion ICWP mark as the business
grew by 4.7% to $1,032.8 million
(2023: $986.3 million). Net ICWP
grew by 11.1% to $499.3 million
(2023: $449.6 million), as the
business deployed additional capital
into attractive market conditions.
Consistent with our strategy, net ICWP
has more than doubled since 2020
as the business has grown into the
hardening market.
The insurance service result of
$165.7 million (2023: $136.1 million)
and an undiscounted combined
ratio of 69.0% (2023: 69.8%) reflect
another year of excellent performance.
Natural catastrophe losses were within
expectations despite a high number of
loss events.
The market remained disciplined
throughout 2024, with attachment
points holding, terms and conditions
stable, and rates broadly flat following
cumulative rate increases of 90% since
2018. January 2025 renewals were
more competitive as capital, typically in
the form of retained earnings, pursued
growth. This has had an impact on
the market, with rates down 8% at
the important 1 January renewals,
although attachment points and terms
and conditions have remained broadly
stable. Market conditions, coming from
the significant highs of 2023 and 2024,
remain attractive and we have deployed
additional capital into the opportunities
that provide the best risk-adjusted
returns for the portfolio.
ILS assets under management (AUM)
as at 1 January 2025 was $1.4 billion
(1 January 2024: $1.6 billion) following
planned capital returns and new
inflows of $460 million. In addition, our
third-party capital strategy benefitted
from growth in outwards quota share
capacity. This third-party capital support,
alongside higher performance fees
following excellent underwriting results
in both 2023 and 2024, has resulted in
record fee income, increasing by 26%
to $128.2 million (2023: $101.7 million),
supporting strong profit delivery and
further enhancing the return on equity.
Claims
For the year, we have set aside
$1.6 billion for (re)insurance claims2,
$117 million more than in 2023 due
to a more active loss environment,
particularly impacting the London
Market business. 2024 was an active
natural catastrophe year, with five
hurricanes making landfall in the USA,
flooding in Spain, Germany and central
Europe, and a number of weather
events in Canada. Natural catastrophe
losses were within expectations, with a
reduction in our initial loss estimate from
Hurricane Milton offset by an increase in
the amounts reserved for certain other
2024 loss events.
In addition, there were a number of
man‑made losses that affected our
big‑ticket business in 2024. These
included a net loss of $28 million from
the MV Dali collision in Baltimore and a
number of small- to mid-size events.
The start of 2025 saw several wildfires
impact the Greater Los Angeles
area, causing a tragic loss of life and
widespread destruction. We extend our
sympathies to our customers and to all
of those impacted by these events.
The Group estimates a net loss from
the wildfires of around $170 million,
at an industry loss of $40 billion. This
event is largely a reinsurance loss with
$150 million expected to be recognised in
Hiscox Re & ILS, and $10 million in each
of Hiscox London Market and Hiscox
Retail. Our estimate, which will be booked
in the first quarter of 2025, includes
reinstatement premiums and does not
make any allowance for subrogation.
Hiscox exists to support our customers
at times like this and we firmly believe
that a high-quality claims service
is essential to help them get back
on their feet as quickly as possible.
We continually monitor our claims
performance through a range of
metrics and targets including our
Retail claims transactional net
promoter score (Retail claims NPS)3.
In 2024, the Group achieved an
exceptional Retail claims NPS of 72%,
a three percentage point improvement
on the already excellent result in 2023.
Strong foundations
Reserves
We have a conservative reserving
philosophy that has consistently
produced positive reserve development
Consistent with our strategy, net
ICWP has more than doubled since
2020 as the business has grown into
the hardening market.”
Hiscox Re & ILS
Hiscox Re & ILS
2024
$
2023
$
Insurance contract written premium
1,032.8
986.3
Net insurance contract written premium
499.3
449.6
Insurance service result
165.7
136.1
Investment result
70.5
70.6
Profit before tax
267.5
221.4
Combined ratio (%)
65.7
68.3
Undiscounted combined ratio (%)
69.0
69.8
2Undiscounted 2024 accident year estimate
of ultimate claims cost, net of reinsurance.
3As measured by an independent third
party across the UK, Europe and US
Retail businesses.
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S&P
Hiscox
integrated
capital model
(economic)
Hiscox
integrated
capital model
(regulatory)
$3.46 billion available capital
Economic
Regulatory
Bermuda
enhanced
solvency
capital
requirement
over a long period of time. In 2024,
net reserve releases were again
broad‑based, from multiple vintages
and classes of business, aggregating
to $145.5 million (2023: $122.8 million).
As at 31 December 2024, the Group’s
net reserves were at the 83% confidence
level (2023: 83%) with a risk adjustment
above best estimate of $267.5 million4
(2023: $272.9 million4).
Hiscox continues to benefit from
legacy portfolio transfers (LPTs)
which protect the Group from
inflationary and other pressures
for 37% of gross casualty
reserves for 2019 and prior years.
Where appropriate, we will pursue
similar transactions to manage
volatility and optimise capital.
The Group’s January 2025 outwards
reinsurance placements benefitted
from our recent strong underwriting
results and ongoing quality of the
book, resulting in a favourable
outcome for the overall renewal
programme. Against this backdrop,
the Group took the opportunity to
improve capital efficiency and reduce
exposure to extreme North America
earthquake and windstorm events,
issuing a $200 million catastrophe
bond in February 2025 to complement
the $125 million catastrophe bond
issued in December 2023. The capital
benefit of the new catastrophe bond
is not included in the BSCR ratio as at
31 December 2024.
Capital
The Group remains well capitalised,
with an estimated BSCR ratio of 225%
at 31 December 2024. Our diversified
Our diversified business model and
the growing contribution of earnings
from our Retail business creates
the flexibility to pursue an ambitious
growth agenda and to step-up our
progressive dividend.”
Capital
Projected capital requirement
Rating agency and BSCR assessments shown are internal Hiscox assessments of the capital
requirements based on year-end 2024. Hiscox uses the internally developed Hiscox integrated
capital model to assess its own capital needs on both a trading (economic) and purely regulatory
basis. All capital requirements have been normalised with respect to variations in the allowable
capital in each assessment for comparison to a consistent available capital figure. The available
capital figure basis is reflective of IFRS 17 and comprises net tangible assets and subordinated
debt. Benefit of IFRS 17 discounting is allowed for within the internal capital model position.
4Allows for the reclassification of LPT recoveries
into claims.
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2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020† 2021
2022‡
2023§
2024
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Hiscox Retail
Hiscox London Market, Hiscox Re & ILS
1,494
1,482
2,072
2,397
2,123
2,254
2,215
2,326
2,481
2,656
2,894
2,973
3,258
3,286
3,777
4,031
4,033
4,269
4,355
2004
4,598
4,767
Total Group insurance contract written premium*
($m)
Big-ticket business
Hiscox Re & ILS
Hiscox London Market
Retail business
Hiscox UK
Hiscox Europe
Hiscox Special Risks
Hiscox USA
Hiscox Asia
*Historic amounts have not been restated for
IFRS 17 but are presented as gross written
premiums on an our-share basis.
†2020 restated for Hiscox Special Risks.
‡2022 restated for IFRS 17.
§2023 restated for kidnap and ransom transfer
from Hiscox USA to Hiscox London Market.
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business model – with very strong
performance in big-ticket and a growing
contribution of earnings from our Retail
business – creates the flexibility to
pursue an ambitious growth agenda
and to step-up our progressive
dividend with a final ordinary dividend
of 29.9 cents per share, an increase of
19.6% from 2023.
The record date for the dividend will
be 25 April 2025 and the payment
date will be 9 June 2025. The Board
proposes to offer a Scrip alternative,
under the terms and conditions of the
Group’s 2025 Scrip Dividend Scheme,
which will be made available when the
AGM notice is published and will be
subject to shareholder approval at the
AGM. The last date for receipt of Scrip
elections will be 19 May 2025 and the
reference price will be announced on
28 May 2025.
The strong results achieved in 2024,
with an excellent ROE and significant
capital generation, allow for another
special capital return of $175 million
to shareholders, by means of a
share buyback, consistent with our
commitment to return excess capital
to investors. Our total capital return is
equivalent to 16 percentage points of
the 2024 year-end BSCR ratio.
Following updated guidance from the
Bermuda Monetary Authority, the Group
has included 20% of the value of the
$155 million DTA relating to Bermuda
corporate income tax in the 2024
estimated BSCR. Previously none of
this DTA was recognised within capital.
The Group’s estimated pro-forma
BSCR, adjusted for the impact of
the year‑end capital returns and the
California wildfires, is 198%5, well in
excess of the level required for the
S&P ‘A’ rating. This would remain
the case even following an extreme
stress scenario.
Liquidity
The Group, at the holding company
level, continues to retain a significant
level of liquidity, with fungible assets
in excess of $1 billion, comprised of
liquid assets and undrawn borrowing
facilities. A full-year 2024 leverage6 for
the Group on a pro-forma basis post
share buyback of $175 million is 15.7%,
comfortably within the range that the
Group chooses to operate in.
Investments
The investment result for the year was
$383.9 million (2023: $384.4 million),
or a return of 4.8% (2023: 5.2%). Group
invested assets as at 31 December 2024
were $8.2 billion (2023: $8.0 billion).
Despite geopolitical uncertainty,
economic growth was resilient (although
slowing), and inflation stabilised at,
or near to, policy targets for many
developed markets, so central banks
continued to cut rates in the fourth
quarter. Against this background, US
treasury yields ended the year close to
where they started, although tightening
credit spreads drove bond yields down,
resulting in an improved performance in
the second half of the year.
Returns from coupons, cash and
cash equivalents have continued to
grow, as higher yields have earned
through. At 31 December 2024, the
Group’s bond portfolio reinvestment
yield was 4.6% and a duration of
1.8 years. The bond portfolio remains
conservatively positioned, with an
average credit rating of ‘A’. We have
modestly increased the allocation
to private credit funds in the year to
diversify the portfolio and incrementally
add more stable returns.
Tax
Bermuda’s Corporate Income Tax (BCIT)
came into effect on 1 January 2025, with
a 15% tax rate applicable. In anticipation
of this, the Group recognised a DTA of
$155 million which would mitigate the
cash tax impact over ten years.
On 15 January 2025, the OECD
published guidance, advising that 80%
of the DTA granted under the BCIT will
not be recognised for calculating global
minimum tax (GMT). As a result, the
Group is likely to be obligated to pay
additional tax of up to 80% of the DTA,
spread over eight years, from 2027.
Under current IFRS requirements, the
Bermuda DTA must be maintained while
it provides a tax benefit in Bermuda, but
no offsetting deferred tax liability can be
recognised in anticipation of future GMT
payable (instead this will be booked as
current tax on an arising basis).
The introduction of BCIT and GMT
is expected to increase the Group’s
effective tax rate to a range of 15%-20%.
Outlook
Over the last 20 years, our Retail
business has grown fivefold organically,
to over $2.5 billion of premium in 2024,
yet the structural growth opportunity
ahead remains immense. The
expectation of long-term, compounding
growth in all of our Retail markets is
unchanged. Our strategy is based on
our entrepreneurial business-building
5Does not include expected capital
generation in 2025.
6Leverage defined as borrowings over
borrowings and shareholder equity.
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We were all deeply shocked
and saddened by the sudden
and tragic death of our Chair,
Jonathan Bloomer and his
wife Judy, in the sinking of the
Bayesian off the coast of Sicily
on 19 August 2024.
Jonathan began his career at
Arthur Andersen, becoming
a Partner during his tenure.
In 1995, he joined FTSE 100
insurer, Prudential plc, initially
as Chief Financial Officer,
and subsequently became
Chief Executive Officer from
2000 to 2005. From 2006 to
2012, Jonathan took on the
role of Operating Partner at
Cerberus Capital Management,
the US private equity and
alternative investor.
From 2012 onwards, following
over 25 years in executive
roles across financial services,
Jonathan pursued a highly
successful portfolio career
with a range of largely financial
services companies, and
became a seasoned board
director. This included
non‑executive roles as Chair of
Morgan Stanley International,
DWF Group plc, SDL Group
Holdings Limited and Arrow
Global Group, Senior Independent
Director at Hargreaves Lansdown
plc, Audit Committee Chair of
Autonomy Systems and, from
2023, Chair of Hiscox.
During his time with us, we
benefitted immensely from
Jonathan’s generosity and
wisdom. Jonathan was widely
recognised for his deep
experience across our industry
and in the broader business
arena which, combined with
his personal values, made him
both an excellent Chair of our
business and a person we were
proud to know and work with.
Jonathan was as passionate
about giving back as he was about
business, having served as Trustee
and Honorary Treasurer at the
NSPCC, and received an MBE for
voluntary services to children and
young people in 2017. At Hiscox,
he chaired our charitable trust, the
Hiscox Foundation.
His advice and support were
immensely valuable to many,
both at Hiscox and beyond.
He is dearly missed.
IN MEMORY OF
JONATHAN BLOOMER
1954-2024
culture, our specialist underwriting,
brand strength and use of technology
to provide superb products to our
customers while reducing friction
and costs in the process. This allows
Hiscox to capitalise on societal trends,
including increasing digital adoption,
strong new business formation, and
the emergence of new professions
and risks.
In recent years we materially improved
our Retail platform, we have added new
leadership, reinvigorated our brand,
re-platformed our technology, expanded
our distribution and materially added
to our capabilities. All of these are
leading to positive momentum in growth
and high-quality earnings. I, along
with the leaders of each of the Retail
businesses, look forward to providing
more detail on how we will capture the
significant growth opportunity ahead at
our Retail‑focused capital markets day
in May.
In 2025, I expect positive momentum
to continue building while maintaining
underwriting discipline, with Hiscox
Retail growth of above 6% in constant
currency. Hiscox London Market is
expected to return to growth, given
favourable market conditions, as we
benefit from new product launches
and as the one-off impacts of the 2024
binder non-renewal recede. In Hiscox
Re & ILS, the Group will continue to
deploy incremental capital into the
attractive market conditions, including
some non‑catastrophe lines.
Aki Hussain
Group Chief Executive Officer
26 February 2025
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STATES
OF
PLAY
Mary Boyd, Chief Executive Officer
of Hiscox USA, on the schoolbook
that changed her life, the importance
of building retail capabilities, and
the competitive nature of the small
business insurance sector.
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Hiscox Ltd Report and Accounts 2024
Q: What inspired you
to build a career in the
insurance industry?
A: I double-majored in applied
maths and economics and
began my career as an
actuarial trainee, but the
story of how I discovered the
actuarial profession goes all
the way back to high school.
I got this assignment, ‘what
do you want to be when you
grow up?’. So I went to the
library, opened a book about
careers and started at ‘A’.
First up was ‘accountant’,
and I absolutely didn’t want to
be an accountant, but then I
saw ‘actuary’. It said: “These
individuals apply math to
solve business problems. For
insurance companies, they
set the price of products.
Senior actuaries can even go
on to lead companies.” That
really stood out to me and
sounded appealing.
Q: What was your
impression of Hiscox
before you joined?
A: Hiscox had long ago
earned my respect for its
underwriting excellence,
creativity and longevity
– especially its 100-year
heritage at Lloyd’s. When I
was at ACE as the President
of the Private Risk Services
(high net worth personal
insurance) division, and we
expanded our products
into the UK, Hiscox was
the form I studied as a new
entrant in that space, so
I have respected Hiscox
enormously for quite
some time.
Q: And now you’re here,
how would you sum up
the business?
A: The thing that strikes
me most is the size of the
opportunity for us – it’s
enormous. There is so
much market share for us
still to capture in the small
business space, and so much
potential. We have work to do
and investments we will make
in strategic capabilities to
fully realise that opportunity,
but as one part of a larger
business we have both the
global strength of the Hiscox
Group and the local focus
of the US division to go for
growth and that’s exciting.
Q: Tell us more about the
capabilities you think need
to be developed. What
are they?
A: Our ambition has always
been to build America’s
leading small business
insurer. To achieve that, we
will bolster our capabilities
rooted in applying data
and analytics to product
manufacturing, intuitive user
Mary Boyd joined us as Chief
Executive Officer of Hiscox USA
in June 2024. A US national, Mary
came to Hiscox from Plymouth
Rock Assurance, a leading home
and auto insurance provider, whose
independent agency business
she had run since 2018. Having
built her career in US insurance,
Mary has extensive experience
of growing, transforming and
innovating businesses in this market.
18
Number of years we’ve been
providing specialist products
for small- and medium-sized
businesses in the USA.
49
Number of US states we
currently operate in.
33m
Huge market opportunity,
with over 33 million small
businesses in the USA.
Key stats
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The benefit we have is
that Hiscox USA was
a first‑mover in digital
experiences, automated
underwriting and quoting,
and that gives us a real
advantage; but we cannot
rest on our laurels which is
why we continue to build
our next‑level capabilities.”
experiences, and highly
scalable and sophisticated
underwriting – connecting
the components of deals
and distribution in a way
that’s going to get value out
of our business and create
advantage. At Hiscox, we
call that ‘retail’, an execution
capability I’ve developed a
deep and wide experience of
over the course of my career.
Aki puts it very well when he
says “Retail is detail”. When a
classically trained underwriter
assesses a piece of business,
they try to understand the
client, the geography, the
exposure, the usage, the
source of the business, so
that they can understand the
quality of the various risks.
For product manufacturing,
we do the same thing for
millions of different data
points at the same time,
looking for the patterns
and trends in the data, then
aligning them to develop the
right price to properly insure
that customer’s risk.
The benefit we have is that
Hiscox USA was a first‑mover
in digital experiences,
automated underwriting
and quoting, and that gives
us a real advantage; but we
cannot rest on our laurels
which is why we continue
to build our next‑level
capabilities. That use of
data and tech is not specific
to our US operations, so
we benefit from the fact
that each of our business
units also experiments
and innovates locally, then
can compare and share
learnings with each other.
This happens at all levels in
the organisation including,
of course, at the Group
Executive Committee which
I am part of, and I find that
kind of knowledge‑sharing
truly valuable.
Q: Does investment
in those analytical
capabilities have an impact
on business through
partners and brokers
as well as the direct and
digital channels?
A: Actually, it does. It has
a significant impact. Every
one of the agencies and
brokers out there today in
the small business space
has its own website.
They’re all doing business
electronically, they probably
already have quoting on
their websites for personal
insurance, and they’ll try
to extend that to getting
quotes or service requests
for the simpler commercial
business. The investments
we have made, and
continue to make, mean
we can offer our partners
and brokers the seamless
service they expect.
Q: In such a vast,
competitive marketplace
how can you ensure the
Hiscox brand punches
above its weight?
A: We think about this a lot
and we do a considerable
amount for a brand of our
size. Right now we trade
through brokers, partners
and direct-to-consumer
and we want customers
to be able to access us in
a way that works for them.
So that means traditional
ways of trading, as well as
through our service centres,
portals and via application
programming interfaces
or APIs.
Q: How would you
summarise life at Hiscox?
A: It’s fun, it’s fast-paced and,
because it’s so supportive,
there’s a palpable sense of
community. The insurance
business can be complex and
challenging but what I see
here is a lot of collaboration,
a lot of energy, to solve any
challenges together. That’s
the strength of the Group
again – there’s always
someone, somewhere,
who’s been there and done
that and that’s where the
power of knowledge-sharing
comes back in. We’re not
immune to challenges but
when there’s a problem,
we call it out, because
in conquering it we get
stronger. We work together
on it and, when doing it that
way, we win together every
single time. That gives us
the energy and confidence
to get to the next problem.
Our teams have always
risen to the occasion when
given a challenge. Not once
have they shrunk away
from it. The folks we have
here are smart, they’re
hardworking, they care about
our mission, they’re willing
to be creative, and they’re
fearless. It’s inspiring.
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Seeing the bigger picture
Risk strategy
Our robust risk strategy positions us to
capture the upside of the risks we pursue
and effectively manage the downside of
the risks to which we are exposed. It is
based on three key principles:
dwe maintain underwriting discipline;
dwe seek balance and diversification
through the underwriting cycle;
dwe are transparent in our
approach to risk, which allows us
to continually improve awareness
and hone our response.
Risk management framework
The Group takes an enterprise-wide
approach to managing risk. The risk
management framework provides
a controlled system for identifying,
measuring, managing, monitoring
and reporting risk across the Group.
The framework includes coverage of
strategic, insurance, market, credit and
operational risks. It supports innovative
and disciplined underwriting across many
different classes of insurance by guiding
our appetite and tolerance for risk.
Exposures are monitored and evaluated
both within the business units and at
Group level to assess the overall level
of risk being taken and the mitigation
approaches being used. We consider
how different exposures and risk
types interact, and whether these may
result in correlations, concentrations
or dependencies. The objective is to
optimise risk-return decision-making
while managing total exposure, and in
doing so remain within the parameters
set by the Board.
The risk management framework
is underpinned by a system of
internal control, which provides a
proportionate and consistent system
for designing, implementing, operating
Risk management
Our core business is
to take risk where it is
adequately rewarded
to meet shareholders’
expectations, and
our success is
dependent on how
well we understand
and manage our
exposures to key risks.
Fabrice Brossart
Group Chief Risk Officer
Owns risk and controls
Responsible for ownership
and management of risks on a
day‑to‑day basis.
Consists of everyone at every level
in the organisation, as all have
responsibility for risk management
at an operational level.
Assesses, challenges and advises
on risk objectively
Provides independent oversight,
challenge and support to the first line
of defence.
Consists of the Group risk team and
the compliance team.
Provides independent assurance of
risk control
Provides independent assurance to the
Board that risks are being managed in
line with approved policies, appetite,
frameworks and processes, and helps
verify that the system of internal control
is effective.
Consists of the internal audit function.
Three lines of defence
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ORSA
documentation
Business
planning
Risk
assessment
Capital and
solvency
assessment
Assurance
Risk
measurement
Risk
mitigation
Risk
monitoring
Risk
reporting
Risk
definition
Risk
owner
Risk
appetite
and assessing the controls that
manage our key risks. This framework
is regularly reviewed and enhanced
to reflect evolving practice in risk
management and governance. During
2024, we have continued to maintain
and further strengthen our system of
internal control including through the
implementation of a new governance,
risk and controls tool.
Risk appetite
The risk appetite sets out the nature and
degree of risk the Group is prepared to
take to meet its strategic objectives and
business plan. It forms the basis of our
exposure management and is monitored
throughout the year.
Our risk appetite is set out in risk
appetite statements, which outline the
level of risk we are willing to assume,
both by type and at an aggregate level.
Risk appetites, which are set for the
Group as a whole and for each of
our insurance carriers, are reviewed
annually, enabling us to respond to
internal and external factors such as
the growth or reduction of an area
of the business, or changes in the
underwriting cycle that may have an
impact on capacity and rates.
Risk management across the business
The Group coordinates risk management
roles and responsibilities across three
lines of defence. These are set out in
the model on page 42. We now have
Chief Risk Officers in place for each
of our business units, and risk is also
overseen and managed by formal and
informal committees and working
groups across the first and second lines
of defence. These focus on specific risks
such as catastrophe, cyber, casualty,
sustainability, reserving, technology,
investments and credit, as well as
emerging risks. The Group Risk and
Capital Committee and the Group
Underwriting Review Committee are
sub-committees of the Risk Committee
of the Board and make wider decisions
on risk. More information on these
Committees can be found on pages
81 to 82.
The Own Risk and Solvency
Assessment (ORSA) process
The Group’s ORSA process involves
a self-assessment of the risk
mitigation and capital resources
needed to achieve the strategic
objectives of the Group and relevant
insurance carriers on a current
and forward-looking basis, while
remaining solvent, given their risk
profiles. The annual process includes
multi-disciplinary teams from across the
business, such as capital, finance and
business planning.
The role of the Board in
risk management
The Board is at the heart of risk
governance and is responsible for setting
the Group’s risk strategy and appetite,
Risk management framework
Understanding and managing the
significant exposures we face.
Hiscox Own Risk and Solvency
Assessment (ORSA) framework
The Group’s ORSA process is an
evolution of its long-standing risk
management and capital
assessment processes.
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and for overseeing risk management
including the risk management
framework. The Risk Committee of
the Board advises on how best to
manage the Group’s risk profile by
reviewing the effectiveness of risk
management activities and monitoring
the Group’s risk exposures, to inform
Board decisions. More information on
the Risk Committee can be found on
pages 114 to 115.
The role of the Group risk team in
risk management
The Group risk team is responsible
for designing and overseeing the
implementation and continual
improvement of the risk management
framework. The team is led by
the Group Chief Risk Officer who
reports to the Group Chief Executive
Officer and the Risk Committee of
the Board.
The team works with the first-line
business units and transversal
functions to understand how they
manage risks and whether they need
to make changes in their approach.
It is also responsible for monitoring
how the business goes about meeting
regulatory expectations around
enterprise risk management.
The second-line Group risk and
compliance function is organised
into dedicated business unit and
Group‑level teams, providing proximity
to the business while enabling the
provision of critical challenge to the
business and ensuring robust risk
management oversight.
As the use of AI at Hiscox
grows in scale and
sophistication, 2024
saw the adoption of a
set of processes and
controls designed to
clarify the Group’s
approach to this
rapidly evolving
technology. “Our brief
was to create a solid
governance framework
that meets our regulators’
expectations but isn’t so
rigid that it stifles innovation,”
says Charlotte Paterson,
Chief Risk Officer for Hiscox
London Market.
The new AI standard is built
on four distinct pillars. “The
first covers governance
including responsible use of
AI: aligning with regulation,
avoiding biases, checking
the input relative to the
output,” explains Charlotte.
The second pillar is risk and
control. “We systematically
work through all the main
risk categories and ask:
what could go wrong? and
how would we mitigate
those risks?”
The third relates to model
oversight, which is key
given the speed of change
surrounding AI. “We’ve done
a huge amount of testing
for the models that are in
play today, but as those are
replaced, what do we do?
How do we make sure that
Risk
management
in action:
creating an
AI governance
and oversight
framework
Charlotte Paterson
Chief Risk Officer
Hiscox London Market
version 2.0 delivers the same
quality of outcomes?”
The final piece is about
people and culture. AI has
the potential to radically
alter working patterns.
“How do people respond
to that? How does it
change our performance
management, training and
skills? Is there a risk that
people become overly
reliant on these tools? And
what happens if it all breaks
down and we suddenly need
to go back to a previous way
of working?”
The Group’s new AI
governance and oversight
framework will evolve in
line with technology and
regulation, but for now it
is supporting a number
of AI use cases across
the business.
For more on our use of AI,
see pages 48 to 51.
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Financial summary
Casualty extreme loss scenarios
As our casualty businesses continue to grow, we develop extreme loss scenarios to better understand and manage the
associated risks. Losses in the region of $75‑$950 million could be suffered in the following extreme scenarios:
Event
Estimated loss
Multi-year loss ratio deterioration
5% deterioration on three years’ casualty premiums
$255m
Economic collapse
An event more extreme than witnessed since World War II*
$460m
Casualty reserve deterioration
Estimated 1:200 view of a casualty reserve deterioration on
current reserves of c.$2.6bn
$950m
Pandemic
Global pandemic considering broader and alternative
impacts than Covid-19
$115m
Cyber
A 1:200 cyber event, such as a major cloud outage or mass
ransomware attack. Includes exposures from outside the
cyber product line†
$425m
Marine scenarios
Range of events covering collision and sinking of vessels and
any resultant pollution
up to $75m
Offshore platform
Total loss to a major offshore platform complex
up to $100m
Terrorism
Aircraft strike terror attack in a major city
up to $350m
Property catastrophe‡
1-in-200 year catastrophe event from $300bn US windstorm
$700m
*Losses spread over multiple years.
†Losses incurred from non-cyber product lines from a cyber event.
‡As a point of comparison.
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1000
900
800
700
600
500
400
300
200
100
0
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
02
04
08
02
49
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
05
07
16
09
94
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
12
13
26
25
161
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
20
19
34
50 234
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
33
27
44
88
326
Industry loss return
period and peril
5–10 year
10–25 year
25–50 year
50–100 year
100–250 year
Mean industry loss $bn
Superstorm Sandy – $20bn market loss
7-year return period
Hurricane Katrina – $50bn market loss
21-year return period
1987 J – $10bn market loss
15-year return period
Loma Prieta Quake – $6bn market loss
15-year return period
Northridge Quake – $24bn market loss
40-year return period
2011 Tohoku Quake – $25bn market loss
45-year return period
Hurricane Andrew – $56bn market loss
25-year return period
Hiscox Ltd net loss ($m)
Upper 95%/lower 5%
Modelled mean loss
Property extreme loss scenarios
Boxplot and whisker diagram of modelled Hiscox Ltd net loss ($m) January 2025.
Stress tests and reverse stress tests are regularly performed and reported on to the Risk Committee of the Board.
These include climate-related scenarios such as those shown in the chart below.
This chart shows a modelled range of net loss the Group might expect from any one catastrophe event.
The white on the red bars depicts the modelled mean loss.
The return period is the frequency at which an industry insured loss of a certain amount or greater is likely to occur.
For example, an event with a return period of 20 years would be expected to occur on average five times in 100 years.
JP EQ – Japanese earthquake
JP WS – Japanese windstorm
EU WS – European windstorm
US EQ – United States earthquake
US WS – United States windstorm
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Financial summary
46
Hiscox Ltd Report and Accounts 2024
Subject to already holding a relevant Hiscox policy, and subject to policy eligibility, terms and conditions.
INTELLIGENT
INSURANCE
How Hiscox is using technology and data
to differentiate its offering.
The inexorable rise of artificial
intelligence (AI) is one of the
hot topics of our time. And
according to Chris Loake,
Group Chief Information
Officer at Hiscox, the next
step in its evolution will be
thanks to the sheer breadth
of its adoption. “AI will be in
everything,” he says. “We
won’t even distinguish it as
a separate technology.”
For Hiscox, this means
technology working hand
in glove with humans.
“The nexus of human and
AI interaction is where we
see the future world of
work. Fundamental roles
will remain the same, but
with everything sped up –
supercharged by technology.”
That journey is already
well underway at Hiscox.
“We have a unique set of
strengths and AI technology
gives us the chance to double
down on them,” says Chris.
“We’re looking for things
that strengthen our risk
selection, improve customer
experiences, and make us
faster and more efficient.”
The most ambitious of
these projects so far has
been in Hiscox London
Market, thanks to the
creation – in collaboration
with Google Cloud – of
the first AI‑enhanced lead
underwriting model in the
London Market.
“The upfront challenge was
a simple one: how could we
integrate generative AI into
the big-ticket underwriting
process so that some of our
underwriters’ valuable time
could be liberated for more
productive, less painstaking
tasks,” says Melissa Dudley,
a Product Manager within
Hiscox London Market and
part of the core project team.
“We’d been thinking about
this for a while when Google
approached us about working
with their Google Cloud
technologies. We decided
to do a ten-week proof of
concept to see what we
could do together. It was
fun, it was experimental, and
it worked even better than
we anticipated.”
A combined team of
underwriters, risk and
technology experts from
both companies created a
system capable of analysing
a broker’s request, assessing
the risk, calculating a price,
and generating an email
back to the broker, ready for
the underwriter to review.
The entire process, which
went live last August after
extensive testing, reduced
the average time to quote
from several days to just a
few minutes.
Laying the foundations
According to Melissa, that’s
just the beginning. As well
as having an immediate
impact on the working
patterns of underwriters,
the Google Cloud project
is “laying the foundation”
for future developments.
“Prompting a large language
model is incredibly complex
– it really is an artform,” she
explains. “We started with
our sabotage and terrorism
lines, but over time we’ll layer
on more capabilities, quote
more risks, and move onto
other, more complex lines
of business. The potential
to create a more efficient
augmented underwriting
process and better customer
service – all by freeing up our
experts to do what they do
best – is immense.”
It’s a similar story in Hiscox
UK, where the introduction
of an AI-powered new
business automation solution
– combined with existing
digital trading capabilities – is
reducing quote handling times
by up to 40% by automating
data extraction and large
parts of the quote process.
Brokers are responded to
quicker, and underwriters
spend less time declining
out‑of-appetite submissions
and more time on larger or
more complex risks.
There are other efficiencies
too, and the UK team has
also been busy turning all
of its knowledge bases and
underwriting guides into
a generative AI-powered
digital assistant that
colleagues can use to quickly
problem-solve. It’s a process
that’s begun in the UK, but is
likely to be replicated in other
areas over time.
Elsewhere in the business,
the Hiscox Europe
technology team has
been experimenting with
Microsoft’s Open AI platform.
“We started with a question:
what are the activities where
true automation can both
improve the productivity of
our underwriters and claims
managers, and reduce our
expense ratio?” says Gonçalo
Carvalho, Chief Technology
Officer of Hiscox Europe.
The European team’s two use
cases – one for underwriting,
one for claims – presented
a lower level of complexity
than the London Market
project, but with the same
overarching aim: automating
and accelerating the analysis
of information received from
customers or brokers, but this
time within the retail business.
While the underwriting use
case focuses on automating
more of the process
to quote, driving faster
response times and freeing
up underwriter time for more
complex cases, the claims use
case focuses on streamlining
claims handling protocols –
getting to a coverage decision
quicker and ultimately paying
claims even faster.
The underwriting and claims
proofs of concept, which are
being tested in Ireland and
Spain respectively, are set
to go live in 2025. “Training
the models, seeing how
they react to the inputs,
increasing the guardrails
– we’ve worked through all
of this on our journey over
the past few months. We
asked ourselves, how do we
improve the results? How do
we protect the model from
hallucination?” Gonçalo
says. He also touches on a
broader lesson: “We started
with the idea that AI will solve
all these problems. But what
we learned throughout the
process is that AI alone isn’t
the answer – it is the mix of
technologies that creates
the solution.”
Adaptable to change
This echoes a point that
Chris makes when outlining
the Group’s evolving
technology strategy. “Our
strategy can’t all be about
groundbreaking new tech,”
says Chris. “It’s about how
we develop our architecture,
how we use the things that
already exist. Everything
has to be more flexible and
adaptable to change if we’re
going to have the agility
needed to deliver these
new solutions.”
It’s a challenge that holds
particular pertinence to
Gonçalo and his team.
Hiscox Europe has a
dedicated presence in seven
different countries, and it is
crucial to maintain the unique
character of each country’s
offering without inhibiting the
flow of ideas and innovation
across borders.
Striking the balance
between global innovation
and consistency, and
local expertise, is one of
the reasons why Hiscox
expanded its Lisbon Tech
Hub, a global technology
centre of excellence, in
2024. The concentration
of technological expertise
in Lisbon enhances
the coordination and
momentum of change
across the whole Group in
support of a relentless drive
to deliver leading‑edge
customer service and
broker experience. 2024
saw the creation of 60
new data and technology
roles across software
engineering, software quality,
cloud management, data
engineering, data science,
and cyber security.
Hiscox has, of course,
been generating, sourcing
and interrogating vast
quantities of data for
decades – such analysis
is central to all insurance
underwriting and claims
management – but the insurer
now sees an opportunity
for data to become a true
‘business differentiator’.
As Shali Vasudeva,
the Group’s new Chief
Operations and Technology
Officer, explains: “The
reality is that delivering on
our strategic objectives
requires us to have the right
data, be able to generate
the right insights, and have
the capacity to act on
those insights.
“We have a Group-wide
data and analytics strategy
to drive business value and
accelerate growth. As part
of that, we’re investing in
modern data platforms
and data management
capabilities to make sure
we’re ready to take advantage
of the full potential AI offers.
This strategy, combined
with our state-of-the-art
data platforms and deep
We started with the idea that
AI will solve all these problems.
But what we learned
throughout the process is
that AI alone isn’t the answer
– it is the mix of technologies
that creates the solution.”
Gonçalo Carvalho
Chief Technology Officer
Hiscox Europe
AI will be in everything. We
won’t even distinguish it as
a separate technology.”
Chris Loake
Group Chief
Information Officer
The intent is to increase the
pace of innovation while
shortening implementation
times for our data science
use cases, of which there
are many.”
Catherine Frost
Chief Operations Officer
Hiscox UK
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Financial summary
partnerships with global
leaders in AI, mean we can
experiment at scale, rapidly
learn what works, and
build reusable AI-powered
solutions with the potential
to benefit multiple parts of
the business.”
A good example of this
thinking is in Hiscox UK
where, over the last 18
months, the team has built
and tested a new single data
platform that brings together
customer, broker, policy and
operational data from across
the UK business in a cohesive
and consumable way. It’s
an approach that’s already
providing colleagues with
access to much richer data
and insights, with plans to
include more data sources
in 2025.
“The intent,” says Catherine
Frost, Hiscox UK Chief
Operations Officer, “is
to increase the pace of
innovation while shortening
implementation times for our
data science use cases, of
which there are many.”
By coordinating the
development and
deployment of our data,
analytics and AI capabilities
across the Group, Hiscox
aims to mature the technical
capabilities of the Group’s
data platforms, increase the
volume of data available, and
expand its usage. But that’s
not all. While standardising
the strategic approach
to data, the Group is also
looking to devolve much of
the operational responsibility
and increase the depth
and breadth of data skills
across the business. “We’re
moving towards what we
call ‘self-service’ – putting
the power of our data and
analytics into the hands of
the people who use it on
a day-to-day basis,” Shali
says. “Instead of relying on a
team to generate reports or
insight for you, and refresh
it every time you need an
update, we will give more of
our people the capabilities
to do it themselves.”
Shali reiterates the importance
of identifying the right use
cases for the application of
AI to solve specific business
problems. But that also
requires the simultaneous
development of architecture
that will enable those solutions
to be propagated in a faster,
more efficient, and more
standardised way. “Once we
solve a problem in one part
of the business, either the
whole solution or components
of that solution will become
available to everyone
else across the Group, or
we use the components
as building blocks for
something bigger, more
complex, and more valuable.”
Having systematically
identified, validated and
prioritised a wide range of
AI use cases across all parts of
the business in 2024, from
finance to underwriting to
claims, a further portfolio of
AI-enabled Hiscox business
solutions will be developed
and rolled out in 2025.
“We’re as thoughtful about
what we don’t do as what
we do develop,” Chris says.
“We want to be close to the
leading edge, but not so far
ahead that we’re wasting time
on areas that the product
vendors are ultimately going
to innovate for us. There’s
no point building expensive
workarounds to problems
that will soon disappear.”
He illustrates this with a
story from the start of the
London Market project,
when the context window of
the AI model – the amount
of text it was able to receive
as a single input – was too
small. “We had to do what’s
called ‘semantic chunking’,
where you break the data
out into different blocks, and
that took time, but the latest
versions of the AI models
have larger context windows.”
Close relationships
Finding the optimal pace
of innovation has been
significantly helped by the
close relationships Hiscox
has nurtured with global
tech and AI leaders.
“We’re building very deep
technology partnerships,
to the extent that I
think we actually have
relatively unparalleled
access to highly
specialist skills and
thought leadership,
as well as the ability to
influence their product
roadmaps and prioritisation
of future capabilities to suit
our needs and those of our
customers,” says Shali.
These technology
partnerships are
complemented by a drumbeat
of quieter progress with
foundational AI capabilities
across the business. “We
provide people with the tech
so we can see what they
can do with it,” Chris says.
“Great ideas can come from
anywhere in the organisation.”
During 2024, this included
1,000 users in different
parts of the business trialling
Microsoft Copilot, the AI
‘companion’ integrated within
the Microsoft 365 suite. “We
gave them the tech and the
training and said: ‘Go and
use this in your day-to-day
lives and if you find something
cool you can do with it, we’ll
share it.’ We’re not blind to
the fact that innovation will
sometimes come from an
individual who’s passionate
about trying something out
in their day job, and we’ve
already had – and shared –
some great use cases. Plus,
if the future of tech sits at the
nexus of human and AI, then
why wouldn’t we give those
humans a say?”
Our state-of-the-art
data platforms and deep
partnerships with global
leaders in AI mean we can
experiment at scale, rapidly
learn what works, and
build reusable AI-powered
solutions with the potential
to benefit multiple parts of
the business.”
Shali Vasudeva
Group Chief Operations
and Technology Officer
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Brokers
Colleagues
Regulators
Suppliers
Shareholders
Customers
Staying connected
Stakeholder
engagement
We approach all of
our stakeholder
relationships
professionally and
pragmatically, and
their inputs help to
shape our business.
Steve Parry
Group Claims Director
As a global business, we have
diverse stakeholders with diverse
interests, so understanding what
matters most to them through regular
engagement is an important part of
our decision‑making processes.
We engage with stakeholders at every
level, including Board level, to build
positive relationships, respond to their
areas of interest, and ensure their
expectations of Hiscox are met.
Our key stakeholder relationships
will be managed in different parts of
the business, and in different ways.
However, they are united by a common
Hiscox approach, driven by our
values, and each has an appropriate
degree of Executive involvement and
Board oversight.
Our ecosystem of stakeholders
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Relevant materiality areas*
Corporate governance
and business ethics.
Resilience to volatility
– market, political,
economic, social, other.
How the business engages
with shareholders
dOur Group Chief
Executive Officer, Group
Chief Financial Officer
and Director of Investor
Relations meet with
existing shareholders,
potential investors
and research analysts
regularly to discuss
our strategy, trading
conditions, business
performance, and
other factors affecting
our operations.
dAnnual investor
roadshows each year
in the UK, USA, Europe
and the Middle East.
dParticipation in a range
of investor conferences
across regions.
dWe report to the
market on Company
performance four times
per year, with interim
and preliminary results
also shared via an
online webcast which is
open to capital markets
stakeholders to attend.
These materials
are available on our
corporate website
and as an email alert
for subscribers.
dWe publish our Annual
Report and Accounts
each March, giving
shareholders a more
detailed view of the
business. In 2024,
we engaged with
shareholders on
their preferences for
receiving this report
and other statutory
disclosures from us,
which resulted in more
shareholders opting for
digital communications.
How the Board engages
with shareholders
dBoard members engage
with shareholders as
part of our AGM.
dBoard members engage
with shareholders at
other key governance
moments, for example
around remuneration
policy review periods.
Outcomes of engagement
and relevant KPIs
dAll 2024 AGM
resolutions passed with
a significant majority.
dDuring 2024, we held
over 470 meetings
with over 200
investors, representing
approximately 75% of
our issued share capital.
dOver the last ten years,
we have returned
$1.4 billion in capital
to shareholders.
Shareholders
We maintain ongoing engagement with our shareholders,
focusing on our clear strategy, strong underwriting discipline,
and sound capital management.
*See Hiscox’s materiality map on
page 59.
Relevant materiality area*
Customer and
broker experience.
How the business engages
with customers
dWe conduct both
quantitative surveys and
qualitative research with
thousands of customers
each year – including
feedback after they have
bought a product or
made a claim – which
help to continually
improve our offering.
dWe measure the
health of our brand
through regular brand
tracking surveys which
assess consumer
brand awareness
and perception and
inform marketing and
sales activities.
dWe use a combination
of customer insight
and claims experience
to develop our risk
transfer products and
risk mitigation tools.
These include our cyber
exposure calculator,
the NCSC-approved
cyber training we offer
through our CyberClear
Academy, and Leakbot
– an early warning
leak detection tool we
offer all UK high-value
home customers to
help mitigate escape
of water claims.
How the Board engages
with customers
dThe Board receives
updates on customer
research and
insight work, and on
customer‑focused
regulation as
appropriate, for
example, the
UK’s Consumer
Duty regulation.
Outcomes of engagement
and relevant KPIs
dCustomer satisfaction
scores – see page 27.
dPaid out $2 billion
in claims to customers
in 2024.
dClaims transactional
net promoter score
of 72 – see page 130.
Read more on pages
18 to 19.
Customers
We have almost 1.7 million retail customers worldwide and
providing each of them with products they can rely on is
what we are here for.
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Relevant materiality area*
Customer and
broker experience.
How the business engages
with brokers
dWe hold an annual
preferred broker summit
for our UK brokers,
to share insight and
expertise, and a London
Market broker academy
to educate and inform.
dWe also hold an annual
claims insights day,
hosted by our London
Market claims team
and providing junior
claims brokers with
informative sessions on
our claims ethos and
process, workshops led
by loss adjusters and
lawyers, and networking
opportunities.
dEach year we measure
broker satisfaction
with our products and
services, with the results
informing future plans.
dWe participate in key
industry events in every
part of our broker-facing
business, including
BIBA, a UK insurance
conference; the CIAB,
a US marketplace
meeting for commercial
property and casualty
brokers and insurers;
and in our big-ticket
businesses, Monte
Carlo, Baden Baden,
and RIMS.
dWe produce thought
leadership that
enhances our broker
relationships and our
position as experts
in our chosen areas.
In 2024, this included
our cyber readiness
report which examines
the cyber threat
landscape, ‘HAT
100’ which explores
key trends in the
contemporary art
market, and ‘Art and
AI’ which examined
emerging trends
in AI‑generated art.
dWe conduct experiential
broker events, which
in 2024 included the
‘energy express’ – a
unique train journey
through the history of
energy underwriting
and its evolution as a
result of the transition
to net zero.
How the Board engages
with brokers
dOur Executive Directors
support our largest
broker relationships,
attending meetings
and events throughout
the year.
Outcomes of engagement
and relevant KPIs
dBroker satisfaction
scores.
d70 brokers attended
our UK preferred broker
summit in 2024.
d22 participants in our
London Market broker
academy in 2024.
d30 London Market
brokers participated in
our ‘energy express’
experiential event at
Lloyd’s of London.
Brokers
The risks we write through brokers account for around
84% of our business, so we look to build strong and lasting
relationships with those that share our values.
*See Hiscox’s materiality map on
page 59.
Relevant materiality areas*
Being a great place
to work.
Positively contributing
to our communities.
How the business engages
with colleagues
dRegular staff surveys
on topics such as
leadership, well-being,
hybrid working and
communication.
dAll-staff ‘connected’
interactive events
sharing strategy
updates, financial
results, and news from
across the Group.
dReal-time updates
via our intranet,
The Gallery, and
newsletters that
highlight work from
around the Group
including business
unit performance,
sustainability,
charitable giving and
volunteering, and
brand and marketing.
How the Board engages
with colleagues
dOur Employee
Engagement Network
is a representative
group of colleagues
from around the world,
convenes approximately
twice a year, and is
chaired by Independent
Non Executive Director,
Anne MacDonald.
Topics covered in
2024 included culture
and leadership, use of
technology and data,
business planning
and future ambitions.
Colleagues
Our people are critical to the successful delivery of our
strategy and ambitions. We want to build teams that are
as diverse as our customers and create a vibrant work
environment where every colleague feels a sense of
belonging and can thrive.
Reports from these
sessions are shared
annually with the Board
and inform Board
decision-making.
dLtd and subsidiary
Board members join
over 160 of our senior
team from around the
world at our annual
leaders and partners
event, for discussions
on strategy, ambition,
plans and performance.
Outcomes of engagement
and relevant KPIs
dMaintaining a high
level of employee
engagement,
which in 2024 saw
us maintain our
employee engagement
score of 82%.
dPromoted 315
colleagues in 2024.
dAttracted 620 new
people in 2024.
Read more on pages
16 to 17.
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Stakeholder
engagement
Governance
Remuneration
Financial summary
Relevant materiality areas*
Corporate governance
and business ethics.
Data privacy and
information security.
Resilience to volatility
– market, political,
economic, social
and operational.
How the business engages
with regulators
dOur Chief Compliance
Officer and compliance
teams worldwide
lead our relationships
with regulators and
maintain regular
dialogue with them
throughout the year.
dWe maintain a regular
cycle of stress testing
and scenario analysis to
ensure we manage risk
well and evolve at the
same pace as the risks
we cover. This includes
both in-house stress
testing and scenario
analysis, as well as
industry scenarios
which we report on to
the relevant regulators.
dWe contribute to the
regulatory change
process, both directly
and through our
membership of trade
associations such as the
ABIR and the ABI. This
helps us to ensure that
we remain compliant
in an ever-changing
regulatory environment.
dWe speak at relevant
industry events which
are often attended by
some of our regulators.
In 2024, this included
participation at the
Relevant materiality areas*
Corporate governance
and business ethics.
Data privacy and
information security.
Digital transformation and
operational excellence.
Reducing our
environmental footprint.
How the business engages
with suppliers
dRigorous global
procurement processes
ensure robustness in our
practices and contribute
to new and existing
supplier relationships.
dPeriodic assessement
of existing supplier
relationships ensure
these remain productive
and valuable.
dOur supplier code of
conduct applies to
both suppliers and
sub-contractors,
and is shared with
suppliers during the
onboarding process
and reshared during
periodic assessments.
dDuring 2024, we
embedded the use
of ESG ratings in our
supply chain, starting
with our largest suppliers
and those with an
existing rating on a
recognised external
data provider.
dIn 2024, we introduced
a new source-to-pay
solution, delivering
enhanced supplier
oversight and faster
payments to partners
and suppliers. The
system is now live in the
UK and Guernsey and
FT’s Global Insurance
Summit in London,
where our Group Chief
Information Officer
spoke about our
market-first Google
Cloud collaboration as
part of a panel debate.
How the Board engages
with regulators
dWe are long-standing
contributors to the
annual supervisory
college which is hosted
by the BMA as our
Group supervisor and
provides an important
opportunity each year
to present a consistent
message to all of our
regulators on issues of
common interest. This
is attended by all of the
Executive Directors, as
well as other members
of the GEC.
dMany of our Independent
Non Executive Directors
have one-to-one
meetings with our
regulators as part of their
regular programmes of
engagement with us.
Outcomes of engagement
and relevant KPIs
d13 regulatory
officials participated
in the 2024 BMA
supervisory college.
will roll out to other parts
of the Group over the
course of 2025.
How the Board engages
with suppliers
dOur Executive
Directors contribute to
decision‑making when
it comes to our largest
suppliers and have been
involved in key selection
and onboarding
processes in 2024.
dThe Board receives
an annual report on
suppliers, covering
supply chain strategy
and spend.
Outcomes of engagement
and relevant KPIs
dOver 100 new
suppliers in the UK and
Guernsey onboarded to
source-to-pay solution
in 2024.
dSuppliers with an
ESG rating, using a
recognised external
data provider,
represented 30% of
third-party spend
in 2024.
Regulators
We are a global business with a responsibility to engage
with regulators in all jurisdictions where we operate.
The Group is regulated in Bermuda and has regulated
subsidiaries worldwide, and in 2024 met all material
regulatory reporting obligations.
Suppliers
Our suppliers are an important extension of our in-house
expertise, which is why we aim to work with like-minded
businesses that share our purpose.
*See Hiscox’s materiality map on
page 59.
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Governance
Remuneration
Financial summary
Being a responsible business
Sustainability
Being a responsible
business takes
consistent and
collaborative effort,
particularly as we
focus on establishing
an effective transition
plan for the Group.
Jon Dye
Chief Executive Officer, Hiscox UK
and member of the Sustainability
Steering Committee
We have established many of the
structures, policies and processes
that it takes to build a responsible
business, but the sustainability
landscape is rapidly evolving and
so too must our approach.
Our sustainability strategy is a key
driver of sustainability action within
our business (see page 57). Our five
strategic pillars – customers, people,
governance, risk adaptation, and impact
– represent important areas of focus for
the Group. We want to be a great place
to work, deliver exceptional customer
experiences, adapt effectively to the
changing risk landscape, do business in
a responsible and ethical way, and play
our part in the net-zero transition.
Activities, progress and oversight
of each pillar will continue to be
driven through our embedded
sustainability governance structures,
under Executive leadership and in
collaboration with the wider business.
People
Building a connected and inclusive
workforce matters to us and is a
long‑term priority. More information
on this, including our people strategy
and latest diversity targets and data,
can be found on pages 64 to 69.
Beyond our own people, we also care
about positively contributing to the
diverse communities in which we live
and work. We donate to good causes
through the Hiscox Foundations in
the UK and USA, and we fundraise
and volunteer for the causes we care
about through Hiscox Gives. In 2024,
our collective efforts resulted in us
supporting almost 250 charities with
donations totalling over $2 million and
1,000 hours of volunteering.
Customers
We are in the business of paying
claims, and during 2024 we paid
out $2 billion to customers around
the world. Delivering a best-in-class
claims service really matters to us,
and this work is recognised not only
through our customer and claims
satisfaction scores, but also through
industry awards including Personal
Lines Insurer of the Year at the UK
Broker Awards 2024, which we were
proud to receive.
As part of enhancing our awareness
of the sustainability progress of our
suppliers and partners, we revised and
updated our information requests that
are shared with vendor managers. This
will enable us to collect better data and
encourage our vendor managers to
more closely align with our ambitions.
More information on customer
satisfaction, including some of our
2024 customer and broker satisfaction
scores, can be found on page 27
and you can find out more about our
customer‑centric approach on pages
60 to 63.
Governance
This year, we have continued to embed
the outputs of the double materiality
assessment we conducted in 2023.
This is enhancing our understanding of
the material sustainability issues facing
our business and supports emerging
regulatory requirements including CSRD
and the ISSB’s IFRS S1 and, to a lesser
extent, S2.
Our double materiality assessment
is shaping our sustainability work
and sharpening our focus on areas of
potential risk and significant opportunity
(see page 59).
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Governance
Remuneration
Financial summary
We give people and businesses the confi dence to realise their ambitions.
We want to be here for the long term, for our customers, colleagues and communities, operating in a sustainable way for
the future.
We want to give people
and businesses
the confi dence
to realise their
ambitions through:
— delivery of our brand
promise across the
customer lifecycle;
— best-in-class
claims service;
— championing SMEs;
— effective products
for risk transfer
and mitigation.
We are committed to
doing business in the
right way through:
— robust and
embedded
structures,
policies, processes;
— adherence to local
laws and regulation
wherever we
operate;
— responsible
investing;
— active risk
management.
We continually adapt
to an evolving risk
landscape through:
— sustainable
underwriting;
— understanding
climate impacts on
our underwriting;
— effective products
and services
for risk transfer
and mitigation;
— use of data and
technology
for changing
underwriting needs.
We are committed
to having a positive
impact by:
— reducing our GHG
carbon footprint;
— contributing to the
net-zero transition,
including through
responsible
operational
practices;
— using robust
data to drive
a sustainable
and scalable
operating model.
Customers
Governance
Risk
adaptation
Impact
Strategic pillars
Hiscox sustainability strategy
Sustainability ambition
Group purpose
We aim to be a
great place to work,
attracting, nurturing
and retaining
talent through:
— strong culture, lived
values and sense
of belonging;
— diverse, equitable
and inclusive
practices;
— continuous learning
as a skills-based
business;
— differentiating
benefi ts;
— supporting our
people and
communities
to thrive.
People
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Remuneration
Financial summary
We will continue to review and refine our
approach in 2025.
Our governance pillar also includes
responsible investments. In 2024,
we made good progress towards
our responsible investment targets
(see page 85). We have reduced the
threshold for direct investment in
securities of companies that generate
revenues from excluded activities from
30% to 10% of revenue. This applies
to each excluded activity: thermal
coal, oil sands, arctic exploration, and
controversial weapons. This will further
reduce the Group’s exposure to areas
of high-transition risk and aligns with
our wider ESG activity and emissions
reduction initiatives. Using the support
of our external data provider, we can
increase the screening of our investment
portfolio for climate and nature-related
impacts which we can then engage with
our managers to address going forward.
During 2024, we also worked with an
external specialist to refine our modern
slavery statement and enhance our
human rights policy. This involved
carrying out a gap analysis to identify
any areas of the business in which we
could strengthen the controls currently
in place to prevent any policy breaches.
We plan to continue this work in 2025
as we look to further embed our
expectations within our supply chain.
Risk adaptation
We are passionate about risk adaptation
in all its forms – from product innovation
to risk mitigation tools – and as the
underwriting risk landscape continues
to evolve, so too does our approach.
In 2024:
dwe set out our ambition
to grow our exposure to
renewables through our new
ESG 3033 sub-syndicate, which
during 2024 has written a range
of risks including wind and
solar farms;
dwe continued to support
customers through the Hiscox
CyberClear Academy, with
online cyber training provided to
over 19,000 employees at over
3,000 companies;
dwe provided over 1,000 Leakbot
devices to our UK home insurance
customers, giving them an early
warning leak detection system that
can help them avoid the damaging
cost of water claims.
More information on climate-related
risk adaptation can be found on pages
74 to 88.
Impact
We continue to enhance our
responsible operational practices in
support of our sustainability ambition
and net-zero goals.
During 2024, this included amending
our lease contract language to
encourage landlords to support our
progress to net zero by switching
to renewable energy contracts;
supporting our emissions data
collection process with more timely
data points; and notifying us in good
time of any significant changes that
could impact our progress.
We also undertook a review of
the buildings we own in the UK to
understand where we could make
energy efficiency savings, use more
sustainable forms of energy, and
continue to reduce our impact. Some
of the actions identified have started to
be addressed in 2024, for example, by
reducing heating and air conditioning
usage and adjusting lighting levels in
Hiscox‑controlled offices, and others
will be a focus for 2025.
In addition, we have begun to monitor
our supplier performance against a
range of metrics to ensure positive
sustainability outcomes within our
supply chain. We have set targets
to continually increase the number
of suppliers we monitor through our
third-party data provider and to track
supplier improvements year on year.
More information can be found
on page 84.
We also continue to carefully monitor our
GHG emissions. The half-year footprint
process we introduced is proving
effective, improving the quality of our
data and providing oversight beyond
a single point in time. A copy of our full
GHG inventory for 2024, along with our
SECR table, can be found on pages
83 to 87.
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Sustainability
Governance
Remuneration
Financial summary
Low
High
Impact on Hiscox
Low
High
Impact on society and the environment
Customers
People
Governance
Risk adaptation
Impact
Ongoing importance
Monitor and manage
Priority
Digital transformation
and operational excellence
Reducing our
environmental footprint
Biodiversity and our
impact on nature
Positively contributing
to our communities
Being a great
place to work
Responsible
underwriting
Climate
change
Responsible
Investment
Data privacy and
information security
Resilience to
volatility– market,
political, economic,
social, other
Customer and
broker experience
Corporate governance
and business ethics
Key
Monitor and manage: topics of relatively
lower impact at the point of assessment,
but which are managed and monitored
with a readiness to adapt to evolving
internal and external requirements.
Ongoing importance: topics of
ongoing importance due to their
influence on our strategy, performance
and stakeholder relationships
which therefore require continuous
focus and active management.
Priority: current mission-critical
sustainability topics due to their
potential to impact our reputation,
financial performance, and ability to
attract and retain customers, business
partners and investors.
Hiscox materiality map
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Custom made
in action:
Operations School
Hear from one of our valued Hiscox
USA SME customers on their
experience of building a successful
business… and protecting it with us.
We are a ‘customer-centric’ business – so what
does that mean in practice?
CUSTOM
MADE
When Racheal Allen
established Operations
School, she was no
stranger to Hiscox. “I was
an insurance agent first. I did
that for a number of years
and then switched industry
– getting into teaching and
then non‑profit leadership
operations, not realising
that every little stop on my
professional journey was
leading me here, to creating
Operations School.”
Racheal established
Operations School, a
Michigan-based business
which teaches primarily
minority-owned SMEs how
to start, sustain and scale
their start-ups, in 2019 and
the results are staggering.
From being the sole tutor,
Racheal has built a core
faculty of 25, and the school
now supports over 1,000
students each year through
its nine-week training
programmes and events.
“I’m a business owner by
day and a teacher by night,”
says Racheal. “Everything
that I learn in my business,
I take it back to the students.”
That includes insurance.
Racheal has been a Hiscox
USA small business customer
since 2022 and that’s when,
she says, “I realised how
easy it was. With most
insurance companies, it’s a
long process – you have to
talk to people, you’ve got to
get quotes, it’s very salesy.
Hiscox was the most direct,
straightforward approach
that I had found. I’ve had to
renew some of our existing
coverages and, as we’ve
grown, add some new ones,
but the speed, efficiency
and value of it has been
unbeatable. I refer Hiscox to
all our students and for many
of them that means they’re
getting general liability cover
for the first time.”
It’s a great grounding for
further growth, as Racheal
explains, “We’re still just
scratching the surface. We’re
in a tonne of communities,
working with adults who
aspire to be an entrepreneur
and in high schools where
students increasingly say they
want to work for themselves
but don’t know where to go
for training and support. We
want to grow nationally, and
ultimately we want to be in
any community where there
are entrepreneurs.”
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A vital part of being customer centric
is ensuring that the products we
develop are genuinely aligned with
what customers want and need. A
good example of how our products take
shape is Hiscox business protection,
a new generation of products for
freelancers and small businesses
that we introduced in Spain in 2024.
By analysing historical claims data and
talking to customers, we were able to
build a detailed understanding of the
level of coverage that businesses with a
turnover of under €500,000 are likely to
require, their financial constraints, and
their appetite for poring over multiple
complex documents in search of the
right combination of policies.
Hiscox business protection bundles
up four key aspects of business
insurance (professional liability, general
liability, directors and officers’ liability,
and cyber insurance) and offers
them to customers as a single, easily
understood, competitively-priced
policy, with a level of coverage suited
to their turnover and risk profile. The
product is available in three versions:
light, medium and premium; offering an
ascending level of cover and cost that
matches the different stages of a small
business’s growth.
The moment at which a customer
will feel most in need of our support
is at the point of making a claim
– a stressful time in anyone’s life
– so we do everything we can to
make that process as smooth as
possible. That means giving each
customer a single point of contact for
the entire life of their claim, including
direct contact details for them, and
making sure that the depth of expertise
needed to unpick complex cases is
readily available.
It also means paying all valid claims
as quickly as we can. During 2024,
we introduced a new faster payments
functionality in the UK which means
we can instantly transfer the claims
payment to the customer, often while
they’re still on the phone – a simple
change, but a very popular one with
policyholders. It means that, for
simple first-party property insurance
claims, we pay around one-in-six of
these claims on day one. As well as
being faster, the new system is also
more secure, with additional fraud
protections built into the process.
Had a burglary in my locked garage at
2.30am on a Friday morning when an
expensive cycle and all of my power
tools were stolen. Contacted Hiscox
at about 10am, provided details of the
crime and a list of what was stolen with
cost of each item. My claim was settled
immediately and the money was in
my account by 11am. I could not have
expected or asked for a better service.”
UK home insurance customer
We build products that
make our customers’
lives easier
We take a
commonsense
approach to claims
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Governance
Remuneration
Financial summary
We’re always here to serve our
customers when they’re confronted
by a crisis, but an even better way
of serving them is to help prevent
that crisis from occurring in the first
place. We call this ‘risk mitigation’.
Through dealing with large volumes of
claims, we’ve developed a vast wealth
of knowledge as to where and how
problems can occur and the simple
protections that can help ward them
off. What we’ve come to understand
is the value of sharing that hard-won
expertise with our customers at
every opportunity.
A good example of this is the Hiscox
CyberClear Academy. Available in
seven different markets and adapted
to the regulatory landscape of the
local jurisdiction, our CyberClear
Academy provides a suite of online
training modules to our small business
customers. Intuitive and easy to use,
the programme helps our customers
meet their statutory obligations while
keeping their systems and data as
safe as possible from cyber attacks.
In 2024, our CyberClear Academy was
used by over 19,000 employees at over
3,000 companies.
A truly customer-centric business
must be responsive to the needs
of all its customers – including
those who, for reasons of health,
capability, resilience, or the impact
of life events, have vulnerabilities
that require additional
understanding and support. We
provide resources and training relating
to the safeguarding of vulnerable
people, and we ensure that their needs
are considered within our products and
services. But as with so much of what
we do, one of our strongest assets
in this area is the knowledge and
dedication of our people. Safeguarding
is an area beset with complexities
and sensitivities, and every vulnerable
person is completely unique, so it’s
inevitable that colleagues will have
questions and concerns that can’t
be answered by simply reading a
document. That’s where our Vulnerable
Customer Champions come in. This
specially trained team are committed
to building awareness of vulnerable
customers, advocating for their needs,
and supporting colleagues with
information or referrals.
Insurance can be complicated but
we have always prided ourselves
on our plain English, jargon‑free
policy wordings. We also know that
some of our customers may have
additional accessibility requirements,
from alternative formats to a preferred
way of speaking with us. That’s why
we provide documents in braille, large
print or audio format, or on different
coloured paper, on request.
We help our customers
to reduce the risks
they face
We support our
most vulnerable
customers
We create policies that
can be easily read and
understood by all
The biggest thing was the
communication and the feeling like
I’m a partner. We’re the only client in
the room when it comes to Hiscox,
and those are the things that are most
important to foster.”
London Market risk manager
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Financial summary
Connected and inclusive teams
People
We are transforming our
approach to our people
in every way and I’m
proud of the progress
we’ve made already in
evolving our talent and
listening strategies, as
well as what it means to
be a leader at Hiscox.
Nicola Grant
Chief People Officer
At Hiscox, people matter, and we
are focused on building a vibrant,
engaged and inclusive workforce.
A place where there are no barriers to
prevent our people from fulfilling their
potential. A place where we reflect
the communities where we live and
work and the customers we serve.
A place where talented people can
thrive and make great things happen
for our customers and wider society.
Creating such an environment has
been a strategic priority for Hiscox
over a number of years, because
we know it makes us a better, more
sustainable and resilient company,
ready to meet future challenges and
seize opportunities.
Learning and development
During 2024, we transformed our
learning and development (L&D)
function and introduced important
enhancements to how learning
and development is structured
within Hiscox to best drive business
outcomes. This included the
introduction of L&D Product Manager
roles aligned to critical skills such
as underwriting, sales, claims,
People strategy
Our people strategy is designed to enable business success by empowering our
people and supporting them to thrive.
Build a great place to work with top
quartile engagement and a diverse and
inclusive workforce.
Develop great leaders and
managers that can attract, retain
and inspire their teams.
Deliver market-leading experiences
for our people, with enhanced digital
capabilities and direct access to
people products and services.
Invest in the skills of the future
that can support our ambitious
growth plans.
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technology and data, in line with
our business priorities and growth
ambitions. We are building core
and common learning experiences
that align with the needs of the
business, and in parallel have
revamped and redesigned our
learning management system,
Hiscox Learning Hub, and launched
a significant partnership with
LinkedIn Learning, democratising
learning for all by providing access
to digital, personalised, self‑paced
learning. All of our people have
access to the Hiscox Learning
Hub for personal development as
well as technical training for the
skills we need not only today but
tomorrow, and in 2024 our people
completed over 51,000 hours
of training worldwide.
We have an established and
embedded approach to
professional qualifications and
compliance education for our
people. This includes mandatory
training around specific risks such
as information security and financial
crime; role‑specific professional
development such as ACA, CII
or CIPD; as well as more tailored
personal development opportunities.
For example, we have made mentoring
accessible to any employee who
wants it, as we look to improve
readiness for leadership roles at
mid‑manager level and ensure equity
when it comes to opportunities to
progress. We have also embedded
the Hiscox Data Academy, an
apprenticeship programme focused
on increasing the data fluency of
our people, which over 70 of our
colleagues have enrolled in so far
(see page 86). In 2025 and beyond,
we will focus on further supporting
our colleagues to upskill in key areas,
personalise their learning experiences
and align individual career growth
with our organisational priorities and
the skills required, by building out
learning pathways to intentionally
help our colleagues navigate and
best select the right content faster.
We also provide on-the-job
training, for example through
our established internship and
graduate programmes, where we
continue to target a diverse pool of
students. We do this through a range
of partnerships with organisations
such as the Bright Network and SEO
London. In 2024, we provided nine
UK summer internship placements
and welcomed 21 new recruits
through our global graduate
programme. We also launched a
new apprenticeship programme
in Hiscox London Market,
partnered with the London
Market Association to host work
experience students as part of
VisionPath’s Futures Academy, and
ran an Insight Week in London,
offering places to students from
under‑represented backgrounds.
Each year we also review our
existing learning and development
programmes to identify opportunities
to further embed inclusive principles
and practices into our materials and
approaches. DEI training is available
to all employees and new joiners and
this includes topics such as allyship,
creating psychological safety, building
inclusive teams, and neurodiversity in
the workplace.
Employee listening
In 2024, leveraging market-leading
behavioural science, we evolved
the way we listen to our employees.
This included capturing employee
experiences in the form of externally
benchmarkable, quarterly pulse
surveys. Our new approach is
providing managers with valuable
insights relating to their teams
and business areas, enabling
them to dynamically respond
to feedback and take timely
action where necessary. Pulse
survey participation in 2024 was
consistently above 80%, and we
are proud to have maintained an
engagement score of 82% for the
third consecutive year. Through
these pulses, we have explored areas
such as communications, inclusion
and well‑being, with the feedback
received being used to further shape
our approach. For example, we have
made enhancements to how we
activate our management cohorts in
response to feedback received on
frequency of communications.
Represent, lead and guide the
DEI culture
How we lead the way forward is critical.
Our DEI strategy is integral to our
overall business strategy and we all
have a responsibility to contribute to
a diverse and inclusive Hiscox.
Strengthen and leverage data
and insights
We are investing in our data inputs
and outputs so we can drive deeper
insights and understanding of
our workforce, pain points and
opportunities. This will help us make
better decisions and place wiser bets
to get us the results we want.
Inspire with our story
Our stories are important. We listen
to and communicate our successes,
invest time and effort into building
on the vision, and work hard to
understand how our employees and
customers experience Hiscox so we
can know who we are, ‘see’ progress
and help our people see themselves as
part of the Hiscox success story.
Make DEI ‘business as usual’
We continue to invest in equitable
structures, programmes, and tools
that enable our journey, so that being
diverse, equitable and inclusive is just
our everyday way of doing business.
DEI strategy
Our DEI strategy is built on four cornerstones. Together, these four cornerstones
provide the solid and sustainable foundation that we need to achieve our vision
and drive progress.
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Meaningful external partnerships
We also continue to capture valuable
feedback through our Employee
Engagement Network, which consists
of a representative group of colleagues
from around the world and is chaired by
Independent Non Executive Director,
Anne MacDonald. More information,
including areas of focus in 2024, can
be found on page 54.
Our community of networks
We have a number of passionate
employee networks, which
focus on building communities
and support around a variety of
employee populations. These
include Global Abilities (disabilities
and neurodiversity), Pan-African,
Generations, Latino, Parents and
Carers, Pride (LGBT+), WeMind
(mental health), Muslim, and
Women at Hiscox. These groups
support our DEI strategy by building
communities, helping to drive
positive employee engagement
and promoting a culture of inclusion.
During 2024, our networks
delivered a series of events
including: speed networking with
senior leaders; celebrations for
Hispanic Heritage Month; mindful
movement and understanding
emotional well-being events during
Mental Health Awareness Month;
Pride commemorations; and a
webinar on the stigma of neurodiversity
through our Global Abilities network.
Structures that support inclusion
Our senior leadership drives
sustainable progress in diversity,
equity and inclusion across the
Company. This includes our approach
to building culture, the alignment of
policies and processes with inclusion
principles, building community and
belonging via employee networks,
and ensuring alignment to credible
external commitments related
to inclusion.
We continue to build our capabilities
in this area and to embed inclusive
principles and best practice into
our processes and structures,
while translating our global plan into
local action. Plans are monitored
centrally, including via our global
culture and conduct dashboard
– which supports our monitoring
of organisational health in areas
including customer outcomes,
employee engagement and wellness
– and via specific local reports to
subsidiary boards.
Our efforts are guided by the
Hiscox Ltd Board DEI policy and our
Group DEI policy, which applies to
all employees. These policies are
publicly available on our website at
hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
Hiscox Ltd Board DEI policy
This sets out the purpose, scope
and governance of our DEI efforts,
and the Board’s commitment to DEI,
including the Board’s and Hiscox’s
overall diversity and how DEI is
considered in appointments and
succession planning at Board level.
The specific objectives of the Hiscox
Ltd Board DEI policy, as well as how
they have been implemented and the
results during the reporting period,
are set out on page 69.
Hiscox Group DEI policy
This sets out the purpose, scope,
governance, principles and commitment
to DEI, how we apply the policy in all
areas of our business, and how we
monitor progress.
Progress through participation
We want to play our part in making our
industry an attractive and inclusive
place to build a career, which is why
we participate in industry groups
including the Lloyd’s of London
Inclusive Futures programme, the
Insurance Inclusion Diversity Forum,
enei Member Forum and We Are The
City. We are particularly proud to
be a founding sponsor of the Black
Insurance Industry Collective, and
to actively participate in the ABI’s
sub‑committee on DEI through which
we have contributed to the creation
of the ABI’s DEI Blueprint to clarify
and promote DEI best practices
across the industry.
Reporting and disclosures
We have fulfilled our UK obligations
to report our gender pay gap ratios
with respect to our UK subsidiaries,
and published our latest annual
gender pay report during the year.
This report sets out in detail the
gender‑related programmes and
initiatives we pursued during 2024 and
can be viewed at hiscoxgroup.com/
genderpayreport2024.
We also report our Board and Executive
Management diversity data as at
31 December 2024 in accordance
with the UK Listing Rules targets and
associated disclosure requirements
– see page 91.
As at 31 December 2024, the Board
comprised 50% women and there was
one Director from an ethnic minority
background. Since August 2024, one
of the four FCA-specified positions on
the Board (Chair, Group Chief Executive
Lloyd’s of London
Inclusive Futures programme
Black Insurance Industry Collective
enei Member Forum
We Are The City
Bright Network
SEO London
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Our policies are publicly available on
our website at hiscoxgroup.com/
about-hiscox/group-policies-and-
disclosures.
Gender/sex diversity at 31 December 2024
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number in
Executive
Management*
Percentage
of Executive
Management*
Percentage
of Executive
Management
and direct
reports†
Percentage
of all
employees
Men
6
50%
3
7
58%
55%
49%
Women
6
50%
1
5
42%
45%
50%
Not specified/prefer not to say
–
–
–
–
–
–
<1%
Ethnic diversity at 31 December 2024
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number in
Executive
Management*
Percentage
of Executive
Management*
Percentage
of Executive
Management
and direct
reports†
Percentage
of all
employees
White British or other white (including minority-white groups)
11
92%
3
10
91%
82%
75%
Mixed/multiple ethnic groups
–
–
–
–
–
1%
3%
Asian/Asian British
1
8%
1
1
9%
8%
9%
Black/African/Caribbean/Black British
–
–
–
–
–
5%
7%
Other ethnic group, including Arab
–
–
–
–
–
–
2%
Not specified/prefer not to say
–
–
–
–
–
5%
4%
Our approach to gender/sex and ethnicity data collection and reporting is consistently applied in the countries where we collect
this data, according to local law and custom. We use the Group’s online HR management system, Workday, to collect and
securely store this data.
In all countries, employees can choose to self-report their gender/sex (male/female) or specify that they ‘prefer not to say’.
In the countries where we collect ethnicity data (currently the UK, Bermuda, USA and Guernsey), employees can choose to
self‑report their ethnicity, specify that they ‘prefer not to disclose’, or not provide an answer at all (leave blank).
The self-reported ethnicity options provided in each country are aligned to the options provided in that country’s government
census, and have been collated corresponding to the UK Listing Rules’ prescribed categories by our People team. Any
ethnicities reflected in a country’s census that do not align with one of the prescribed categories in the table were included in
the ‘other ethnic group’ row data.
The data reported here includes the self-reported data provided by our employees in the countries where we collect the data.
For any data categories where an employee has not provided a response, these employees are counted in the ‘not specified/
prefer not to say’ row. We do this so that, to the best of our abilities, all employees in the countries where we collect the data
are accounted for.
The data does not include employees in countries where we were unable to collect data. Note: some totals may not tally due
to rounding.
*For the purposes of the UK Listing Rules, Executive Management includes the Group Executive Committee (the most senior executive body below
the Board) and the Company Secretary, excluding administrative and support staff.
†For the purposes of the UK Corporate Governance Code, Senior Management (which for consistency we refer to as Executive Management in the
tables above) includes the Group Executive Committee and the Company Secretary and their direct reports.
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Each programme is designed
to take 12 to 18 months, but
the benefits accrue quickly,
with progress through the
modules often dependent
on evidence that learning
is being applied within
the workplace.
The programme’s success
has been tangible. The
academy’s completion rate
is around 90% and stories
abound of its positive impact
– Jason cites the example
of a member of the People
team who was able to move
from a generalist role to a
more specialist role that
relied heavily on data skills.
The next step: going global.
“The academy’s success so
far has been UK-centric,” says
Jason, “but we plan to extend
its reach globally. It’s a critical
skill for the entire business and
we really sharpen our focus on
data‑driven decision‑making.”
See pages 48 to 51.
People in action:
building out data
literacy across
the Group
Jason Bell
Group Head of Learning
and Development
Officer, Group Chief Financial Officer or
Senior Independent Director) has been
held by a woman.
We are committed to enhancing
ethnic diversity within our Senior
Management* team, in alignment
with the updated Parker Review. Our
global target remains to achieve 13%
ethnic minority representation among
our 90 Senior Management members
by the end of 2027, up from 11% as of
31 December 2024†.
Additionally, and again in alignment
with the updated Parker Review, we
have set a new and specific target for
our UK Senior Management team,
aiming to increase ethnic minority
representation from 9% to 12% by the
end of 2027, among our 57 UK-based
Senior Management members.
In some of the jurisdictions in which
we operate, current laws mean it is
not possible to collect ethnicity data
from employees, but where we can we
encourage employees to self-identify.
This helps us build a more complete
picture of our workforce (including
intersectionality), understand our
progress, and further evolve our
people strategy and approach.
As such, improving the volume of
voluntary disclosure from employees
– not only in areas such as sex and
ethnicity but in other diversity-related
categories – remains a focus area
and while that work continues we are
pleased to be disclosing all-employee
ethnicity data, as far as we are able to
currently, for the third consecutive year
in this report.
We will look to build on this work in
2025 and beyond by strengthening
our ability to leverage data and
insights, building our inclusion skills
and capabilities, inspiring others with
our stories, and embedding inclusive
and equitable practices into business
as usual. Together, these initiatives
will strengthen the diversity measures
we already have in place and build
the maturity of the DEI landscape
at Hiscox.
Jason. “It’s an area where
you typically find lots of
people are self-taught or
have learnt within other
companies. Creating core
and common learning
experiences across the
business is one of our driving
principles and through the
Data Academy we can make
sure we’re all speaking the
same language when it
comes to data.”
While the pilot programme
drew its participants from
roles that already feature an
explicit data component, in
2024 – thanks to the success
of the pilot – the academy was
made available to all Hiscox
colleagues. Delivered by
Corndel, a specialist training
provider, in partnership with
Imperial College London,
the programme combines
instructor-led lessons,
one‑to‑one coaching
and e-learning. Different
qualification levels are
available, which ensures
it’s suited to everyone
from beginners to data
strategy leaders.
Hiscox launched its Data
Academy in response
to evolving demands for
data fluency. “Data has
always been part of our
underwriting and claims
DNA, but now it’s
permeating most if not
all functions,” says
Jason Bell. “Almost
every part of the
business wants to
understand and be
informed by data in
new or different ways.”
As well as proliferating
vital skills and knowledge,
the academy has brought
a more uniform approach
to enhancing data fluency.
“Consistency is key,” says
*For the purposes of the Parker Review, Senior
Management includes the Group Executive
Committee (the most senior executive
body below the Board) and the Company
Secretary, and their direct reports, excluding
administrative and support staff.
†An additional 13% of our Senior Management
live in countries where we do not currently
collect ethnicity data and therefore are not
reflected in our ethnic minority metrics.
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Board DEI objectives and 2024 progress
Board objective
Implementation
Progress
1.
Ensure a
diverse1 and
effective Board
dAnnually review the structure, size and
composition of the Board, including
the balance of skills, knowledge and
experience to assist in the development
of a diverse pipeline.
dAnnually review Board diversity as part of
the Board evaluation process.
dEnsure the values of the Company promote
an open and inclusive environment.
Page 91 of this Annual Report demonstrates the
diversity of our Board as at 27 February 2025.
Via the delivery of our Board DEI policy, we have:
dmaintained a gender balance in line with the
Davies and Hampton-Alexander reviews since
2015 and intend to work towards the current FTSE
Women Leaders Review targets and UK Listing
Rules targets for gender balance at Board level;
dhad at least one ethnic minority Director since 2016.
2.
Ensure that
all Board
appointments
are considered
on merit within
the context of
the strategy
requirements
and diversity
considerations
dAt least annually review the succession
plans for the Board and Senior
Management and ensure the talent review
process is in place for the wider workforce.
dGender and ethnic diversity will be taken
into consideration when evaluating
the skills, knowledge and experience
desirable to fill each role and when
considering the methods to attract
diverse candidates.
dA search firm will normally be engaged
to assist in the review of the market and
they should be committed to addressing
gender and/or ethnic diversity.
dAll appointments must be made on merit
as aligned to the needs of the Board, the
Company, and its strategy and values.
Each June, the Board and Committee review the talent
plans for Senior Management and, each November, the
Board succession plans. Diversity is taken into account
as part of this process. Talent reviews are replicated
throughout the business.
3.
Ensure that
the overall
workforce
is diverse
and inclusive
dReview the execution of the Group
DEI policy2.
dOngoing Board and Committee review of
matters relating to employee retention,
engagement and culture.
The Committee receives an annual report from the
Global Head of DEI. Our senior leadership drives
sustainable progress in diversity, equity and inclusion
across the Company, which includes a commitment
from every business unit leader to deliver on our DEI
goals. These plans are monitored centrally and also
via specific local reports to subsidiary boards.
The tables on page 67 provide a breakdown of diversity
at Hiscox at 31 December 2024.
The Board and Committees receive reports relating to
key workforce matters on an ongoing basis, including
employee retention, engagement and culture.
1Diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.
2hiscoxgroup.com/diversity-and-inclusion-policy.
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JOURNEY
PLANNER
How the Hiscox approach to learning
and development is shaping the
experts and leaders of tomorrow.
Building the business of
the future means having
the skills for the future. And
that requires data, explains
Nicola Grant, Chief People
Officer at Hiscox. “One of
the things we’ve done during
2024 is a ground-up review
of our approach to learning
and development. Now
that’s not something we do
in isolation; we look at the
data. Where do our people
go for development, and how
do they want to learn? What
we found is that, actually,
our people want a lot more
convenience in when and
where and how they learn,
and a good proportion were
actively engaged in LinkedIn
Learning. We listened to that
and as a result have offered
our own digital proposition on
LinkedIn Learning.” Within the
first ten weeks of going live,
more than 1,700 people had
signed up.
This is a prime example of
how the People function uses
a raft of information sources
to pin down what colleagues
across the business actually
want. “What we’re trying to do
is make sure we’re listening
to people and then making
their lives better,” says Nicola.
Rather than relying purely
on the blunt force of a large
annual survey, her team have
developed what she calls an
‘approach to listening’ that
involves a much wider set
of inputs.
“We still have a ‘pulse
survey’ – so quarterly pulses,
which give us a regular
check-in with how people
are doing. But we also listen
to colleagues in lots of ways
that historically would have
been very fragmented.” This
‘passive feedback’, as she
calls it, might be comments
on Glassdoor, feedback from
prospective candidates,
exit interviews from leavers
– or indeed usage stats for
online learning platforms.
“We’re starting to bring all
these things together in
a way that means we can
draw actionable insights
from the data.”
Encouraging and facilitating a
commitment to learning is an
essential part of the Hiscox
strategy as a skills-based
business, and the signs are
good. “Obviously, the big
‘people’ goal is that we want
this to be a great place to
work, a place where everyone
feels welcome, where
everyone feels able to bring
their full self to work. But we
also care very deeply about
our people building their skills
and being relevant in the
future,” she says.
Defining leadership
It was with this in mind that,
in 2024, Hiscox developed a
global leadership framework,
part of a comprehensive
process to articulate
what great leadership
looks like at Hiscox. This
framework serves as a key
underpin of the Group’s
leadership development
strategy. It will be integrated
into talent acquisition,
performance and talent
management organisational
practices, and leadership
programmes that focus on
the skills and behaviours
that set Hiscox apart from
peers when it comes to
attracting, developing and
retaining talent.
Building those first-class
leadership capabilities
are equally important for
nurturing technical expertise,
as one of the key tenets of the
framework is the fundamental
responsibility of all senior
staff to, in turn, build the
skills of every member of
their teams. “Every single
day, our leaders need to be
developing their people in
service of our strategy. It can’t
only be down to the People
function to make those things
happen – we’ve got far more
managers in the business
than we’ve got staff within
the People function, and they
know better than anyone
where the gaps are.”
Some of the skills that need
building are specific to
individual roles or business
units – for example,
underwriters are well
served by our underwriting
faculty – but others need
to be developed across
the board. “One of our key
priorities is looking at the
skills that are going to be
required in the future and
putting programmes in place
to develop them at pace,”
says Nicola. “We did a piece
of work earlier this year,
developing our view of what
we believe should be core
and common skills across the
organisation, so we can start
investing in those.”
One of the most important
of these universal skills is
data literacy. Rather than
remaining the domain of
specialists, the ability to
interrogate, analyse and
present data will need to be
a proficiency common to
every employee. “These skills
are only going to be more
and more important as time
passes. That’s why we’ve
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To thrive in this environment,
people need the ability to
learn quickly. We’re looking
for lots of drive and ambition,
people who are going to
be making things happen,
who are solutions focused.
We’re looking for curiosity,
the ability to question, the
ability to join the dots.”
Kema Davies
Early Careers Lead
developed a Data Academy
where everybody has an
opportunity to learn more
about data,” says Nicola.
Launched in 2023, the Data
Academy is run in partnership
with leading data education
providers. Participants have
access to robust training
programmes lasting as long
as 18 months. Work is now
underway to expand the
offering to a wider cohort
by including more specific,
bite‑sized modules.
An appetite for this kind
of learning is one of the
main traits demanded of
participants in the Hiscox
early careers programmes
– the summer internships
and graduate recruitment
schemes used to draw bright
junior talent into the business.
Hiscox has an early careers
team which is focused on
this, led by Kema Davies.
She explains the importance
of personal attributes over
degree discipline, work
experience or professional
qualifications. “To thrive in this
environment, people need
the ability to learn quickly,”
she explains. “We’re looking
for lots of drive and ambition,
people who are going to be
making things happen, who
are solutions focused. We’re
looking for curiosity, the ability
to question, the ability to join
the dots.”
Grit in the system
One of the benefits of seeking
out aptitudes rather than
fully developed skills is that it
deepens the well of potential
hires beyond the social milieu
from which the financial
sector has historically drawn.
“Insurance, generally, has
been relatively insular as
an industry, so when you’re
looking for experienced
senior hires, they often have
quite similar backgrounds,”
explains Nicola. “You get
the best outcomes when
there’s a bit of grit in the
system, when you’re
challenged on a regular
basis, so bringing in new
thinking, innovative thinking,
is essential. That allows us
to represent the diversity of
our customers. Our early
careers programmes are a
When Michael Moyo was
growing up in Harare,
Zimbabwe, the idea
of forging a career in
insurance never crossed
his mind. But that
all changed while at
university in Bristol, when
Michael was introduced
to SEO London – a
charity that helps students
from under-represented
backgrounds achieve career
success. Through the charity,
he helped organise an event
at which representatives from
Hiscox introduced students to
the insurance sector. “It was
brilliant and eye-opening,”
he says. “Afterwards, a
colleague sent me a message
saying that my eyes had been
glued to the screen the entire
time. One thing that stood
out was that a CEO joined the
session – that was my first
experience of speaking to
someone at that level.”
In the summer of 2022, after
navigating a highly competitive
application process, Michael
spent two months on the
Hiscox internship programme.
“They give you a lot of
responsibility, which I thought
was both very surprising and
very rewarding!” he recalls.
“You really get to forge
your own way and meet a
plethora of people within
the organisation.”
The obvious next step then
was the Company’s graduate
scheme. “Because I’d had
such a wonderful time during
my internship with Hiscox,
it was a no-brainer to apply.
And because of the network
I’d built within the Company,
I was able to speak to people
and get their input in terms
of what to expect and how
to prep for an interview.”
Securing a place on the
graduate programme involves
an extensive interview
process, and competition is
typically fierce. When Michael
applied, he was one of over
1,200 applicants globally
for just 20 roles; and having
been successful he is now
partway through a 27-month
programme which will see
him rotate through three
placements. His rotation
started in the cyber team, and
he is now in business change,
before commencing his final
rotation in the terrorism team
during 2025. “It’s a great
opportunity to experience
different aspects of the
business, meet different
people, learn new skills and
get the relevant qualifications.
Honestly I haven’t stood still
– the learning curve is steep
but I’ve been able to get stuck
in at the same time as feeling
really supported.”
Michael has also joined
the Hiscox Pan-African
employee network, which
was shortlisted for the
Outstanding Ethnicity
Network of the Year award
at the British Diversity Awards
2024. Through the network,
Michael’s journey has come
full circle as he’s now offering
the kind of support to young
people that he received on
his way into the business.
“There’s no reason why
anyone can’t excel within
this world,” he concludes.
“But having people who
can help you get your foot
through the door can make
all the difference.”
Early careers
in action:
the graduate
experience
Michael Moyo
Underwriting Graduate
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fantastic pipeline for bringing
in different capabilities,
different demographics,
different perspectives.”
Hiscox is supported in this
work by some highly effective
partnerships. In the UK,
one of these is with SEO
London, an organisation
that helps students
from underrepresented
backgrounds gain access to
job opportunities. For the past
three years, Hiscox has been
working with the charity to
promote the idea of careers in
insurance – and at Hiscox in
particular – to young people
who might otherwise never
be exposed to the possibility.
“Our partnership with SEO
London enables us to engage
with students in a meaningful
way,” explains Kema. “There
are lots of in-person events,
virtual events, opportunities
to network. We’re able to
have people from Hiscox
deliver panel discussions,
skills sessions, mentoring
programmes.” Of the ten
places on the UK internship
programme each year,
around half are filled by
candidates who have come
through the SEO London
route, and those who don’t
secure a place still benefit
from exposure to coaching
and interviews.
There are internal
partnerships too,
including with the Hiscox
Pan-African network, an
employee-led network that
supports and represents
employees of African
descent. “There is a
general acknowledgement
that there’s an
under‑representation of
minority groups in our sector
– either they’re not attracted
to insurance, or they can’t get
in, or they don’t stay,” says
Dominica George‑Oppong,
a Hiscox Re Risk and
Controls Manager and
Pan‑African network lead.
“Our objective is to support
representation at all levels of
the organisation.” As well as
participating in careers fairs,
members of the network
act as mentors to new
employees, offering the kind
of personal advice and social
networking opportunities that
can’t be gained through a
LinkedIn Learning module.
Continuous development
That culture of professional
development is crucial to
employee retention too.
“Helping our colleagues
learn and grow and develop
their careers within Hiscox
is something we pay a lot of
attention to,” says Nicola.
It’s important the business
fosters a culture in which,
however disruptive it might
be to a team in the short term,
change within the workforce
is seen as a positive, with
people actively encouraged
to seek new challenges
and experiences within the
Group. “More than 10% of
our colleagues have taken
new jobs within Hiscox over
this last year, and in the ten
months since January 2024,
we had 122 secondments
– an enormous number
for an organisation of
our size.”
According to Nicola,
the scale of Hiscox
means it is large and
diverse enough for its
people to be exposed to
a wide array of specialisms
and environments. “We’re a
global specialty insurer, and
we’ve got such a diversity of
businesses – London Market,
reinsurance, ILS, and three
retail businesses. The fact
that we’re based in multiple
geographies as well means
we can offer a global career
to those who want it. No
two days, and certainly no
two careers, at Hiscox look
the same.”
When James Brady joined
Hiscox as a 22-year-old
Trainee Underwriter, he had
no idea of the opportunities
that lay ahead. “What I’ve
found is that there are
many ways you can build a
career here, especially as an
underwriter,” he says. “If you
want, you can stay in one
product line and become an
expert in that particular thing,
and we have people like that
who are market leaders. I’ve
moved around a lot, which
has given me a breadth of
experience, so there’s room
to do that too.”
Having started out in the retail
side of the Group, James
spent almost 12 years within
Hiscox UK. He took both
upwards and lateral moves
during this time, working
in Glasgow and London,
leading the Manchester
and later the Maidenhead
office. Initially underwriting
high-value homes, he moved
on to professions and
specialty commercial before
specialising in media and
finally cyber when the risk was
still in its infancy. He took on
ever-greater underwriting and
management responsibility,
and his willingness to
embrace change was,
he explains, aided by the
remarkable consistency of the
company’s culture: “If you’re
moving to a different product
line, a different office, even a
different business unit, you’re
never having to adjust to a
completely new environment.
Every step I’ve taken here,
I’ve felt supported.”
His decision six years ago to
swap the retail unit for a role
within Hiscox London Market
was James’s boldest move
yet. It was, he says, “an itch I
wanted to scratch”. In terms
of seniority, it was initially
one step back, but as James
recalls, “I was told: ‘Come
and do a good job here and
you will not be held back,’”
and so it came to pass. After
working hard to gain technical
Career
development
in action:
the career builder
James Brady
Divisional Director – Property
Hiscox London Market
knowledge, negotiation skills
and new broker relationships,
he is now a Divisional Director
overseeing product lines
including commercial and
residential property, major
property, and London
Market’s innovative US
flood proposition.
James’s appreciation for how
his own mentors encouraged
his growth now informs his
own leadership approach.
“The easy thing to do, when
someone’s doing a great
job, is to keep them in that
role, but I’ve experienced
firsthand the long-term view
we take to talent so I would
never stand in anyone’s way,
as painful as that might be,”
he says. “I have lost genuine
superstar talent to other
teams within Hiscox, but
that person’s retained and
they’re motivated to grow
and develop. That’s a good
thing for that individual and
ultimately that’s a good day
for the business.”
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Journey planner
Governance
Remuneration
Financial summary
Climate change
and decarbonisation
Task Force on
Climate‑related
Financial
Disclosures (TCFD)
Reporting against
the Financial Stability
Board’s Task Force
on Climate‑related
Financial Disclosures
(TCFD) is a requirement
of the FCA for all
premium‑listed firms
on a ‘comply or explain’
basis, and represents
the mandatory
climate‑related
financial disclosures
by publicly listed
companies, large private
companies and LLPs.
We have been reporting against the
TCFD-aligned ClimateWise Principles
since 2019 and are public supporters of
TCFD. Our annual climate report sets out
our approach to climate-related matters
in every part of our business, including
from governance, risk management,
operations, underwriting, investment,
and marketing perspectives. It is
our richest source of climate‑related
information and expands on the
information set out in the pages that
follow, so for more information go to:
hiscoxgroup.com/hiscox-climate-
report-2024.
Disclosures have been made against
the TCFD recommendations, taking
into account the TCFD supporting
guidance, and in consideration of the
FCA listing rules and compliant with
CFD requirements. Where additional
information outside of this report
aids our TCFD disclosure, links have
been provided, and where we have
not yet disclosed fully against the
recommended TCFD disclosure, we
have flagged this and where possible
outlined current and planned actions
being taken towards full disclosure.
TCFD offers a comply or explain basis
for reporting metrics, and Hiscox is
currently compliant in all but two areas
of TCFD: 2°C or lower scenario analysis,
and financial planning. Both of these
reporting recommendations remain
under development, with the aim of
reaching full compliance during 2025.
Governance
Board oversight
We have an established and
embedded governance structure for
climate‑related matters, with robust
and rigorous processes for identifying,
measuring, monitoring, managing
and reporting climate-related matters
(including climate-related risks and
opportunities) across the Group.
This spans from an operational level
up to the Sustainability Steering
Committee, the Risk Committee of
the Board, and the Board itself – see
page 75 for an overview of structure,
membership, roles and responsibilities
and frequency of meetings, including
Management’s role in assessing
and managing climate-related risks
and opportunities. Climate-related
responsibilities are embedded across
Board and Management committees,
and where appropriate within job
roles. The Board has oversight, with
the Group Chief Executive Officer
holding ultimate accountability. This
ensures that climate action and
ambition are driven by the Group’s
senior leaders, as well as by individuals
with day-to-day management
responsibilities. The Board and each
entity board adheres to its own terms of
reference which have been updated and
approved to include climate and wider
sustainability considerations.
Management responsibilities
The Group sustainability strategy,
outlined on page 57, ensures a focus
on the areas that matter most to our
business – our people, our customers,
governance, risk adaptation and impact
– and a member of the Group Executive
Committee leads each pillar. Our Group
Chief Executive Officer is Chair of the
Sustainability Steering Committee
and his regulatory responsibilities
for managing the climate risks to the
business are set out in the Senior
Managers Certificate Regime (SMCR).
Sustainability governance discussions
While this structure also covers broader
sustainability matters, both climate and
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Governance
Remuneration
Financial summary
Sustainability governance structure
This is how we manage and monitor sustainability matters, including climate and nature, to ensure appropriate accountability
and oversight. This structure is supported by other established roles and teams, including our employee-led networks and
our green teams, our governance committees, and Management forums, such as those outlined on pages 82 to 83. While not
explicitly shown here, these also feed into elements of this structure.
Board
dOversight of long-term sustainability vision, strategy, priorities and performance against agreed metrics and targets.
dEnsures governance and accountability in place with sufficient support.
dMeets quarterly and discusses sustainability strategy, trends, opportunities, vulnerabilities, and emerging issues including
climate issues at least annually.
Risk Committee
dAdvises Board on sustainability strategy, key priorities, risk profile, risk exposures and opportunities.
dMeets quarterly and recommends proposals for consideration by the Board as required.
dProvides oversight to identifying and managing climate risks and opportunities.
Group Risk and Capital Committee (GRCC)
dQuarterly reporting on sustainability and climate matters
from the SSC.
dSets high-level Group strategy, priorities and ensures
delivery across the Group.
Group Executive Committee (GEC)
dPeriodic sustainability sessions.
dSets business unit or function sustainability-related
strategy, priorities and drives delivery through business
units and functions.
Sustainability Steering Committee (SSC)
dSub-committee of the GRCC, responsible for execution of the agreed sustainability strategy, driving actions and delivery
at a Group level.
dTypically meets quarterly and oversees the embedding of sustainability risks and opportunities.
dOversees effective use of resources and tracks Group and entity-level sustainability performance.
dEnsures Senior Management-level involvement and accountability for sustainability issues, with senior representation
from areas including underwriting, investments and operations.
Sustainability working group
dOperational body, providing a central point of coordination and expertise for sustainability and climate-related activity
across the Group.
dManages sustainability-related Group reporting, disclosures and communications.
dMeets monthly and provides input and recommendations to Management on sustainability matters.
dFocuses on sustainability-related research, including external monitoring and expectations.
Principles for Responsible Investment
(PRI)
Task Force on Climate-related Financial
Disclosures (TCFD)
Environmentally focused commitments
Principles for Sustainable Insurance (PSI)
ClimateWise
Paris Agreement 2015
Sustainable Markets Initiative
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nature-related matters are important
components of this and as such are
regularly debated and discussed.
Examples of climate-related
discussions during 2024 include:
ddiscussion and approval at
the SSC of the underlying
sustainability plans to achieve
our strategic ambition;
dannual review of the ESG
exclusions policy and the
responsible investment
policy, coordinated by the
sustainability working group
(and, in the case of the responsible
investment policy, the Group
Investment team) and approved
by the SSC;
dreview of our overarching new
Group climate action plan, ensuring
a Group view improved from the
individual business entity views
which will form addendums to the
Group plan;
dapproval of a new Group code
of conduct designed to ensure
clarity around the expectations
of policies, practices and
behaviours that matter to us as a
business as we grow, including
health and safety, data privacy
and security, responsible
environmental practices and
avoiding financial crime such as
bribery and corruption;
dapproval of our human rights policy
and modern slavery statement;
dreview of our impact assessment
regarding nature and biodiversity
and approval of actions;
dapproval of our first Group
climate transition plan, ahead
of Board approval;
dreview and approval of our
environmental policy;
dreview and approval of our annual
climate report for publication.
Training and building expertise
We also consider the training and
development requirements of those
with oversight responsibilities and
accountability for climate-related
matters to ensure we have appropriate
awareness and expertise to drive
progress. In 2024, this included a
Board session focused on ESG risks
within underwriting. The session was
delivered by our Sustainability Manager
with support from a specialist risk and
sustainability third party. The aim of
the session was to further inform the
Board on the intricacies of E, S and
G factors that may occur in the risks
we write. The topic was well received
and achieved its main aim. Board
sessions on sustainability and related
issues have also taken place in our
subsidiary boards.
Other opportunities to further build
in‑house expertise are also considered
on a team-by-team, function‑by‑function
basis. For example, our new
sustainability manager has previously
completed the Cambridge Institute
for Sustainability Leadership’s (CISL)
Sustainable Business Management
course, senior members of our in‑house
Group Investment team have gained
accreditation through the CFA Certificate
in ESG Investing, and one member of
the investment team has completed a
Themis course, developed with the UK
Independent Anti-Slavery Commissioner
and accredited by the London Institute
of Banking and Finance, on modern
slavery and human trafficking within
financial services. Meanwhile, members
of our central strategy and investor
relations teams have also upskilled
through the Sustainability in Insurance
course for senior leaders, run by the
LMA through the ESG Academy. The
remainder of the business receives
annual sustainability mandatory
training which has been updated for
2024 to ensure individuals have the
basic knowledge of our impact on
climate and nature, our sustainability
strategy and the associated policies.
In addition, we carried out numerous
lunch and learns for our employees
to brush up their knowledge and
understanding of how to reduce
their individual impact.
We will consider further ESG or
climate‑specific training in 2025
as appropriate.
Policies and processes
The governance structure we have
embedded for climate-related
issues is also supported by a range
of relevant policies and processes
that we expect both our staff and
our third-party providers to adhere
to. These policies are all published
on hiscoxgroup.com and the table
on page 77 shows the updates to
enhance the policies during 2024.
These governance policies and
processes are complemented by our
long-standing active risk management
practices, which include climate-related
stress testing and scenario analysis,
such as those outlined on page 46,
both through our own established
internal programme of stress testing
and scenario analysis and also as
participants in market-wide activities
when they occur, such as the Bank of
England’s Climate Biennial Exploratory
Scenario (CBES) in 2021 and the PRA’s
General Insurance Stress test (GIST)
in 2022. Examples of the outputs of
our internal work include the property
extreme loss scenarios detailed on page
46, which show the potential financial
impact to the Group of events including
More information on our policies
and disclosures can be found at
hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
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Policies and processes
Policy
Overview
2024 updates
The Hiscox
Group ESG
exclusions policy
This policy outlines our ambition to reduce steadily
and eliminate by 2030 our (re)insurance and
investment exposure to thermal coal, oil sands,
Arctic exploration (beginning in the ANWR region)
and controversial weapons. Oversight of this
policy occurs at the SSC, as well as through the
relevant underwriting and investment committees,
with implementation of it driven at a business
unit and function level across both underwriting
and investments. The policy is reviewed annually.
During 2024, the SSC decided to lower the
threshold for exclusion from direct investment,
from 30% to 10% of revenue. This applies to each
excluded activity: thermal coal, oil sands, Arctic
exploration and controversial weapons. This will
further reduce the Group’s exposure to areas of
high-transition risk and aligns with our wider ESG
activity and emissions reduction initiatives.
The Hiscox
Group
responsible
investment
policy
This policy outlines our expectations of both
our in-house investment team and our external
asset managers. This includes: our investment
processes and stewardship activities as we look
to invest in companies that have sound ESG
practices; how we evaluate our managers’ ESG
integration; and our approach to impact investing.
This policy is owned by the Group investment
team with oversight from both the SSC and the
Group Investment Committee. The policy is
reviewed annually.
The 2024 policy review resulted in more precise
guidelines on the human rights-related filters that
we expect our external investment managers
to apply to investments. In addition, we now
monitor an increasing array of nature-related
metrics across our portfolios, such as commodity
production that contributes to deforestation.
The Hiscox
Group
environmental
policy
This policy outlines our approach to managing
the environmental impact of our business
activities and those that arise from our ownership
and occupation of office premises. We actively
manage and aim to minimise our environmental
impacts, due to the resources we consume and
the amount of waste our activities produce, as
well as complying with relevant environmental
legislation and other external requirements. While
the policy is owned by our Chief Operations and
Technology Officer and reviewed periodically, its
effective implementation relies on Group‑wide
adherence to the environmental principles we
wish to live by. During 2024, it was reviewed
and further enhanced in line with our evolving
environmental practices.
The policy has been updated to ensure alignment
with regulatory expectations and to ensure it
captures our targets and progress to net zero as
part of our transition planning developments.
Human rights
policy
This policy outlines our approach to managing any
risks associated with human rights. Human rights
are based on the principles of dignity, equality,
and respect, and they are enshrined in the
Universal Declaration of Human Rights and other
international treaties and laws, which have guided
our approach.
Policy developed in 2024, ongoing development
of associated risk review processes.
Modern slavery
statement
This statement outlines our approach to managing
any risks associated with modern slavery.
The statement has been enhanced to provide
more transparency around our business
structure, risk management and KPIs. The
developments have been well received by
external ratings agencies.
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Financial summary
Identified climate-related risks
Risk type
Time horizon
Risk
Physical
Short, medium
and long term
Increased frequency and severity of
natural catastrophes including floods
and storms.
Physical
Medium to
long term
Business disruption to us, our
suppliers or investment assets from
climate events.
Physical
Medium to
long term
Lack of availability and increased price
of reinsurance.
Transition
Short, medium
and long term
Slump in the price of carbon-intensive
financial assets.
Transition
Short, medium
Reputational damage from insuring risks
that have a negative E, S, or G impact.
Litigation
Medium and
long term
Increased cases of legal action
against those that are seen as being
responsible for climate damage.
Short term: 0-2 years, medium term: 2-5 years, long term: 5+ years.
Japanese earthquake, Japanese
windstorm, European windstorm,
US earthquake and US windstorm.
Our risk management practices also
include the work of our exposure
management groups, which
is outlined on pages 42 to 45.
Our governance work culminates
in regular, repeatable climate-
related public reporting and
disclosures. This includes reports
we produce such as our annual
climate report, as well as global
standards that provide a means of
independent peer comparison such
as CDP, ClimateWise, MSCI and
Sustainalytics. An overview of our
2024 performance resulting from
these disclosures can be found on
page 88. These scores are used
to inform areas of improvement for
the year ahead, alongside our
own sustainability plans, with the
resulting action plans driven by the
sustainability working group and
overseen by the SSC in line with our
established governance structure
(see page 75).
Strategy
Climate-related strategic objectives
Strategic climate-related objectives
are considered in the Board‑approved
Group business plan as each
business area or function considers
the climate‑related elements that
affect them – for example, from
an underwriting, investment or
operational perspective. The Group
business plan outlines the strategic
priorities for the business and is
used by Senior Management to
guide the Group’s annual business
strategy and financial planning.
Specific climate-related strategic
objectives for the Group in 2024
included further thinking on
strategic view of climate-related
emerging risks and opportunities,
the embedding of our sustainability
strategy, and the understanding
of nature and biodiversity risks
and opportunities.
Process for identifying climate risks
and opportunities
Climate-related risks and opportunities
are identified and either progressed
or managed and mitigated in much
the same way as any other risks
and opportunities facing the Group.
Risks can be initially identified in a
number of ways, for example via
emerging risk groups, exposure
management, or via bottom-up risk
register refreshes. Once identified,
they are assessed by impact materiality
and probability and an appropriate
treatment strategy is put in place to
ensure the risk level is acceptable; in
certain cases the risk may be formally
accepted for a defined time period.
The relevant structures involved
in identifying climate-related risks
and opportunities in particular are
outlined here.
Opportunities
In the short, medium and long term we
expect to adjust our current product
offering and develop new products
that support the changing needs of
our customers. The products below
will support our sustainable operating
model plans.
Climate-related product development
We are continuously developing
products that are necessary for our
customers in the short, medium and
long term and that consider changing
needs including in relation to a changing
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Risk to Hiscox
Mitigation
Associated metrics and targets
Increased claims from customers and
changes to current claims patterns.
These claims will not only come from
damage to property but also from other
knock-on effects, such as global supply
chain disruption or scarce resources.
Given the majority of the policies we
write are annual (re)insurance policies,
we regularly consider our exposures to
physical climate change risks, which
gives us the opportunity to adjust
pricing and appetite accordingly.
We monitor any relevant
claim notifications.
Our employees, suppliers and assets
including sovereign bonds may be
impacted by physical climate impacts.
This may mean business disruption.
We have plans in place to deal with
disruption from natural disasters and
extreme weather events, supported by
our business continuity processes.
Not applicable.
As climate change increases it may
become harder and/or more expensive
to buy reinsurance for the most
impacted regions/perils.
We continue to maintain strong
relationships with a broad panel
of reinsurers. This enables us to
understand how reinsurers’ risk
appetites are evolving over time and
to optimise pricing and cover.
ESG exclusions policy to 2030.
Financial market dislocation could have
a negative impact on our investment
portfolios if we do not actively reduce
our exposure to carbon-intensive
financial assets.
Our ESG exclusions policy, which will
see us reduce steadily and eliminate by
2030 our exposure to the worst carbon
emitters in both underwriting and
investments, prepares us for this, as do
our GHG emission reduction targets.
ESG exclusions policy to 2030.
GHG targets to 2050.
Increased risk of reputational impact
including customers, suppliers and
other partners no longer wanting to
work with us.
Continue to improve our sustainability
progress and continue to reduce our
exposure to the high-emitting sectors.
ESG scores.
ESG exclusions policy to 2030.
Where such claims are successful,
those parties against whom the
claims are made may seek to pass on
some, or all, of the cost to insurance
firms through policies such as
professional indemnity or directors
and officers’ insurance.
Given the majority of the policies we
write are annual (re)insurance policies,
we regularly consider our exposures to
climate litigation risks, which gives us
the opportunity to adjust pricing and
appetite accordingly. We could also
consider specific policy exclusions
over time.
We monitor any relevant
claim notifications.
climate. What that looks like varies by
business area; for example, through our
participation in Flood Re in the UK, we
are better positioned to provide flood
insurance to some clients that are in
high-risk flood areas, and in the USA our
FloodPlus products similarly improve
market access to affordable flood
cover. ESG, including climate, is a key
consideration in our product frameworks.
Hiscox UK flood insurance
In UK retail, where our climate-related
exposures are relatively low, we have
been supporting homeowners and
small businesses with effective flood
insurance for a number of years. As
such, we are a longstanding participant
in Flood Re, the government-backed
scheme designed to improve both
the access and affordability of flood
insurance for high-risk properties.
Through our participation in Flood Re,
we also support the ‘build back better’
provision introduced to Flood Re in
2022. This provision enables customers
to access further funds, above
reinstatement costs, after a flood to
install flood resilience measures that are
designed to reduce the cost and impact
of future flooding. However, for our
high‑value home insurance product this
is an approach we have taken for some
time because we have always believed
that prevention is better than cure.
Hiscox UK sustainability and
environmental professional indemnity
In UK retail, we offer a suite of tailored
professional indemnity (PI) products
for specific emerging professions and
sectors. Given the continued growth
in environmental and ESG-related
professions, in recent years our PI
product suite has included a bespoke
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product for ‘green’ consultants –
designed specifically for businesses,
consultants or freelancers who are
providing professional advice and
consultancy on environmental goals
and practices to protect them against
claims arising from any poor or negligent
advice given. During 2023, we reviewed
our green consultants product offering
and have evolved the product in line
with the changing risk landscape,
consumer expectations and feedback,
and our own claims insights. The
result of this work is our sustainability
and environmental PI product, which
better reflects the current landscape
of climate-related, environmental and
broader sustainability professions which
are emerging. As such, it is designed
specifically for those professionals
providing advice and services in the ESG
sector, and who use their professional
expertise to help clients reach their
sustainability goals. In addition to the
standard elements of PI cover, the policy
provides more tailored elements of cover
for risks associated with sustainability
or climate-related incentives and tariffs,
or environmental certificate providers
– whether these risks relate to our
customer’s own practice, or those of
their client.
Hiscox London Market FloodPlus
We also support clients with
effective flood cover in our big-ticket
London Market business, where our
award‑winning FloodPlus product offers
higher limits and wider coverage than
those provided by the National Flood
Insurance Program (NFIP), the US
government-backed scheme. Through
FloodPlus, we also offer premium
discounts for those who take steps
to minimise the risk to their property
from flood. Our pricing capabilities for
FloodPlus are significant, as we use a
combination of in-house modelling and
additional model sources to identify
location-level pricing, and we work
with data providers to augment the
information we receive from vendor flood
hazard maps which enhance our ability
to view first-floor elevation data.
Hiscox London Market ESG 3033
During 2023, we launched ESG 3033 –
a sub-syndicate of our Lloyd’s Syndicate
33 – to recognise those businesses we
provide insurance for who can show
they have a positive ESG record. It is
industry agnostic and brings additional
insurance capacity to those clients to
help them cover ESG-positive risks,
such as wind and solar farms. In time,
this should lead to premium savings for
those businesses who show how their
ESG performance makes them a more
attractive risk. In 2024, we have written a
range of risks into the sub-syndicate,
delivering a more diverse and robust
portfolio. We aim to continue the growth
trajectory to enable support for more
businesses who align with our own
sustainability commitments.
Climate risk exposure management
Our natural catastrophe team uses
catastrophe models, to produce
a quarterly risk review of Hiscox‘s
exposure to peril impacts. The team’s
work also results in a one‑year
forward‑looking model of relevant
natural catastrophe risks, which reflects
the fact that the majority of the policies
we write are annual in nature, and
supports our ability to rapidly respond to
emerging trends as required. The team
includes historical claims data in the
model to produce a realistic likelihood of
risk exposure to Hiscox, and alongside
other functions this work contributes
to the development of UK entity-level
climate action plans which are reviewed
and approved at both entity‑level and
through the SSC. One example of how
an identified risk has been managed
with the help of the natural catastrophe
team relates to Japanese typhoon risks,
where through modelling we identified
changing typhoon patterns in terms of
both size and intensity, which we were
then able to reflect in how we price this
particular business.
Climate and disaster recovery
As part of the climate risk mitigation
focus of our risk adaptation pillar
within our sustainability strategy,
Hiscox has been helping to plug the
insurance protection gap for countries
and communities around the world
by founding and chairing the Lloyd’s
Disaster Risk Facility. Alongside five
other Lloyd’s syndicates who work
together as part of the facility, we aim
to design and support initiatives in
areas of the world where insurance is
unaffordable, or simply does not exist
at all. The facility focuses on providing
crisis and climate-related disaster
risk financing solutions to reduce
vulnerability and support the risk
transfer mechanisms across all stages
of the disaster cycle, from emergency
response through to reconstruction.
Following a disaster caused by natural
or anthropogenic hazards, pre‑arranged
finance (such as insurance) can
significantly reduce the cost, impact
and recovery time, by ensuring financial
support reaches those who need it
most. The Lloyd’s Disaster Risk Facility
operates globally with streams of
distribution including the Lloyd’s chaired
Sustainable Markets Initiative, and the
Insurance Development Forum (IDF),
which is a public-private partnership,
and led by the insurance industry.
Examples of support include:
dparticipation on the IDF’s
Sovereign and Humanitarian
Solutions working group, which
together with the United Nations
Development Programme (UNDP)
and InsuResilience Solutions
Fund (ISF), aims to address the
insurance needs of the most
climate-vulnerable sovereigns,
and humanitarian organisations
operating in these nations;
dprovision of reinsurance for
the major risk pools across the
globe, providing capacity to: the
Southeast Asia Disaster Risk
Insurance Facility (SEADRIF) for
flood risk in Laos; the African Risk
Capacity (ARC) for drought, flood
and cyclone risks across more than
20 nations in Africa; the Caribbean
Catastrophe Risk Facility (CCRIF
SPC) for excess rainfall, hurricane
and earthquake risk in the
Caribbean and Latin America;
and the Pacific Catastrophe Risk
Insurance Company (PCRIC),
which supports small island
nations, and responds to the risk of
earthquake, tsunami and cyclone
in the south Pacific region. The
Lloyd’s Disaster Risk Facility has a
global scope and is peril agnostic,
engaging with clients located all
over the world;
dproviding support to the United
Nations Children’s Fund (UNICEF)
Today and Tomorrow initiative,
which focuses on providing rapid
pay-outs following cyclone events
in eight countries across four global
cyclone basins – Bangladesh,
Comoros, Haiti, Fiji, Madagascar,
Mozambique, Solomon Islands,
and Vanuatu. These insurance
pay-outs are then used in the
immediate aftermath of such an
event, responding to the needs of
vulnerable children and helping to
mitigate the impacts;
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dpartnered with Aon and the
International Federation of Red
Cross and Red Crescent Societies
(IFRC), to implement a reinsurance
solution which protects IFRC’s
Disaster Response Emergency
Fund (DREF), allowing the local
societies of the Red Cross and
Red Crescent to respond to more
natural hazard-related disasters in
a timely manner.
Risk management
Approach to climate risk management
While there are certain nuances to
climate risk, we consider it to be a
cross-cutting risk with the potential to
impact each existing risk type rather
than a stand-alone risk. We look at how
climate interacts with different risks and
whether this may result in correlations or
concentrations of exposure that we need
to know about, monitor and manage.
Climate-related risks, among other
major exposures, are monitored
and measured both within our
business units and at Group level. By
design, our Group risk management
framework provides a controlled and
consistent system for the identification,
measurement, mitigation, monitoring
and reporting of risks (both current
and emerging) and is structured in
a way that allows us to continually
and consistently manage the various
impacts of climate risk on the risk
profile. Examples of the climate-related
risks identified can be found on pages
78 to 79, and for more information on
the risk management framework, see
pages 42 to 43.
Our risk and control register, risk and
control self-assessment process,
and risk policies include relevant
climate considerations against each
of our existing risk types, including our
emerging and principal risks, which can
be found on pages 22 to 25. Therefore,
climate-related risk drivers are not
considered a single risk factor but are
assessed and recorded against the
risks on our risk and control register.
Climate risk appetite
In line with regulatory requirements,
we have developed a climate risk
appetite statement for the Group,
which articulates our risk appetite
when it comes to climate and guides
our approach to climate risk. The
climate risk appetite statement was
formally approved by the SSC and we
subsequently developed a climate
dashboard to monitor a set of metrics
which can assess our position relative
to our climate risk appetite.
Climate risk management and oversight
Our Risk Committee is responsible
for assessing the climate-related
risks and opportunities we face.
It advises the Board on how best
to manage the Group’s risks, by
reviewing the effectiveness of risk
management activities and monitoring
the Group’s actual risk exposure. The
Risk Committee relies on frequent
updates from within the business,
including those arising from the
management committees and working
groups that report up through the Risk
Committee, and from independent
risk experts, for its understanding
of the risks facing both our business
and wider industry.
Group Underwriting Review (GUR)
The GUR is a Group management
committee focused on assessing
progress against the Group’s strategic
underwriting priorities, reviewing and
challenging the Group’s underwriting
portfolio and loss ratio performance,
and approving key underwriting risks.
It also serves as an escalation point for
underwriting governance and control
issues. The committee meets at least
five times a year, is chaired by the Group
Chief Executive Officer, and attended by
other senior leaders including the Group
Chief Financial Officer, Group Chief
Underwriting Officer and the Group
Chief Risk Officer – with experts invited
from actuarial, claims, underwriting risk
and reinsurance.
A number of working groups feed into
the GUR, including some with particular
climate relevance such as the Natural
Catastrophe Exposure Management
Group (see below) and the Casualty
Exposure Management Group, which
considers among other things risks
associated with climate litigation.
Deep dive – the Natural Catastrophe
Exposure Management Group
The Natural Catastrophe Exposure
Management Group reviews natural
catastrophe risk at least quarterly. This
group is chaired by the Group Chief
Underwriting Officer and attended
by other Hiscox senior managers
responsible for catastrophe-exposed
business. This group looks at the risk
landscape, exposure monitoring and
capital modelling for climate-related
perils, and recommends, based on
the latest observations and scientific
knowledge, which models should be
used for each peril, and, if necessary,
how they should be adapted to reflect
our best view of the risk. They also
identify new areas of risk research.
The models are reflected with
changes to Hiscox’s modelling policy,
historical claim data and all of our
research prioritisations. The results
from the updates are signed off and
authorised by this group, resulting
in recommendations of changes
to Hiscox’s policies to mitigate the
potential impact of climate-related
losses to the Group.
Deep dive – the Casualty
Exposure Management Group
This group develops and manages
the systemic risk that may arise in
our casualty portfolio. Extreme loss
scenarios are run to better understand
and manage the associated risks
throughout Hiscox. The risks that the
team review include possible climate
litigation covering topics such as
greenwashing, energy litigation and
mis-statement of disclosures. There
is potential exposure in all business
units, particularly in our London Market
business in areas such as general
liability, marine and energy liability
and D&O. The team continues to track
developments in climate cases, new
legislation and corporate reporting
requirements to understand potential
risks, and these are taken into account
when setting business plans across
the Group.
Group Risk and Capital
Committee (GRCC)
The GRCC is a Group Management
committee focused on risk and capital
management. It covers all types and
categories of risk, including but not
limited to underwriting, reserving,
market, credit, operational and strategic
risk (see pages 22 to 25 for a summary of
our emerging and principal risks), as well
as risk aggregation, concentration and
dependencies. The committee meets
four times a year, is chaired by the Group
Chief Executive Officer, and attended by
other senior leaders including the Group
Chief Financial Officer, Group Chief
Underwriting Officer, Group Chief Risk
Officer, and the Group Head of Capital
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Management – with other experts invited
from across the business as required.
A number of committees feed into the
GRCC, including some with particular
climate relevance such as the SSC and
the Grey Swan Group (see below).
Deep dive – the Grey Swan Group
Grey swan risks are defined as being
those risks with a potentially large
impact, but a low perceived likelihood of
happening. Therefore, the focus of the
Grey Swan Group is to consider various
enterprise emerging risks identified
from across the business and to
provide a forum for discussion to ensure
Hiscox has the relevant ‘grey swans’
identified and the right actions in place
to address them. Several elements feed
into this process, including enterprise
emerging risk scanning; regulatory
horizon scanning; casualty exposure
management; strategic and business
planning; claims and actuarial reserving;
and any other relevant business unit
or function inputs. Rapidly evolving
expectations on companies’ responses
to sustainability and climate change
are considered as part of this group, in
addition to other matters unrelated to
sustainability or climate change.
The risk management processes
we have established and embedded
for climate-related matters feed into
the annual review of the operating
plan, the long-term strategy planning
process, forward-looking assessment
scenarios, stress tests, and reverse
stress test scenarios.
Climate scenario analysis
The governance and risk management
structures we have in place are critical
to the delivery of the annual Group
operating plan and ensure a coordinated
approach to climate and other issues
across the Group. These structures are
supported by investments in technology
– to ensure the right modelling and data
are available to support our pricing and
exposure – and by in-house expertise –
where we combine off-the-shelf climate
views with our own claims expertise and
insight to form a unique view (what we
call the ‘Hiscox view of risk’). Therefore,
we consider the potential impact from
climate-related issues over a range of
short-, medium- and long-term time
horizons. We consider short term to be
0-2 years, medium term to be 2-5 years,
and long term to be five years and over,
which aligns with some of our business
planning timeframes.
While in the long term as a property
casualty insurer, Hiscox is certainly
exposed to climate-related risks,
we believe our exposures can be
managed through time as a result of
how we conduct our business. For
example, through the flexibility we
have in our predominantly annual
underwriting contracts, and through
the liquidity of our investment
portfolio which lends itself to constant
adjustment. This flexibility is our key
tool for managing the multi-decade
challenge of climate risks holistically.
We have previously conducted our
own in-house stress testing and
scenario analysis and contribute to
industry events which can help us
manage the risks related to climate
impact. In 2022, Hiscox Syndicate
33, Syndicate 3624 and Hiscox
Insurance Company (HIC) participated
in the PRA General Insurance Stress
Test (GIST). The objectives of the
GIST 2022 exercise were to assess
resilience to severe but plausible
natural catastrophe, as well as cyber
scenarios, to gather information about
firms’ modelling and risk management
capabilities and to enhance the PRA’s
and firms’ abilities to respond to
future shocks.
While the exercise did not aim to assess
the financial impact specifically from
climate change, the climate-related
(atmospheric) scenarios it explored
– US hurricanes, European/UK
windstorms and UK flood – represented
severe but plausible realisations of
current climate conditions chosen to
reflect firms’ exposures and business
models. Industry-wide stress tests such
as the GIST support our established
and embedded programme of internal
stress testing and scenario analysis and
contribute to their continued evolution,
with the risks identified contributing to
the table on pages 78 to 79.
Metrics and targets
Metrics
We recognise the need to establish
climate-related metrics that can inform
and incentivise the management
of our identified climate risks and
opportunities. While we have
established metrics in areas such as
GHG emissions, investments, and
underwriting exposure, we have more
work to do in other areas and as such
we are committed to expanding our
disclosures in the near future to ensure
we can further quantify our progress
over time.
Investments
Climate Value-at-Risk (CVaR)
Hiscox’s investment exposure to climate
risk in different global temperature
scenarios can be analysed through
the lens of CVaR. This form of stress
and scenario testing is designed to aid
our identification, assessment, and
management of climate-related risks
as they arise and complements our
Climate Value-at-Risk (CVaR)
Warming scenario
1.5°C
net zero
2050
2.0°C
delayed
transition
3.0°C
fragmented
world
CVaR (%)
(3.4)
(2.0)
(1.6)
CVaR ($m)
(283)
(162)
(135)
Data as at year-end 2024.
Percentages above are calculated as a proportion of total investable assets.
This analysis aggregates the bottom-up exposure of our investee companies to transition and physical risks to produce a holistic view of the Group’s
risk exposure in different plausible scenarios. The modelling uses the REMIND model with scenarios from the NGFS (Network for Greening the
Financial System) and assumes aggressive physical risk outcomes.
These stress tests are updated quarterly and are run for each entity, portfolio and at Group level. The calculated values are also compared to the
outcomes for a globally diversified equity index and are included within our internal ESG investment dashboard in order to highlight any Management
actions required. The CVaR results show the most dramatic impact at 1.5oC in part due to the make up of our investment portfolio and the limitations
of current modelling.
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participation in market-wide activities,
such as the Bank of England’s Climate
Biennial Exploratory Scenario (CBES)
in 2021 and the PRA General Insurance
Stress Test (GIST) in 2022.
Current models do not forecast any
loss in cash or government bonds, and
generally do not cover asset-backed
securities at present. Therefore the
stress impacts mainly derive from
climate risk exposure within our
corporate bond portfolio, and within
our equity portfolios to a smaller extent.
We have chosen three warming
scenarios to assess our investment
exposure to climate risk, each from
the Network for Greening the Financial
System (NGFS). These scenarios
provide a plausible range of outcomes,
are broadly conservative, and do not
assume the transition will be orderly.
The modelling uses the REMIND
model for future macro-economic
climate damage.
In each scenario we use a version
that assumes an aggressive physical
risk outcome, to more accurately
assess worst-case portfolio
outcomes. This helps to inform
our strategic decision‑making and
monitor the climate impacts of our
investment portfolio.
For Hiscox’s investments as a whole,
the CVaR results for the different
scenarios, as of year-end 2024, are
shown in the table on page 82.
Water and waste
Activity data (Unit)
Emissions (tCO2e)
2024
2023
2024
2023
Water use (m3)
23,000.3
32,288.4
3.5
5.7
Wastewater (m3)
20,746.7
29,002.1
3.9
5.8
Waste (tonnes)
123.2
84.6
57.6*
22.7*
GHG emissions summary
Scope
2024
(tCO2e)
2023
(tCO2e)
2022
(tCO2e)
2021
(tCO2e)
2020
(tCO2e)
2024 vs. 2020
baseline
Scope 1
549.4
408.9
786.6
677.5
615.1
-10.7%
Scope 2 (market-based)
1,029.4
1,043.1
926.1
866.2
1,111.0
-7.3%
Total Scope 1 and 2
1,578.8
1,452.0
1,712.7
1,543.7
1,726.1
-8.5%
Scope 3 (operational)
22,612.1
24,462.0
19,298.1
17,116.2
20,347.9
11.1%
Scope 3 (operational) per FTE
6.47
6.94
5.83
5.80
6.13
5.5%
Total operational footprint
24,190.9
25,914.0
21,010.8
18,659.9
22,047.0
9.6%
Scope 3 (non-operational)
12,948.7
10,233.8
9,862.2
8,458.0
8,635.7
49.9%
Investments†
126,997.0
129,526.0
127,497.0
125,156.0
135,275.0
-6.1%
The increase in waste is due to more actual data from sites, including some spending for waste that wasn’t previously reported.
*Includes office waste reported by material type and weight, plus spend related to waste treatment. GHG emissions for spend-related data use the
US EPA EEIO emission factors.
Our Scope 1-3 emissions (excluding investments) are independently verified to a reasonable assurance level. A limited level of assurance has been
attained for Investments emissions. Emissions are calculated for the period 1 November 2023 to 31 October 2024. A copy of the verification statement
can be found at hiscoxgroup.com/responsibility/environment.
*GHG emissions are calculated according to the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition). Hiscox
uses market-based Scope 2 emissions for reporting in line with its GHG reduction target. Scope 1 includes natural gas, fugitive emissions (leakage
of gases from air conditioning and refrigeration systems) and company cars, while Scope 2 includes electricity and district heating. Operational
Scope 3 includes operational suppliers (office and other related services), capital purchases, fuel and energy-related activities, waste generated in
operations, business travel, employee commuting and remote working. Non-operational Scope 3 includes emissions that do not directly contribute to
the emissions associated with daily business activity, including non-operational purchased goods and services, transportation and distribution and
downstream leased assets.
An assessment across all categories of Scope 3 emissions has taken place and the relevant categories are disclosed as part of our full GHG inventory
(above). Note some emissions totals may not tally due to rounding. A copy of our Streamlined Energy and Carbon Reporting (SECR) GHG emissions
table can be found on page 84.
The investment emissions are calculated using the Enterprise Value Including Cash (EVIC-based) method of attributing financed emissions to
investors, and calculations use Morgan Stanley Captial International’s (MSCI) carbon data† as the ultimate source. Our 2020 operational emissions
baseline for business travel has been restated to project pre-Covid travel patterns.
†Although Hiscox’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the ‘ESG Parties’), obtain information
(the ‘information’) from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness,
of any data herein and expressly disclaim all express or implied warranties, including those of merchantability and fitness for a particular purpose.
The information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for,
or a component of, any financial instruments or products or indices. Further, none of the information can in and of itself be used to determine which
securities to buy or sell or when to buy or sell them. None of the ESG Parties shall have any liability for any errors or omissions in connection with any
data herein, or any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the
possibility of such damages.
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Current reporting year (2024)
Previous reporting year (2023)
% Change
in emissions
(total
year‑on‑year)
UK
Global
(excluding UK)
Total
UK
Global
(excluding UK)
Total
Fuel consumption – stationary
(Scope 1) (tCO2e)
340.3
39.5
379.9
269.5
45.5
314.9
21%
Fuel consumption – mobile
(Scope 1) (tCO2e)
–
58.7
58.7
–
44.4
44.4
32%
Fugitive emissions
(Scope 1) (tCO2e)
102.2
8.7
110.9
32.3
17.3
49.6
124%
Scope 1 total (tCO2e)
442.5
106.9
549.4
301.7
107.2
408.9
34%
Electricity (Scope 2)
– location-based*† (tCO2e)
498.8
861.8
1,360.6
514.4
926.6
1,441.0
-6%
Electricity (Scope 2)
– market-based*‡ (tCO2e)
65.0
917.7
982.7
38.0
955.2
993.2
-1%
District heating and cooling
(Scope 2) (tCO2e)
–
46.7
46.7
–
49.9
49.9
-6%
Scope 2 market-based
total (tCO2e)
65.0
964.4
1,029.4
38.0
1,005.1
1,043.1
-1%
Total Scope 1 and Scope 2
(location-based)
941.3
1,015.4
1,956.7
816.1
1,083.7
1,899.8
3%
Total Scope 1 and Scope 2
(market-based)
507.5
1,071.3
1,578.8
339.7
1,112.3
1,452.0
9%
Scope 1 and 2 intensity
ratio – location-based
(tCO2e/headcount)
0.5
0.6
0.6
0.5
0.6
0.5
4%
Scope 1 and 2 intensity
ratio – market-based
(tCO2e/headcount)
0.3
0.6
0.5
0.2
0.6
0.4
10%
Total energy consumption
(MWh)§
4,269.8
2,942.4
7,212.3
3,957.0
3,033.9
6,990.8
3%
In line with the requirements set out in the UK Government’s guidance on streamlined energy and carbon reporting, the table
above shows Hiscox’s total annual energy use and GHG emissions associated with the consumption of electricity, natural gas
and other fuels combusted, and fuel consumed for relevant business transport purposes, for the period 1 November 2023 to
31 October 2024.
The methodology applied to the calculation of GHG emissions is the ‘GHG Protocol: Corporate Accounting and Reporting
Standard (revised edition)’. An ‘operational control’ boundary has been applied. Carbon factors from UK Government
GHG Conversion Factors for Company Reporting, and the International Energy Agency (IEA) database and, the United
States Environmental Protection Agency (US EPA) GHG Emission Factors Hub database have been used to calculate the
GHG emissions. Emissions are reported as tCO2e. Electricity emissions have been reported as both ‘location-based’ and
‘market-based’.
This table will differ from our full GHG inventory on page 83. In our full GHG inventory you will find information on our Scope 3
emissions not required under SECR.
In 2024, the UK accounted for 32% of our global total Scope 1 and 2 of our market-based emissions, and 59% of our global
energy use as outlined in the table above.
In 2024, we implemented a number of energy efficiency initiatives, including reducing heating and air conditioning usage and
adjusting lighting levels in Hiscox-controlled offices, in support of our decarbonisation plans.
Streamlined Energy and Carbon Reporting (SECR) GHG emissions
*Includes electricity consumption from both stationary and mobile assets.
†A location-based method reflects the average emissions intensity of grids on which energy consumption occurs.
‡A market-based method reflects emissions from the electricity supply that the company has purchased.
§Total energy consumption refers to all energy consumption under Hiscox’s operation control. This includes Scope 1 and Scope 2: natural gas, diesel,
petrol, refrigerants, stationary electricity, mobile electricity and district heating.
For the purposes of baselining and ongoing comparison, we are required to express emissions using a carbon intensity metric. The intensity metric
chosen is employee headcount.
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GHG targets
Our GHG targets commit us to:
dreduce our Scope 1 and Scope 2
emissions by 50% by 2030,
against a 2020 adjusted baseline;
dreduce our Operational
Scope 3 emissions by 25% per
FTE by 2030, against a 2020
adjusted baseline;
dtransition our investment
portfolios to net-zero GHG
emissions by 2050;
dengage with our suppliers, brokers
and reinsurers on our net-zero
targets and on their plans to adopt
Paris-aligned climate targets;
dmonitor emerging standards
around underwritten emissions
and collaborate across our
industry on their development,
aligning with best practice in this
area as it emerges.
Our GHG targets are important as they
will help us to reduce our exposure
to volatile carbon costs in the future,
for example the cost of offsetting,
and therefore help to mitigate the
financial risks associated with our
GHG emissions.
Interim GHG targets
We recognise that achieving these
targets will take collective, consistent
effort and continue to work towards
achieving them.
dIn addressing our Scope 1 and
Scope 2 targets, we continue
to produce a half-year carbon
footprint process in order to further
enhance data transparency and
accuracy and provide a midpoint
for internal tracking and review.
dWe continue to review all electricity
contracts across the Group to
further improve our evidence base
and oversight as we migrate to
renewable electricity contracts
wherever possible.
dOn Scope 3, where emissions are
dominated by our investments,
we have set a number of
interim targets:
dwe aim for more than 25% of
our corporate bond portfolio
by invested value to have
net‑zero/Paris-aligned targets
by 2025;
dwe are targeting an additional
25% by AUM coverage every
five years as we aim to be on
a linear path to 100% portfolio
coverage by 2040.
In addition, in 2024 we set engagement
targets for our supply chain
management, which will be progressed
by all relationship managers across the
business. These include:
d45% of our suppliers to be
assessed via our third-party
agency ratings in 2025.
d75% of spend assessed via our
third-party ratings agency over
the next three years.
We have now exceeded the first of
our interim targets, a year ahead of
schedule, with approximately 27% of
our corporate bond portfolio having
net-zero/Paris-aligned targets as at year
end. We will continue to engage with our
managers on further net-zero plans and
action, in order to reach our next target
of 50% portfolio coverage by 2030.
2024 GHG progress
We continue to focus on managing and
reducing our carbon emissions.
In 2024, we adapted our contract lease
wording to ensure the offices we are
choosing as part of our estate meet
our future sustainability commitments
and have continued to engage with
landlords to ensure alignment. We
also took part in the UK Government
Energy Savings Opportunity Scheme
(ESOS) assessment which enabled us
to capture and implement reduction
opportunities within our UK offices.
Against our 2020 baseline, we have
seen a 9% decrease in our overall
Scope 1 and 2 emissions, partly
due to reductions in our vehicle fleet
emissions as we switch to electric
and hybrid vehicles. We have also
maintained our renewable electricity
contracts, which support our
reduction in Scope 2 emissions.
Compared to 2023, we have seen
an increase in our overall Scope 1
and 2 emissions due to more accurate
reporting on natural gas and refrigerant
emissions for several of our more
significant UK sites. Our Scope 2
emissions have slightly improved
compared to 2023, and we continue
to focus on renewable electricity
procurement in our updated office
lease guidance and through our
engagement with landlords.
There has been an 8% decrease in
our Scope 3 operational emissions
compared with 2023, predominantly
due to reductions in our operational
purchased goods and services and
slight reductions in our employee
commuting emissions linked to
changes in both headcount and
office occupancy rates.
With our Scope 3 non-operational
emissions, we have seen an increase
compared to the previous year, driven in
part by an increase in non-operational
emissions from purchased goods and
services, in line with heightened overall
spend in this area in 2023. As part of
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developing processes to manage and
monitor our supply chain sustainability,
we have onboarded a third-party data
provider and are encouraging new
suppliers to report their progress via the
platform. Sustainability is also part of our
new supplier scorecard, with 20% of the
rating given to sustainability.
We also report on waste and waste
water usage (see page 83), where the
year-on-year movements we have seen
are predominantly driven by further
enhancements to our data collection
processes, including greater use of
actual, rather than estimated, data.
In relation to waste data, this has
resulted in more detail on waste types
for some sites, which in turn allows
for more accurate categorisation of
emission factors.
Tracking progress against our
GHG targets
Progress against these targets is driven
by our sustainability working group and
overseen by the SSC. For example,
emissions data is discussed at least
annually at the sustainability working
group and SSC, with other related
activities discussed periodically. This
includes our progress against targets,
and any issues with progress are
escalated through the established
sustainability governance structure
(see page 75).
Progress against these targets is also
recorded through our annual carbon
reporting cycle, and we seek to remain
operationally carbon neutral through
offsetting, as we have been since
2014, while also actively reducing
our emissions over time. Our primary
and continuous goal is to improve our
emissions reporting to become more
granular in order to help us reduce
emissions efficiently and confidently.
Climate targets
Beyond our GHG targets, other
climate‑related measures include:
dreducing underwriting
and investment exposure to
carbon-heavy sectors including
coal-fired power plants and
coal mines, oil sands and Arctic
energy exploration (beginning
with the Arctic National Wildlife
Refuge), in line with our Group
ESG exclusions policy;
dannual investment portfolio
sustainability reviews, taking
into account climate-related
issues, in line with our responsible
investment policy;
dmonitoring the amount invested in
ESG/green bonds, which at year
end stood at $264 million, or 4%
of the corporate bond portfolio;
dsupporting the growth and
exposure of sustainable
underwriting products such as
flood and renewable energy
products, including, but not limited
to, the business written through the
ESG sub-syndicate we launched
during 2023, ESG 3033.
Transition planning
As part of our ongoing work to
assess our progress to our committed
and stated targets we have begun
developing an internal transition plan
which has been reviewed by the SSC.
The transition plan has been developed
in line with the Transition Plan Taskforce
guidance and aligned to a 1.5°C
trajectory. The transition activity is
owned by the relevant business areas,
and progress governed by the SSC
which is chaired by the Group Chief
Executive Officer.
We acknowledge that a ‘whole
economy’ approach is necessary
to achieve a net-zero transition, and
our value chain partners are critical
to our ability to achieve our net-zero
targets. When engaging with our
partners, we aim to nurture long-term
relationships based on the principles
of fairness and transparency through
both our commercial dialogue and
supplier assessments.
We have focused on the areas
where we can currently measure our
emissions with a robust methodology.
One challenge the industry has as
a whole is measuring the emissions
of our insureds. This is particularly
challenging for Hiscox given the nature
of our various business units, there
are varied approaches to customer
engagement. As such, we are
proactively engaging data providers
and increasingly shifting resources
to support further development in
this area.
We will continue to develop, track and
monitor the progress of our transition
plan internally for another year before
publication, but include, below, some
progress highlights for reference.
Scope 1 and 2
For our Scope 1 and 2 target, a
reduction of 50% by 2030 and achieving
net zero by 2050 are heavily dependent
on landlords and the type of energy
used to power the offices we lease.
In 2024, we updated our contracts
to include certain contractual terms
to encourage landlords to make the
switch to renewable energy contracts
and sources. In recent years this has
potentially been difficult for landlords
as the energy and financial crisis has
made renewable energy less of a
priority and sourcing cheaper forms of
energy more attractive. However, now
our green leasing terms will support
us in ensuring we do not return to
non‑renewable energy sources in any
of the buildings we lease. We are also
reliant on government policy prioritising
and enabling renewable energy for the
countries we operate in to support our
progress. For any future new offices, we
will prioritise renewable energy sources.
Operational Scope 3
Our focus for this scope of emissions
over the coming years will be on
improving our data collection processes
and coverage and engaging with
our suppliers to reduce their own
emissions. The calculation used to
understand our supply chain emissions
is currently based on spend rather than
the emissions of each supplier, which
with increased spend will increase
the carbon footprint of our supply
chain. During 2023/4 we onboarded
a third party to support our suppliers
to report their emissions, and this
has been successful in moving us
from zero to 30% coverage of our
portfolio as well as in helping us to
understand the ESG factors of our
supply chain. However, this is still
fairly low coverage for us to move
away from the current measurement
process. We will continue to improve
the coverage, and then look to
amend our measurement with the
improved data.
Investments
Our ESG considerations are
embedded in our investment strategy
and activated when selecting funds.
Our investment managers are engaged
to support us to meet our committed
aims. Our progress is tracked and
monitored via an investment dashboard
and we have achieved our first interim
target with approximately 27% of
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Climate‑related Financial
Disclosures (TCFD)
Governance
Remuneration
Financial summary
Natural gas
Refrigerants
District heating and cooling
Vehicle fuel use
Electricity market-based (including vehicles)
Projected near-term reduction required
SBT near-term 50% reduction
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Emissions (tCO2e)
2020
2021
2022
2023
2024
2025
2030
2050
Transition planning: Scope 1 and 2
The graph below shows our progress to date and our forward-looking assumptions to net zero. We aim to reduce by 50% by
2030 in addition to our current achieved reductions, and by 90% by 2050. In the table below are some of the agreed near-term
actions to support the required reduction. Any associated costs will be included in our operational costs, and in most cases
offer cost savings.
Our plan to reach our near-term 50% reduction target involves the following actions and aims
Reduction activity
Time frame
(s/m/l term)
Dependencies
Potential
reduction (tCO2e)
Electricity: switch to renewable electricity tariffs for our
remaining UK, European and main US site between 2025
and 2030.
Medium
Landlord
engagement
and government
policy.
492
Heating electrification: switching 10% of gas demand to be
provided by heat pumps by 2030.
Medium
Landlord
engagement
and government
policy.
25
Fuel efficiency: reducing gas usage by 5% by 2030 using high
efficiency boilers and thermal insulation.
Medium
Landlord
engagement.
19
Energy efficiency: electricity consumption reduction of 10%
by 2030 by changing lighting, BMS optimisation, insulation,
HVAC controls.
Medium
Landlord
engagement.
179
Short term: 0-2 years, medium term: 2-5 years, long term: 5+ years.
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Climate‑related Financial
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Governance
Remuneration
Financial summary
100
80
60
40
20
0
•
Assumes current portfolio of corporate bonds is static.
•
Assumes that all ‘committed’ companies do set net-zero targets by 2040, and
therefore the share falls to zero.
•
Assumes that companies with no SBTi/net-zero org/ITR data do eventually set
targets (4% currently).
•
Assumes companies with 23 remain misaligned and do not set net-zero targets.
Percentage of corporate bonds with
net-zero aligned targets
Hiscox’s net-zero/Paris-alignment, smooth trajectory
50
25
100
Approved targets
Committed
Misaligned
Target
2020
2025
2030
2035
2040
our corporate bond portfolio having
net-zero/Paris-aligned targets as at year
end. We will continue to engage with
our managers on further net-zero plans
and action. The chart below shows our
current projections to 2040.
With the goal of a fully net-zero/
Paris-aligned portfolio by 2040, we
use a variety of data sources and
assumptions to estimate, based on our
current portfolio, to what extent this
is likely to be achieved. Principally this
is based on whether companies have
SBTi-approved targets, whether they
are members of key net-zero industry
organisations and, where available,
company-specific implied temperature
rise (ITR) data.
Where companies already have
SBTi‑approved targets, we assume
these are kept and adhered to. If a
company has implied temperature rise
alignment of between two and three
degrees, or they are members of key
net-zero industry organisations, we
also assume they set targets by 2040.
The same is true for the small number
of companies where there is a lack of
current data on their status. There is
a small portion of the corporate bond
portfolio which, based on current data,
is not likely to set net-zero/Paris‑aligned
targets. As we get closer to the interim
and final targets, we may have to exit
these holdings if these companies
make no further efforts to transition.
Using the data and assumptions
outlined, we estimate the corporate
bond portfolio will trend towards 92%
Paris/net-zero-alignment by 2040.
This methodology allows for regular
updates as the portfolio shifts, further
data points become available and new
industry standards emerge.
Please see the glossary on page 246
for definitions of acronyms.
2024: B grade
2023: B grade
2024: 54%*
2023: 78%
2024: AAA grade
2023: AA grade
2024: 26.4
2023: 28.0
Risk reduction score
ESG disclosure
We recognise the importance of
credible, repeatable and comparable
ESG disclosure which is why we
contribute to a number of independent
ESG standards.
Our continued progress to embedding
sustainability across our business
has enabled us to maintain or improve
our scores. Our ClimateWise score
has reduced due to the development
of new principles, which is a positive
action as it continuously raises the
bar for the insurance industry.
*2024 reporting
reflects a change
in the ClimateWise
reporting principles.
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Disclosures (TCFD)
Governance
Remuneration
Financial summary
88
Hiscox Ltd Report and Accounts 2024
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Underwritten by Hiscox Insurance Inc., a Chicago based insurer.
We care about your
business dream as
much as you do.
Board member*
Board
meetings
attended
Audit
Committee
attended
Nominations
and
Governance
Committee
attended
Remuneration
Committee
attended
Risk
Committee
attended
Investment
Committee
attended
Colin Keogh†
4/4
4/4
4/4
4/4
4/4
4/4
Aki Hussain
4/4
4/4
4/4
4/4
4/4
4/4
Paul Cooper
4/4
4/4
4/4
4/4
4/4
4/4
Joanne Musselle
4/4
4/4
4/4
4/4
4/4
4/4
Lynn Pike
3/3
4/4
3/3
3/3
4/4
3/3
Beth Boucher
4/4
4/4
4/4
4/4
4/4
4/4
Donna DeMaio
4/4
4/4
4/4
4/4
4/4
4/4
Michael Goodwin
4/4
4/4
4/4
4/4
4/4
4/4
Jane Guyett‡
1/1
1/1
1/1
1/1
1/1
1/1
Thomas Huerlimann
4/4
4/4
4/4
4/4
4/4
4/4
Anne MacDonald
4/4
4/4
4/4
4/4
4/4
4/4
Constantinos Miranthis
4/4
4/4
4/4
4/4
4/4
4/4
Jonathan Bloomer†
3/3
3/3
3/3
3/3
3/3
3/3
*Lynne Biggar and June Yee Felix did not attend any 2024 meetings as they were not appointed to the
Board until January 2025.
†Colin Keogh became Interim Chair in August 2024 following the sudden death of Jonathan Bloomer.
‡Jane Guyett joined the Board in September 2024.
Governance summary
Key corporate
governance
activities
Read more about 2024 Board activities
on pages 101 to 102.
Board
attendance 2024
Board Chair
Committee Chair
Transition
Smooth transition of Board
responsibilities following the sudden
death of Chair, Jonathan Bloomer,
with Colin Keogh appointed Interim
Chair and Lynn Pike appointed
Interim Senior Independent Director.
Appointments
Jane Guyett, Lynne Biggar and
June Yee Felix appointed to the Board.
Code of conduct
New Group-wide code of
conduct introduced.
Engagement
Sixth year of our Employee Engagement
Network, led by Independent
Non Executive Director Anne
MacDonald, which is ensuring that
workforce views are considered as
part of Board decision‑making.
Training
The Board undertook focused
training in 2024 on areas including
the UK Listing Regime and UK Market
Abuse Regulation, investments, and
ESG issues.
Performance
review
An internal Board performance review
was conducted in 2024, with the findings
reflecting the effective progress made
by the Board against the 2023 external
Board performance review.
The Company’s Bye-laws prohibit any
Director who is in the UK or the USA from
counting towards the quorum necessary
for the transaction of business at a Board
meeting. This restricts the ability of the
Company’s Directors based in the UK or USA
to participate in Board meetings by telephone
or other electronic means. More information
on the Board and Committees can be found
on page 103.
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Governance
Remuneration
Financial summary
Gender
Female
8
Male
6
Tenure
0-3 years
5
3-6 years
2
6-8 years
4
8+ years
3
Age
46-55
3
56-65
4
66-75
7
Location
USA
6
Bermuda
1
Europe
6
Asia
1
Nationality
British
5
Bermudian*
1
American
6
Swiss
1
Australian
1
*Includes those Directors who hold a
Permanent Residency Certificate.
Ethnicity
White
12
Chinese American
1
Asian British
1
Board statistics
Board diversity at 27 February 2025.
Read more about gender and ethnic
diversity at Hiscox on page 67.
Appointments
and departures
Appointments
Jane Guyett
(effective 2 September 2024)
Lynne Biggar
(effective 27 January 2025)
June Yee Felix
(effective 27 January 2025)
Departures
Jonathan Bloomer
(deceased August 2024)
Anne MacDonald
(effective 15 May 2025)
Lynn Pike
(effective 15 May 2025)
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Governance
Governance summary
Remuneration
Financial summary
Interim Senior Independent Director
Lynn Pike (Aged 68)
Appointed to the Board:
May 2015
Relevant skills, experience
and contribution
sStrong background in the US
financial services sector.
sSignificant knowledge
of providing commercial
solutions for small businesses,
particularly in the USA.
Lynn worked in the US banking
industry for nearly four decades,
most recently as President of Capital
One Bank. Before that, she was
President of Bank of America’s
business banking division. Lynn
is Chair of the Risk Committee
and also serves on the Hiscox
Insurance Company Inc. board as
a Non Executive Director.
External board appointments
American Express Company
(NYSE: AXP); American Express
National Bank; CareerWork$
Advisory; California State University
Channel Islands Foundation.
Non Executive Interim Chair
Colin Keogh (Aged 71)
Appointed to the Board:
November 2015
Appointed Interim Chair:
August 2024
Relevant skills, experience
and contribution
sValuable financial
services experience.
sSignificant knowledge of
how to run an international
financial business.
Colin has spent his career in financial
services, principally at Close
Brothers Group plc where he worked
for 24 years and served as Chief
Executive Officer for seven years until
2009. Colin is also Interim Chair of
the Nominations and Governance
Committee and Chair of the Hiscox
Insurance Company Limited Board.
External board appointments
Ninety One Plc; Ninety One Ltd.
Executive Director
Aki Hussain (Aged 52)
Group Chief Executive Officer
Appointed to the Board:
September 2016
Relevant skills, experience
and contribution
sConsiderable experience of
providing strategic, financial
and commercial management
and in-depth knowledge
of the regulatory and
compliance environment.
sSignificant experience of driving
complex business change.
Aki joined Hiscox in 2016 as Group
Chief Financial Officer and became
Group Chief Executive Officer in 2022.
Aki also sits on the board of a number
of Hiscox subsidiary companies.
Aki has over 30 years of leadership
experience, across financial services,
telecoms and media, including as
Chief Financial Officer of Prudential’s
UK and Europe business, and
Finance Director for Lloyds Banking
Group’s consumer bank division.
Aki is a Chartered Accountant,
having trained with KPMG.
External board appointments
Visa Europe Limited.
Executive Director
Joanne Musselle (Aged 54)
Group Chief Underwriting Officer
Appointed to the Board:
March 2020
Relevant skills, experience
and contribution
sConsiderable underwriting
expertise, including experience
of managing underwriting
portfolios in our key markets.
sSignificant knowledge of
Hiscox, particularly Hiscox
Retail, having worked for the
Group for over 20 years.
Joanne joined Hiscox in 2002 and
has held a number of roles across the
Group, including Head of UK Claims,
Chief Underwriting Officer for Hiscox
UK & Ireland, and Chief Underwriting
Officer for Hiscox Retail. Joanne
also sits on the board of a number
of Hiscox subsidiary companies.
Prior to Hiscox, Joanne spent almost
ten years working in a variety of
actuarial, pricing and reserving roles
at AXA and Aviva in both the UK and
Asian markets.
External board appointments
Realty Insurances Ltd.
Executive Director
Paul Cooper (Aged 52)
Group Chief Financial Officer
Appointed to the Board:
May 2022
Relevant skills, experience
and contribution
sConsiderable experience
of financial and commercial
management within a
complex regulatory and
compliance environment.
sQualified Chartered
Accountant, with significant
experience of both the retail and
Lloyd’s insurance markets.
Paul joined Hiscox in 2022 as
Group Chief Financial Officer. With
over 30 years of financial services
experience, Paul has held a number
of senior roles, including Interim
Group Chief Financial Officer at M&G
Plc and Chief Financial Officer for The
Prudential Assurance Company. Paul
is a qualified Chartered Accountant,
having trained with PwC, and sits
on the board of a number of Hiscox
subsidiary companies.
External board appointments
None.
Board
of Directors
Group General Counsel and
Company Secretary
Marc Wetherhill (Aged 52)
Marc has significant legal and
governance experience, and is
the Principal Representative to
the Bermuda Monetary Authority
for the Hiscox Group. He
previously served as Chief Legal
Counsel and Chief Compliance
Officer at PartnerRe Ltd,
having trained as a solicitor in
London, and is a member of the
Bermuda Bar.
Independent Non Executive Director
Lynne Biggar (Aged 62)
Appointed to the Board:
January 2025
Relevant skills, experience
and contribution
sExtensive experience
in developing and
advancing well‑known,
multi‑market brands.
sDeep global marketing
expertise, including within
financial services.
Lynne has over 25 years of
experience in advancing global
brands across a range of sectors.
Lynne has held a range of senior
global marketing and operational
roles, including at American Express,
Time Inc., and most recently Visa
where, as Executive Vice President
& Global Chief Marketing Officer,
she led a global team of 800+ and
managed a budget of over $1 billion.
She is currently a Senior Advisor at
Boston Consulting Group.
External board appointments
Anheuser-Busch InBev SA/NV;
Voya Financial Inc.; Finastra Group
Holdings Ltd; The Leading Hotels of
the World, Ltd.
Chair of Committee is highlighted
in solid.
Member of the Audit Committee
Member of the Nominations and
Governance Committee
Member of the Remuneration
Committee
Member of the Risk Committee
Member of the Investment
Committee
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Governance
Remuneration
Financial summary
Independent Non Executive Director
June Yee Felix (Aged 68)
Appointed to the Board:
January 2025
Relevant skills, experience
and contribution
sConsiderable experience
in running, advising and
transforming technology
intensive businesses.
sDeep expertise in leading
complex global fintech
operations that serve both
businesses and consumers.
June has over 30 years of experience
growing, advising and transforming
technology intensive businesses
globally, particularly in financial
services, having worked across
Asia, the USA and Europe. This
includes leadership roles at Chase
Bank, Citibank, IBM, Verifone,
and most recently as Group Chief
Executive Officer of FTSE-listed
global fintech, IG Group Plc.
External board appointments
Relx Plc; Iron Mountain Inc.
Independent Non Executive Director
Michael Goodwin (Aged 66)
Appointed to the Board:
November 2017
Relevant skills, experience
and contribution
sSignificant knowledge of the
global insurance market.
sDeep understanding of
risk management as a
trained actuary.
Michael has over 25 years’
experience in the insurance industry,
having worked in Australia and the
Asia Pacific region for QBE Insurance
Group for over 20 years. Michael
started his career as an actuary, is
a Fellow of the Institute of Actuaries
of Australia and served as Vice
President of the General Insurance
Association of Singapore between
2006 and 2012. During the year,
Michael served on the DirectAsia
board as a Non Executive Director.
External board appointments
Steadfast Distribution Services
Pte Ltd; NCI Brokers (Asia) Pte Ltd;
Galaxy Insurance Consultants Pte
Ltd; Enya-Lea Pte Ltd; Werombi
Pte Ltd.
Independent Non Executive Director
Thomas Huerlimann (Aged 61)
Appointed to the Board:
November 2017
Relevant skills, experience
and contribution
sConsiderable experience of
leading a global business.
sExtensive knowledge of the
European insurance market.
Thomas has over 30 years’
experience in banking, reinsurance
and insurance. He was Chief
Executive Officer Global Corporate
at Zurich Insurance Group, a $9
billion business working in over 200
countries. Prior to that, he held senior
positions at Swiss Re Group and
National Westminster Bank. Thomas
serves on the Hiscox Syndicate Ltd
board as Chair and on the Hiscox SA
board as a Non Executive Director.
External board appointments
Leadway Assurance Ltd, Nigeria.
Independent Non Executive Director
Anne MacDonald (Aged 69)
Appointed to the Board:
May 2015
Relevant skills, experience
and contribution
sExtensive marketing expertise,
particularly in the USA.
sSizeable experience in
developing well-known
global brands.
Anne has served as Chief Marketing
Officer at four Fortune 100
companies, and been in charge of
some of the most recognised brands
in the world, including Citigroup,
Travelers, Macys and Pizza Hut.
Anne serves as the Employee Liaison
for Hiscox.
External board appointments
Boot Barn Holdings, Inc.; Visiting
Nurse & Hospice of Litchfield County.
Independent Non Executive Director
Constantinos Miranthis (Aged 61)
Appointed to the Board:
November 2017
Relevant skills, experience
and contribution
sDeep understanding of
Bermuda’s (re)insurance
industry, as well as the broader
global (re)insurance landscape
and market cycle.
sSenior leadership experience in
the reinsurance sector including
within large publicly‑listed
companies.
Costas served as President and Chief
Executive Officer of PartnerRe Ltd,
one of the world’s leading reinsurers,
until 2015 and prior to that was a
Principal of Tillinghast-Towers Perrin
in London, where he led its European
non-life practice. He is a Fellow of the
UK Institute and Faculty of Actuaries
and a resident of Bermuda. Costas
serves on the Hiscox Insurance
Company (Bermuda) Limited board
as a Non Executive Director.
External board appointments
Argus Group Holdings Limited;
Pacific Life Re; Riverstone
International Limited.
Independent Non Executive Director
Beth Boucher (Aged 59)
Appointed to the Board:
May 2023
Relevant skills, experience
and contribution
sConsiderable technology
experience within
global operations.
sExtensive experience in
leading global M&A and
transformation programmes.
Beth is currently a partner and fractional
CIO at Fortium Partners and a Research
Fellow at Nemertes Research. Beth
has more than 25 years of professional
experience across multiple industries,
as well as strategic consulting and
managed services. Most recently,
Beth was the Senior Vice President
and Chief Information Officer of Sirius
Point from 2019 until 2021 and prior to
that held various executive roles at The
Travelers Company. Beth is a certified
organisational change management
and international board director
with experience leading technology
strategy, application development,
infrastructure and operations.
External board appointments
Coforge Ltd.
Independent Non Executive Director
Donna DeMaio (Aged 66)
Appointed to the Board:
November 2021
Relevant skills, experience
and contribution
sExtensive financial services
experience, particularly in
the USA.
sProven expertise in
overseeing global auditing
and operational activities.
Donna has over 35 years’ financial
services experience, gained across
banking and insurance. She was
AIG’s General Insurance Global Chief
Operating Officer and also served
as their Global Chief Auditor. Donna
was Chief Executive and Chair of
the Board at United Guaranty, Chief
Executive Officer and Chair of the
Board at MetLife Bank and was a
PwC Financial Services Partner.
Donna serves on the board of Hiscox
Insurance Company Inc. as a Non
Executive Director and is Chair of
the Audit Committee.
External board appointments
State Street Corporation.
Independent Non Executive Director
Jane Guyett (Aged 64)
Appointed to the Board:
September 2024
Relevant skills, experience
and contribution
sStrong financial services
experience across
multiple markets.
sConsiderable expertise
in effective global
operational capabilities.
Jane has held a range of roles
across both the public and private
sectors and worked in the global
banking sector for over two decades,
most recently at Bank of America
Securities in senior leadership
roles including Chief Operating
Officer Global Markets, EMEA and
Asia. Jane was awarded a CBE in
the 2021 New Year Honours List
for public service to the economy.
On her appointment during 2024,
Jane became Chair of the Hiscox
Remuneration Committee.
External board appointments
Royal London Mutual Insurance
Society; BDO LLP; LCH Limited;
Banque Centrale de Compensation;
Connect Plus (M25) PLC.
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Governance
Board of Directors
Remuneration
Financial summary
Group
Executive
Committee
(GEC)
Robert Dietrich
Chief Executive Officer,
Hiscox Europe
Joined Hiscox: June 1997
Relevant skills, experience
and contribution
sIn-depth knowledge of the
European insurance market.
sSignificant experience of
bringing niche insurance
products to market.
Robert served as Managing
Director for Hiscox Germany for
many years, driving disciplined
expansion and building it
into the flagship European
business it is today. In 2021,
he took on wider responsibility
for Hiscox Europe, whose
operations span eight countries,
overseeing critical cross-country
systems transformation, redefining
its long-term vision and leading its
ambitious growth plans.
Jon Dye
Chief Executive Officer, Hiscox UK
Joined Hiscox: September 2022
Relevant skills, experience
and contribution
sIn-depth knowledge of the UK
insurance market.
sTrack record of building
sustainable, profitable retail
insurance businesses.
Jon leads our UK retail insurance
business, which spans eight
offices and over 800 employees,
overseeing the development of our
established broker business and
direct-to-consumer offerings. Jon
is responsible for building on our
long-term broker relationships,
distinguished brand and deep
expertise in underwriting and digital
distribution with new capabilities as
we continue to drive scale.
Aki Hussain
Group Chief Executive Officer
Joined Hiscox: September 2016
Relevant skills, experience
and contribution
sConsiderable experience of
providing strategic, financial
and commercial management
and in-depth knowledge
of the regulatory and
compliance environment.
sSignificant experience of driving
complex business change.
Aki joined Hiscox in 2016 as Group
Chief Financial Officer and became
Group Chief Executive Officer in
2022. As such, Aki leads the Group
Executive Committee in realising
the strategy, delivering the business
plan, and driving the Company
through its next phase of growth.
Aki has over 30 years of leadership
experience, across financial
services, telecoms and media, and
is a Chartered Accountant, having
trained with KPMG.
Fabrice Brossart
Group Chief Risk Officer
Joined Hiscox: November 2023
Relevant skills, experience
and contribution
sExtensive expertise in
enterprise risk management
and actuarial within the
international general
insurance industry.
sConsiderable experience in
leading regulator relationships
around the world.
Fabrice joined Hiscox in 2023
from AIG, where he was Chief Risk
Officer for the International General
Insurance business. He continues
to evolve our risk function, leading
our global team of approximately
40 risk and compliance experts,
and is responsible for ensuring our
risk structures enable growth, as
well as our continued regulatory
compliance. Fabrice has held a
number of senior actuarial roles at
AIG and AXA, having trained with
Watson Wyatt.
Paul Cooper
Group Chief Financial Officer
Joined Hiscox: May 2022
Relevant skills, experience
and contribution
sConsiderable expertise of
financial and commercial
management within a
complex regulatory and
compliance environment.
sQualified Chartered
Accountant, with significant
experience of both the retail
and Lloyd’s insurance markets.
With over 30 years of financial
services experience, Paul leads
our team of 400 finance experts
around the world and is establishing
a market-leading finance function.
He is responsible for ensuring robust
financial systems and continued
capital efficiency, and is a qualified
Chartered Accountant, having
trained with PwC.
Mary Boyd
Chief Executive Officer, Hiscox USA
Joined Hiscox: June 2024
Relevant skills, experience
and contribution
sAccomplished builder and
leader of key insurance
businesses in the USA.
sDeep understanding of the US
customer market and in product
and service innovation across
multiple trading models.
Mary joined the business during
2024 from Plymouth Rock Assurance
Corporation, where she was Chief
Executive Officer of its independent
agency business. She has 30
years of experience within the US
insurance market across both
agency and direct channels, and in
addition to small commercial auto,
her expertise includes property,
auto, inland marine and excess
casualty protection for personal lines
customers segments spanning high
net worth and the mass-market.
At Hiscox, she leads our team of
over 400 people across the USA,
with a focus on realising the market
opportunity and building America’s
leading small business insurer.
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Joanne Musselle
Group Chief Underwriting Officer
Joined Hiscox: April 2002
Relevant skills, experience
and contribution
sConsiderable underwriting
expertise, including experience
of managing underwriting
portfolios in our key markets.
sSignificant knowledge of
Hiscox, particularly Hiscox
Retail, having worked for the
Group for over 20 years.
Joanne joined Hiscox in 2002 and
has held a number of roles across the
Group, including Head of UK Claims,
Chief Underwriting Officer for Hiscox
UK & Ireland, and Chief Underwriting
Officer for Hiscox Retail. As Group
Chief Underwriting Officer, Joanne
leads our team of around 500
underwriters around the world,
driving the continued evolution of
our underwriting practices and the
development of our underwriting
talent. Prior to Hiscox, Joanne spent
almost ten years working in a variety
of actuarial, pricing and reserving
roles at AXA and Aviva in both the
UK and Asian markets.
Nicola Grant
Chief People Officer
Joined Hiscox: September 2022
Relevant skills, experience
and contribution
sDeep expertise in leading HR
as a global function, scaling
it through technology and
effective, integrated, global
products and services.
sSignificant experience of
performance and reward
management, robust talent
and succession planning and
HR transformation.
Nicola leads our global People team,
driving Group-wide people strategies
to accelerate and de-risk the Group’s
business performance. This includes
policies, products, and services
covering workforce planning and talent
acquisition to ensure the right talent
is in the right place at the right time;
learning and development experiences
that strengthen our culture and
support skills development; employee
listening mechanisms to understand
and communicate with colleagues;
and compensation and benefits
programmes that retain and inspire
performance at all levels.
Kathleen Reardon
Chief Executive Officer,
Hiscox Re & ILS
Joined Hiscox: January 2021
Relevant skills, experience
and contribution
sExtensive experience of building
reinsurance businesses
throughout the cycle.
sIn-depth knowledge of the
Bermuda reinsurance market.
Kathleen leads our reinsurance
and ILS business, which operates
in London and Bermuda. She
is responsible for ensuring the
130-strong team of underwriting,
analytics and asset manager experts
lean into changing market conditions
and seize opportunities as they
present themselves, as we continue
to build both specialist reinsurance
capability and our position as an
expert alternative capital manager
in the ILS space.
Kate Markham
Chief Executive Officer,
Hiscox London Market
Joined Hiscox: June 2012
Relevant skills, experience
and contribution
sStrong experience of building
customer-focused businesses.
sTrack record of establishing
operational and digital
infrastructures that support
profitable growth.
Kate originally joined Hiscox to run
our UK Direct business and moved
across to our big-ticket business
in 2017 when she became Chief
Executive Officer of Hiscox London
Market. She leads our team of
400 London Market underwriters,
analysts and support functions in
the UK, Guernsey and the USA,
who work with clients around the
world with large and often complex
insurance needs. Most recently,
Kate has overseen an ambitious
market‑leading programme of AI
adoption in our lead underwriting
model through a collaboration with
Google Cloud.
Shali Vasudeva
Group Chief Operations and
Technology Officer
Joined Hiscox: January 2025
Relevant skills, experience
and contribution
sStrong insurance
industry background.
sDeep expertise in delivering
large-scale tranformation
programmes and technological
innovation at pace.
Shali joined Hiscox in January 2025
with over 25 years of experience
within financial services, having led
large-scale transformation projects
and driven technological innovation
across multiple markets, and with
deep expertise in digitising customer
interactions, improving colleague
experiences, and building new
systems from the ground up. At
Hiscox, Shali oversees critical Group
functions including technology,
change, operations, data,
procurement and property services
to ensure the continued effective
and efficient delivery of core services
while also driving operational
efficiency and scalability.
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Group Executive
Committee (GEC)
Remuneration
Financial summary
Dear Shareholder
As you are aware I was appointed
Interim Chair in August following the
sudden death of Jonathan Bloomer.
During his tenure, Jonathan led the
Board with professionalism and passion,
and I am privileged to have known
and worked with him. I would also like
to take this opportunity to thank my
fellow Board members for their various
contributions to ensuring a smooth
transition of Board responsibilities
during the year, particularly in such
difficult circumstances.
It has been a busy year for the Board
as the Group continues to focus on
realising its ambitious plans. This has
included Board oversight and critical
review of the Group’s strategy and plans
to ensure that both position the Group
well for stronger growth and earnings.
The Board also had a particular focus
on succession as a number of Board
members – myself included – reach
the conclusion of their respective
terms. While Lynn Pike and Anne
MacDonald will not seek re-election
at the 2025 AGM, I will remain in
post until a permanent Chair has
been appointed and following an
appropriate period of handover.
I would like to thank Lynn and Anne
for their many valuable contributions
during their tenure, particularly Lynn’s
support in chairing the Risk Committee
and as Interim Senior Independent
Director during 2024, and Anne’s
work to establish a very effective
employee engagement network.
We welcomed Jane Guyett to the
Board in September, not only as an
Independent Non Executive Director
but also as Chair of the Remuneration
Committee. Jane brings immense public
and private sector experience to our
ranks, and we are already benefitting
from her sage counsel. We also
welcomed Lynne Biggar and June
Yee Felix to the Board as Independent
Non Executive Directors in January
2025. Lynne brings extensive US
market experience, as well as deep
marketing expertise, and June has
considerable experience in growing,
advising and transforming technology
intensive businesses globally. Both will
be excellent additions to the Board.
Hiscox is an ambitious, growing
business which in 2024 delivered
a second consecutive record
profit before tax of $685.4 million
(2023: $625.9 million) and a strong
undiscounted combined ratio of 89.2%
(2023: 89.8%) despite the active loss
environment. With every business unit
contributing, this result demonstrates
the strength and successful
diversification of the Group.
I trust that this report will further
enhance your understanding of the
business, including the robustness
of our corporate governance
arrangements, and thank you for your
continued support of the Hiscox Group.
Colin Keogh
Interim Chair
Chair’s letter to shareholders
It has been a busy
year for the Board as
the Group continues
to focus on realising
its ambitious plans.
Colin Keogh
Interim Chair
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SIE MACHEN IHREN
JOB DOCH AUCH
NICHT 08/15.
Eine normale Business-Versicherung kriegt jeder.
Sie kriegen Hiscox. Individuelle Absicherung
und persönlicher Schadenservice.
Wir schützen, was Sie schätzen.
Mehr erfahren auf
hiscox.de/herzblut
Corporate governance
Having a robust
governance structure,
and a culture which
supports that, really
matters to us and
we have further
strengthened our
approach in 2024,
including with a new
code of conduct for
the Group.
Marc Wetherhill
Group General Counsel and
Company Secretary
Corporate governance framework
The corporate governance framework
throughout Hiscox supports the delivery
of our values, culture, strategy and
business objectives.
The Board’s formal corporate
governance framework includes the
Board, the Hiscox Group subsidiaries
and the Executive internal governance
structures, which together ensure
the governance requirements for the
Group are robust and fit for purpose.
As a company listed on the London
Stock Exchange, the UK Corporate
Governance Code (the Code) is
applicable to Hiscox, and an overview
of the Company’s compliance with the
Code is detailed on pages 104 to 105.
The Board has a formal schedule
of matters reserved for the Board’s
determination that covers areas
including: setting the Group’s
purpose and strategic vision;
monitoring performance of the
delivery of the strategy; approving
major investments, acquisitions
and divestments; risk oversight and
setting the Group’s risk appetite; and
reviewing the Group’s governance.
The Group governance manual
(the Manual) details the wider
corporate governance framework
including the overall legal entity
structures and relationship with
the business units, the division of
responsibilities between Group and
principal subsidiary boards, Board
process and procedures for issues
such as Non Executive Director
appointments, diversity requirements
and Board performance reviews, and
the principles to be applied to the
wider subsidiary management. The
Manual also includes procedures
for the regulations of Board conduct
(accompanied by Directors’ individual
appointment letters) to ensure that
all Directors act with integrity, lead by
example and promote our culture. The
Manual is approved by the Board and
regularly reviewed. The Group also
benefits from a strong governance
framework at a subsidiary level. The
Manual and the supporting subsidiary
governance manuals ensure that the
underlying processes throughout the
subsidiary boards follow consistent
and effective governance practices.
The division of responsibility between
the Board and the boards of the Group’s
principal subsidiaries is understood
throughout the Group and is visually
represented in the Hiscox Group
governance model (available to view
at hiscoxgroup.com/investors/
corporate-governance).
The model shows the relationship
between the Board exercising strategic
direction and oversight of the Hiscox
Group, and the subsidiary boards’
delivery of their respective entity’s
responsibilities. This is further detailed
in explicit terms of reference and
governance manuals for the principal
subsidiaries – ensuring alignment to
the overall Group approach to values,
purpose, culture of risk awareness,
ethical behaviour and Group controls.
Informal interaction, information flows
and collaboration between Group
and the principal subsidiaries are also
delivered by Board Non Executive and
Executive Director representation on
the boards of the principal insurance
carrier entities.
The Executive’s internal governance
structures support decision‑making at
the Executive level between the Group
Executive Committee, the business units
and the functional departments. The
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Group Executive Committee members
are detailed on pages 94 to 95.
Supporting policies and processes
During the year, no corrective action
was required by Management to ensure
that policies, practices and behaviours
in the business were aligned with the
Company’s purposes, values and
strategy, as outlined on pages 5 to 7.
The corporate governance framework
complements the Company’s internal
controls framework and its supporting
framework of policies and processes.
Key policies for the Group are
published online and available to view
at hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
The Board is ultimately responsible
for the Company’s risk management
and internal controls, and for ensuring
that the systems in place are robust
and take into account the principal and
emerging risks faced by the Company.
The Board is satisfied that the internal
control and risk management systems
relating to the financial reporting
process are strong, with the Audit
Committee and the Risk Committee
forming the central points of review and
challenge. In 2024, the Audit Committee
undertook a review of the effectiveness
of the internal controls of the Group
on behalf of the Board. This review is
carried out at least annually. The Risk
Committee leads detailed discussions
on the principal and emerging risks
of the Company on behalf of the
Board and recommends to the Board
the appropriate risk management
framework including risk limits, appetite
and tolerances. The Risk Committee
also oversees the independence of the
risk and compliance functions. The
Risk Committee supported the Board
in its review of the effectiveness of the
Group’s internal control systems through
key activities that took place over the
course of 2024, and considers internal
control effectiveness as a specific topic.
Further detail can be found in the Audit
Committee report on pages 110 to 112
and in the risk management section on
pages 42 to 45.
In addition, the Board and the Audit
Committee – whose Chair also
serves as the Group’s whistleblowing
champion – have oversight of
whistleblowing matters and receive
reports arising from its operation.
The Company’s whistleblowing
policy is designed to ensure that the
workforce feel empowered to raise
concerns in confidence and without
fear of unfair treatment. The structures
and processes in place allow for
the proportionate and independent
investigation of any such matters, and
for appropriate follow‑up action to be
taken where necessary.
Board composition
The Board has responsibility for the
overall leadership of the Group and its
culture. The operations of the Board
are underpinned by the collective
experience of the Directors and the
diverse skills which they bring. The
composition of the Board can be
found on pages 92 to 93, along with
biographical details of each of our
Directors, including the reasons why
their contribution is (and continues to be)
important to the Company’s long-term
sustainable success. Information on
changes to the Board in the reporting
period can be found on page 91.
The Board is satisfied that it has
the appropriate balance of skills,
experience, independence and
knowledge of the Company to
enable it to discharge its duties and
responsibilities effectively, and that
no individual or group dominates the
Board’s decision‑making.
In accordance with the Company’s
Bye-laws and the Code, all
Directors will seek appointment or
re‑appointment (as applicable) at
the 2025 AGM, with the exception of
Lynn Pike and Anne MacDonald who
will not seek re‑appointment following
the conclusion of their respective terms.
It had previously been anticipated that
Colin Keogh would also step down
from the Board before the Company’s
2025 AGM, having reached the
conclusion of his nine-year term.
While the Board has progressed its
established succession plans during
the year – including the appointment
of Jane Guyett who now serves as
Chair of the Remuneration Committee,
and the addition of Lynne Biggar
and June Yee Felix to the Board in
January 2025 – the unexpected
death of Chair, Jonathan Bloomer, in
August 2024 necessitated changes
to these plans, with Colin serving
as Interim Chair and Lynn as Interim
Senior Independent Director.
Given his role in the search for a
permanent Chair, and the functioning of
the Board as a whole, Colin will remain
in post until a permanent Chair has been
appointed, and following an appropriate
period of handover.
Colin will therefore stand for re-election
at the Company’s 2025 AGM. The Board
is content that, notwithstanding his
tenure, Colin continues to demonstrate
strong commitment to his role and
continues to show the independence
of thought and judgement consistent
with remaining on the Board.
No issues have arisen that would
prevent the Chair from recommending
the appointment or re‑appointment of
any individual Director.
Additional details on Board succession
planning, can be found on page 108.
Board independence and
Director duties
The Nominations and Governance
Committee reviews the independence
of each Non Executive Director, taking
into account, among other things, the
circumstances set out in the Code that are
likely to impair, or could appear to impair,
their independence. The Committee
remains of the view that the most
important factor is the extent to which
they are independent of mind.
Each Director has undertaken to
allocate sufficient time to the Group in
order to discharge their responsibilities
effectively. Each Non Executive
Director’s letter of appointment
outlines the commitments expected
of them throughout the year and
this is further detailed in the Manual.
Executive Directors are prohibited from
taking more than one additional non
executive directorship in a FTSE 100
company. Each year, as part of the
Director review process, the Directors
are required to provide a complete list
of all third‑party relationships that they
maintain. This is analysed to determine
if there is any actual or potential conflict
of interest and that appropriate time
continues to be available to devote to
the Company.
The Nominations and Governance
Committee reviews the findings and
determines if there is any conflict of
interest. The Committee determined
that there were no relationships
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which could cause an actual or
potential conflict.
Additionally, there were no concerns
regarding overboarding and all Directors
had adequate time available to carry out
their duties. Where Directors accepted
additional Board positions during the
year, these were reviewed as part of our
corporate governance processes and
were not deemed to be significant to
the extent that they would overburden
that Director’s time. Approval occurs
prior to a Director undertaking additional
external appointments.
Onboarding and Board training
On joining the Board, all Non Executive
Directors take part in a full, formal
induction programme which is tailored
to their specific requirements. More
information on this can be found on
pages 107 and 109.
The Board also has an ongoing training
programme with regular items on
topical issues. In 2024 this included,
among other things: updates on the
UK Listing Regime and UK Market
Abuse Regulation; investments; and
ESG issues. Items for training are
identified in the Board, Committee and
Director reviews, as well as through
specific requirements and individual
requests, and can be delivered via
the frequent programme of Board
informational sessions.
Board structure and decision-making
The Board operates within an
established structure which ensures
clear responsibilities at Board level,
transparent, well-informed and
balanced decision-making, and
appropriate onward delegations to
effectively deliver the Company’s
purpose, values and strategy.
The Board has delegated a number of its
responsibilities to its Audit, Nominations
and Governance, Remuneration and Risk
Committees. Each Board Committee
operates within established written terms
of reference and each Committee Chair
reports directly to the Board. The formal
schedule of matters reserved for Board
decision and the Committee terms of
reference were reviewed in late 2024
as part of the annual review of terms of
reference, and copies of each can be
found at hiscoxgroup.com/investors/
corporate-governance. To ensure that
the Board operates efficiently, the roles
of the Chair, Senior Independent Director
and Group Chief Executive Officer are
distinct to demonstrate the segregation
of responsibilities.
Board cycle
The Board receives appropriate and
timely information to enable Directors
to review business strategy, trading
performance, business risks and
opportunities. Executive Directors and
Senior Management from the business
are invited to present on key items,
allowing the Board the opportunity to
debate and challenge initiatives and
proposals directly.
The Board agenda is set by the Chair
following discussion with the Group
Chief Executive Officer and Company
Secretary, and taking into consideration
feedback from the individual Directors.
Board agendas focus on strategically
important issues, key regulatory items
and regular reports from key business
areas. Board papers are circulated in
advance of each meeting to ensure
Directors have appropriate time to
review them, and to seek clarification
where necessary. The Management
reports follow a short standard
format which aids discussion and
understanding. The quality of Board
papers is kept under regular review.
At each meeting, the Board receives
an update from the Committee
Chairs to keep them abreast of the
items discussed, the outcomes
agreed, and to summarise
recommendations for Board
approval from the Committees.
The scheduled meetings follow
an agreed format; agendas are
developed from the Board’s annual
plan of business, with flexibility
built in to ensure the agendas can
accommodate relevant upcoming
issues. Each quarterly cycle typically
covers a series of decisions,
discussions and regulatory items
either at the Board, during Committee
discussions, or during informal
informational sessions, depending
on the nature of the matter. Items for
discussion may be identified from
actions from previous meetings,
issues escalated from Management,
items requested either formally or
informally by Non Executive Directors,
ongoing regulatory topics throughout
the Group, and horizon scanning
including a review of the competitive
landscape. Agendas are built to ensure
that the most appropriate method of
progressing an item is utilised. The
Chair and Non Executive Directors
usually meet at the start or end of each
Board meeting without the Executive
Directors, creating an opportunity
for Non Executive Directors to raise
any issues privately. Owing to this
system, the Group has an effective
Board which supports a culture
of accountability, transparency
and openness. Executive and Non
Executive Directors continue to work
well together as a unitary Board and
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debate issues freely. The Board culture
is congenial; however, both Non
Executive Directors and Executive
Directors continually challenge each
other in order to deliver our shared
aim. In the context of unitary Boards,
Non Executive Directors provide
Executive Directors with support and
guidance, not just challenge, and our
Non Executive Directors are close
enough to the business to do this.
Board and Committee attendance
In line with the agreed meeting schedule,
the Board and each of the Committees
of the Board held four comprehensive
meetings in 2024, in addition to seven
informational Board calls between Board
meetings. These informational calls
provided an opportunity to ensure the
Board was kept informed of any business
developments and allowed the Directors
to monitor exposures, emerging issues
and opportunities. More information on
Board and Committee attendance can
be found on page 90.
Outside of the formal Board and
Committee meetings and informational
calls, Non Executive Directors have
unfettered access to employees at
all levels of the business, regularly
liaise with Management on activities
aligned to their key skills, and attend
appropriate management strategy
and training events. They also have
the opportunity to attend briefings
with Group Executive Committee
members and Senior Management,
to understand key issues and conduct
deep dives on specialist subjects.
Board activity in 2024
Board activity in 2024 was suitably
focused to ensure it covered the
appropriate strategy, performance
and governance items and considered
the needs and concerns of our key
stakeholders. This included:
dstrategy and business performance,
including approval of the 2025
business plan, the agreement
of business priorities for the
year ahead, oversight of capital
management measures taken
(including legacy portfolio
transactions), embedding the
Group’s strategic evolution,
and further optimising
operational effectiveness;
dculture and engagement,
including reviewing the annual
employee engagement survey,
oversight of the employee
proposition work done to date,
and gaining new insights from
the Employee Engagement
Network facilitated by the Board’s
Employee Liaison. Anne MacDonald
has served as the Board’s Employee
Liaison, and when she steps down
from the Board in 2025, this role will
be assumed by Beth Boucher;
dgovernance, including updates
on key underwriting exposures,
and approval of the updated risk
limits framework;
doversight of all key risks,
compliance, internal controls and
governance matters, as outlined
on pages 22 to 25, 42 to 46 and
110 to 112.
Board engagement with stakeholders
A key element of the corporate
governance framework is open and
transparent communication with
stakeholders at all levels including
Board level. As such, the Board regularly
discusses stakeholder topics including
shareholder matters, employee
engagement, customers, and the
Group’s impact on, and relationship
with, wider society.
The Board is kept abreast of stakeholder
feedback and issues through reports
from a variety of sources, including the
Chair, Group Chief Executive Officer,
Group Chief Financial Officer, Employee
Liaison, Senior Management and
external consultants. This feedback
loop is complemented by the regular
dialogue that the Board maintains
with the Group’s key stakeholders,
with the support of Executives and
Senior Management. The Chair
of each Committee of the Board
is available for engagement with
shareholders when required.
More information on how the Board
engages with key stakeholders can
be found on pages 52 to 55.
More information on the Board’s
approach to investing in and rewarding
the workforce can be found on pages
121 to 123.
Board performance review
The Board and its Committees have a
culture of continuous improvement and
as part of this undertake a formal and
rigorous annual review of Board and
Committee performance, the results
of which help to inform action and
development. Board and Committee
performance reviews are carried
out each year and the results are
reviewed and discussed by the Board
and its Committees.
Every third year, the Board performance
review is undertaken by an external
evaluator. An external review was last
undertaken in 2023 by SCT Consultants
and, in the interim years, such as
2024, an internal performance review
is carried out which reviews each
Committee, the Board and individual
Directors. The review also assesses the
completion of the prior year’s actions.
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2024 performance review
and outcomes
Building on the work of prior years, the
performance review undertaken at the
end of 2024 involved an assessment of
Board, Committee Chair and individual
Director performance. The 2024
performance review focused on Board
oversight of strategy; risk management
performance and effectiveness of
systems; Board accountability, focus
and priorities for the coming year;
Board composition; culture of the Board
and the broader organisation; Board
and Chair independence, expertise,
decision-making and dynamics;
succession planning; Board progress
on diversity, climate change approach
and digitalisation; communication with
shareholders; clarity on purpose, direction
and values; and Board support.
The format of the performance review
was a confidential survey of the Board.
This survey was completed by all
Directors, with the results analysed by
the Company Secretary, shared with the
Chair and discussed with the Board.
Individual Director reviews are an
opportunity to discuss individual skills,
training requirements, succession and
any other issues. Each Non Executive
Director completes a self-assessment
form which is followed by a detailed
discussion on performance with
the Chair. The Senior Independent
Director carries out the Chair’s review,
including by meeting with the Non
Executive Directors without the Chair
being present, and this supports the
annual review process of the Chair.
Individual objectives and action plans
are agreed following each meeting
where appropriate.
The 2024 Board performance review
results demonstrated continued strong
Board, Director, Chair, and Committee
performance and re-affirmed the
independence of the Board, the
appropriate leadership provided by the
Chair, and the robustness of the Non
Executive Director succession plans
and Executive Director talent reviews.
Directors were fully engaged with
the Board, Committee and Director
evaluation process. The review was
positive and confirmed continued robust
decision‑making and a Board culture
which fosters constructive discussion.
The Board continues to engage in
continuous improvements, with the
annual review process being an explicit
point of reflection on ongoing actions
and new areas of focus. The Directors
determined to focus on the following
matters in 2025:
doverseeing and guiding the
development and execution
of the Group strategy;
dthe appointment and
comprehensive onboarding of
a new Chair and two new Non
Executive Directors, who will
replace longstanding members of
the Board, ensuring constructive
and collaborative relationships
are established, including a good
rhythm between the Chair and
the CEO;
dmanaging the insurance cycle
and transitioning markets;
dworkforce planning to ensure the
right talent and skills are in the
right place at the right time;
doversight of technology, AI and
data strategies;
densuring the operations and
control environment keeps
pace with growth.
Additional topics for review were
identified as part of the Board
performance review which will
influence the agendas and training
plans for the year.
In light of the finding that the Board
continues to perform well and function
effectively, it is not anticipated that
there will be any changes to Board
composition as a direct result of the
Board effectiveness review conducted
this year.
The Board welcomed the review’s
conclusions, with the feedback directly
linking to ongoing Board developments.
The Chair owns the response to the
findings, and a report on their delivery
will be included in the 2025 Annual
Report and Accounts.
Progress against 2023 performance
review outcomes
The Board and its Committees have
made tangible progress against the
action points identified during 2024.
They have:
dcontinued to enhance the annual
strategy review taking account of
and examining the wider picture,
including overall market, customer
and partner feedback, as well
as competitive positioning and
geopolitical factors;
ddeveloped a clear roadmap for
strategy implementation with
explicit milestones, measures
and indicators of success;
destablished plans for major
investments and projects and
established regular monitoring
of progress in terms of cost
management, timescales
and timely deliverables;
denhanced and strengthened
the talent review sessions
with additional focus on talent
and pipeline, seeking out the
perspectives of key stakeholders;
drecognised the significant benefits
that are derived from attendance
at subsidiary boards across the
Group, identified opportunities
for Independent Non Executive
Directors to further participate in
the subsidiary board process to
develop stronger insights into the
wider business, and developed
ways for these experiences to be
shared between all Directors.
Board remuneration
The remuneration of Independent
Non Executive Directors is
determined by the Chair in
conjunction with the Nominations
and Governance Committee and is
regularly benchmarked to ensure it
reflects the time commitment and
responsibilities of each role; there are
no performance‑related elements.
The Chair’s remuneration is determined
pursuant to the remuneration policy.
More information can be found on
pages 121 to 163.
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The role of the Board
The Board as a whole is collectively responsible for the success of Hiscox Ltd and the Group. Its duties are to:
dset the Group’s strategic direction, purpose and values and align these with its culture;
doversee competent and prudent management of internal control, corporate governance and risk management;
ddetermine the sufficiency of capital in light of the Group’s risk profile and business plans;
dapprove the business plans and budgets.
This structure is supported by the Group Executive Committee, Investment Committee and a number of other management
committees. The Board and its Committees have unfettered access to the resources they deem necessary to fulfil
their obligations.
Certain administrative matters have been delegated to a committee comprising any Director and the Company Secretary.
The Company Secretary acts as a trusted advisor to the Board and its Committees, and ensures there are appropriate
interactions between Senior Management and Non Executive Directors. He is responsible for advising the Board on all
governance matters and all Directors have access to him for advice.
Audit Committee
Nominations and
Governance Committee
Remuneration Committee
Risk Committee
dAdvises the Board on
financial reporting.
dOversees the
relationship with internal
and external audit.
dOversees internal
controls including
reserving and claims.
The Audit Committee report
can be found on pages
110 to 112.
dRecommends Board
appointments.
dSuccession planning.
dEnsures an appropriate
mix of skills and
experience on
the Board.
dPromotes diversity.
dManages any potential
conflicts of interests.
The Nominations and
Governance Committee
report can be found on
pages 106 to 108.
dEstablishes
remuneration policy.
dOversees alignment
of rewards, incentives
and culture.
dSets Chair, Executive
Director and Senior
Management
remuneration.
dOversees workforce
remuneration-related
policies and practices
across the Group.
The Remuneration
Committee report can be
found on pages 121 to 123.
dAdvises the Board on
the Group’s overall risk
appetite, tolerance
and strategy.
dProvides advice,
oversight and challenge
to embed and maintain
a supportive risk culture
throughout the Group.
The Risk Committee report
can be found on pages 114 to
115 and more information
on risk management can be
found on pages 22 to 25 and
42 to 46.
To ensure that the Board operates efficiently, each Director has distinct role responsibilities.
Chair
Senior Independent
Director (SID)
Chief Executive
Independent
Non Executive Directors
dLeadership of the Board.
dEnsuring effective
relationships exist
between the Non
Executive and
Executive Directors.
dEnsuring that the views
of all stakeholders
are understood and
considered appropriately
in Board discussions.
dOverseeing the annual
performance evaluation
and identifying any
action required.
dLeading initiatives to
assess the culture of the
Company and ensure
that the Board leads
by example.
dAdvisor to the Chair.
dLeading the Chair’s
performance evaluation.
dServing as an
intermediary to
other Directors
when necessary.
dBeing available to
shareholders and
other stakeholders
if they have any
concerns that cannot
be resolved through
normal channels, or
if contact through
these channels is
deemed inappropriate.
dProposing and
delivering the strategy
as set by the Board.
dFacilitating an effective
link between the
business and the Board
to support effective
communication.
dLeading the Group
Executive Committee,
which delivers
operational and
financial performance.
dRepresenting Hiscox
internally and externally
to stakeholders,
including shareholders,
employees, government
and regulators, suppliers
and contractors.
dActive participation in
Board decision-making.
dAdvising on key
strategic matters.
dCritiquing and
constructively
challenging proposals
and activities, and
approving plans
where appropriate.
dUpholding the cultural
tone of the Company.
dEngaging with
internal and external
stakeholders.
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Compliance with the UK Corporate Governance
Code 2018
The Board is pleased to report that
the Company applied the principles of
the 2018 edition of the UK Corporate
Governance Code (the Code)
throughout the year and complied with
all of its provisions throughout the year
except as disclosed below.
Following the sudden death of our
Chair, Jonathan Bloomer, in late
August 2024, in accordance with
our Governance processes, Colin
Keogh, as the then-appointed Senior
Independent Director, assumed
the position of Interim Chair. Colin
had been due to step down from
the Board before the Company’s
Annual General Meeting in 2025,
having originally been appointed to
the Board in November 2015. As a
result, the Company has not been
in compliance with Provision 19
of the Code since November 2024
(being the nine-year anniversary of
Colin’s appointment to the Board),
given that Colin continues to serve as
Interim Chair but has now been on the
Board for more than nine years since
his first appointment.
This instance of non-compliance is
attributable only to the unexpected
circumstances leading to the extension
of Colin’s tenure and the Board fully
expects to be compliant with Provision
19 once a permanent successor to
Jonathan is appointed (the process
for which is well advanced). The Board
is satisfied that Colin continues to
demonstrate objective judgement and
considers his leadership and in-depth
knowledge of the Group to be invaluable
to the search for a new Chair and to the
functioning of the Board as a whole.
Additionally, the Company was
non‑compliant with Provision 32 of
the Code for a short period between
late August 2024 and September 2024
when Colin was technically serving
as both Interim Chair and Chair of
the Remuneration Committee. No
Remuneration Committee meetings
were held during this period.
Immediately upon Jane Guyett’s
appointment in September 2024, Colin
transferred the role of Chair of the
Remuneration Committee to Jane and
stepped down from the Committee.
The corporate governance statement,
the remuneration report and the
Directors’ report, together with the
cross-references to other relevant
sections of the Annual Report and
Accounts, explain the main aspects of
the Company’s corporate governance
framework and provide greater
understanding as to how the Company
has applied the principles and reported
against the provisions of the Code. The
Code itself can be found at frc.org.uk.
With effect from 1 January 2025, the
2024 edition of the UK Corporate
Governance Code will apply to the
Company (with the exception of
Provision 29, which is effective from
1 January 2026). The Company will
report on its compliance with the
2024 edition of the Code in its 2025
Annual Report.
As a company listed
on the London Stock
Exchange, the UK
Corporate Governance
Code is applicable
to Hiscox.
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2
3
4
5
Compliance with the UK Corporate Governance Code 2018
More information on how we have applied the principles of the Code is contained in various sections of this report. Please refer
to the pages signposted below.
1. Board leadership and Company purpose
The Board’s role
pages 98 to 103
Purpose and culture
pages 5 and 98 to 99
Resources and controls
pages 42 to 46 and 110 to 112
Stakeholder engagement
pages 52 to 55
Workforce engagement
page 54
2. Division of responsibilities
Role of the Chair
page 103
Composition of the Board
pages 92 to 93
Role of Non Executive Directors
page 103
Role of the Company Secretary
page 103
3. Composition, succession and evaluation
Board appointments and succession
pages 106 to 109
Skills, experience and knowledge
pages 92 to 93
Board performance review
pages 101 to 102 and 108
4. Audit, risk and internal controls
Internal and external audit
page 112
Fair, balanced and understandable assessment
page 112
Risk management and internal controls
pages 22 to 25, 42 to 45 and 111
5. Remuneration
Policies and practices
pages 121 to 123, 126 to 139 and 152 to 158
Executive remuneration
pages 121 to 122, 124 to 125 and 129
Outcomes and independent judgement
pages 121 to 122 and 126 to 139
The Code can be found at frc.org.uk.
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Nominations and Governance Committee report
Key responsibilities and membership
The Nominations and Governance
Committee (the Committee) leads
in the delivery of formal, rigorous
and transparent procedures on
appointments and succession,
ensuring the development of a diverse
pipeline of Board members and
Senior Managers. This includes an
annual review of succession plans
for Executives and Non Executives,
a process which is guided by the
appointment and succession principles
set out in the Group governance manual
for Non Executive Directors and by our
Group people policies for Executive
Directors and Senior Management.
The Committee also reviews the
Board performance review process,
Company strategy relating to DEI, and
the diversity of both the Board and
Senior Management. In addition, the
Committee carries out several other
Group activities, including a review of
intragroup conflicts of interest and the
approval of certain Group policies.
The Committee comprised the Chair
of the Board and all of the Independent
Non Executive Directors. The Interim
Chair of the Board is the Interim Chair
of the Nominations and Governance
Committee, and the Senior Independent
Director leads on any matters relating
to the Chair. The Committee’s terms of
reference are reviewed and approved
annually and are publicly available
at hiscoxgroup.com/investors/
corporate-governance.
Key activities of the Committee
The Committee’s key activities in 2024
were as follows.
dSearch for and appointment
of several new Independent
Non Executive Directors,
resulting in the appointments
of Jane Guyett in September 2024
(who also serves as Chair of the
Remuneration Committee), and
Lynne Biggar and June Yee Felix
in January 2025 – see page 107
for more information on the Board
appointment process.
dSmooth transition of Board
responsibilities on an interim basis
following the death of Jonathan
Bloomer in August 2024.
dSearch for a new permanent Chair.
dReview of the Board performance
review outcomes.
dOngoing diversity monitoring
of the Board and Senior
Management.
dReview of Committee terms
of reference.
dDevelopment of explicit
milestones and measures of
success in connection with
the implementation of the
Group strategy.
Talent reviews
The Committee leads on Executive
succession planning via an established
and robust talent review process.
As required, the Committee reviews
key talent plans throughout the Group.
The Group review focuses on the
GEC and their direct reports, and the
Company Secretary. The outputs of
the talent review process contribute
to Senior Management performance
development plans and include relevant
diversity actions. This process is
replicated at a business unit level to
ensure a sufficient pipeline of talent
in each area. Talent plans are also
reviewed when vacancies arise.
Board composition and succession
The Committee reviewed the
independence of each of the Non
Executive Directors. There was a
Succession was an
important focus for the
Committee in 2024,
and we have made
good progress in this
regard, with two new
appointments bringing
fresh perspectives to
the Board.
Colin Keogh
Interim Chair of the Nominations and
Governance Committee
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A formal and transparent process was deployed for the appointment of the Remuneration Committee Chair.
Requirements
Process
Interview and appointment
Induction
As part of the orderly
succession plan for
the retirement of the
Remuneration Committee
Chair, it was agreed to target
an appointment to be in
place during 2024.
The key requirements of the
role were agreed as being
recent financial services and
remuneration experience
(including at least 12
months’ service on another
remuneration committee).
It was agreed that a
diverse candidate with
these skills would also be
highly regarded.
A review was completed
by the Committee on the
geographical location of the
new Remuneration Chair,
assisted by an externally
delivered market map of
available Directors.
A brief was prepared for the
role specifying the above.
The process was initiated
with the appointment of
an agency.
Spencer Stuart was
engaged based on its
market reputation, and
alignment to our DEI
objectives. The search
firm used was deemed to
be independent as it does
not have any connection
with the Company or its
individual Directors other
than in its engagement on
other Non Executive Director
search processes.
The search firm identified
potential candidates
assessed against the role
specification, based on
merit, and with due regard
for the benefits of all forms
of diversity on the Board,
including gender and
ethnicity. This produced
a long list of high-quality
candidates from a broad
range of potential sources
of talent. Candidates
were then shortlisted for
interviews, which focused on
each candidate’s skills and
experience for the role.
A formal, multi-stage
interview process was used
to assess candidates, and
included interviews with
Board members. All interview
candidates were deemed
appropriate for appointment
based on their skills and
experience, and subject
to a referencing process
and review of any potential
conflicts and time availability
(assessed against significant
time commitments).
The outstanding candidate
for the role was Jane Guyett,
and the Nominations
and Governance
Committee agreed
that she demonstrated
considerable financial
services expertise and
sufficient experience of
chairing remuneration
committees. The
appointment was
announced in
September 2024.
Jane’s induction consisted
of a tailored induction
programme which
allowed her to become
more familiar with the
working of the Board and
the Group, and to fully
understand the Company’s
operating environment
(internal and external). This
included meetings with
individuals from the Board,
Senior Management and
external auditor, and was
supported by an induction
pack. The programme
was tailored to Jane’s
appointment and was
continually reviewed to
identify additional areas
where induction may
be required. More information
on Jane’s induction can be
found on page 109.
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particularly robust assessment of the
independence of those Directors that
had served more than six years on the
Board. While an appointment process
was initiated for the replacement of
Colin Keogh as Senior Independent
Director and Chair of the Remuneration
Committee in the first half of 2024, to
ensure a smooth transition of Board
responsibilities on an interim basis
following the death of Jonathan
Bloomer, Colin agreed to stay on as
Interim Chair until the search for a
new permanent Chair has concluded
and following an appropriate period
of handover. The Board continues
to consider that Colin demonstrates
independent judgement and provides
robust challenge.
As part of the annual Board
succession planning process, the
Committee reviewed the composition
of the Board in 2024. This included
a skills and experience review –
encompassing independence, length
of service, the balance of skills and
experience, diversity, and the capacity
required to oversee the delivery of
the Company’s strategy – and Board
succession planning on an immediate
and longer‑term basis for the Chair
and all members of the Board.
The review focused on Non
Executive succession and was
aligned to the talent reviews for the
Executive Directors. The reviews
resulted in the appointment
of Jane Guyett as Chair of the
Remuneration Committee, as well as
Lynne Biggar and June Yee Felix as
Independent Non Executive Directors.
In 2025, the Committee will be focused
on the search for a new permanent
Chair, as well as the transition of the
Senior Independent Director role from
Lynn Pike, who will not be standing for
re-election at the 2025 AGM.
The appointment process associated
with each of Lynne and June’s
appointments will be disclosed in next
year’s Annual Report and Accounts.
Following these formal reviews, the
Board remains confident that the
current skills and expertise are in place
to deliver value to the Company and
its shareholders. This formal annual
process is augmented by ongoing open
dialogue between the Non Executive
Directors on succession and the skills
required to deliver the strategy.
Pages 92 to 93 set out the nature
and breadth of each Director’s
relevant skills and experience.
Additionally, all Directors have
demonstrated that they have adequate
capacity to fulfil their duties. As part of
the discussions on the requirements
of new Directors, the Committee
determined that the Company has
a strong Board which is sufficiently
capable to meet the demands of the
Group and future strategy. This was
also validated through the Board
performance review process.
Board performance review
The Board and its Committees have
a culture of continuous improvement
and as part of this undertake a formal
and rigorous annual evaluation of
Board and Committee performance,
the results of which help to inform
action and development. Board and
Committee effectiveness evaluations
are carried out each year and the
results are reviewed and discussed
by the Board and its Committees
– specifically the Nominations and
Governance Committee, with a
focus on Board composition. More
information on this can be found on
pages 101 to 102.
Colin Keogh
Interim Chair of the Nominations and
Governance Committee
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When Jane Guyett, a highly
experienced Non Executive
Director, was appointed
to the Hiscox Board in
September 2024, she
already had a strong sense
of the culture she was
stepping into. “I already
knew Hiscox very well from
a client perspective,” she
says. “I’ve always liked the
tradition, the specialisation,
the great history around
risk taking. I’m very
careful about the
boards I choose
– I need to
agree with
the strategy,
like the
people
and feel
they have
integrity –
and Hiscox
ticked those
boxes for me.”
To be effective
from the start, she has
worked quickly to develop
a well-rounded view of the
business. Understanding the
structures was, she explains,
the easy part for a seasoned
director: “Large companies
often have lots of similarities
in how they’re structured.
Some of that is defined
by the regulators, some is
shaped by best practice in
the industry.” It was getting
to grips with the nuances of
the strategy that required far
greater immersion.
The foundations can
be laid through reading
documentation, but real
depth can only come from
meeting people. “I had
numerous meetings with
key individuals and joined
some of their monthly calls,”
she says. For a two-week
spell she was in the Hiscox
office almost full-time,
“drinking from the fire
hose” as she puts it. That
extended to seeking external
perspectives, meeting
with some of our external
advisors which “gave me
that market lens”.
As Chair of the Remuneration
Committee, Jane has also
developed a clear sense
of what her priority for the
Committee will be in the
coming years. “I want to
see a clear path through
from what we’re trying to do
strategically to what we’re
trying to reward. Are we
rewarding people for driving
the strategic performance
that we want? That’s the key
thing for me.”
See pages 121 to 123.
Board
appointments
in action:
getting up
to speed
Jane Guyett
Independent Non Executive
Director and Chair of the
Remuneration Committee
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Audit Committee report
We have continued to
evolve our approach
as it relates to ensuring
the integrity and
robustness of our
financial disclosures,
and to the effectiveness
of the Group’s
internal controls.
Donna DeMaio
Chair of the Audit Committee
In relation to financial reporting,
the primary role of the Audit
Committee (the Committee) is to
monitor the integrity of the financial
statements of the Group and any
formal announcements relating to
the Group’s financial performance.
The Committee meets four times
a year to coincide with key points
in the Group’s financial calendar.
Working with both Management and
the external auditor, the Committee
reviewed the appropriateness of the
interim and annual financial statements,
concentrating on:
dthe quality and acceptability of
accounting policies and practices;
dthe clarity of the disclosures and
compliance with financial reporting
standards and requirements;
dmaterial areas in which significant
judgements and estimates have
been applied, or where there has
been discussion with the external
auditor; and
dany correspondence from
third parties in relation to our
financial reporting.
The Committee is comprised of
the Chair of the Board and all of the
Independent Non Executive Directors.
Colin Keogh ceased being a member
following his appointment as Interim
Chair on 19 August 2024. Jane Guyett
was appointed to the Committee on
2 September 2024.
The requirements of the FRC’s
publication ‘Audit Committees and the
External Audit: Minimum Standard’,
have applied to Hiscox (as a FTSE 350
constituent) since it was published in
May 2023 and is now incorporated in
the 2024 Corporate Governance Code
with effect from 1 January 2025, were
reviewed, and the Committee believes
it is compliant with those requirements.
The Committee has set out below
the activities it has undertaken to
fulfil its responsibilities and meet the
requirements of that Standard.
An explanation of how the Company
applies its accounting policies can be
found on pages 178 to 189.
The significant judgements considered
by the Committee in relation to the 2024
financial statements were as follows.
i) Reserving for insurance losses
As set out in our material accounting
policies on pages 187 to 189, the
reserving for insurance losses is the
most critical estimate in the Group’s
financial statements.
The Chief Actuary presents a quarterly
report to the Committee covering Group
loss reserves, which discusses both
the approach taken by Management
in arriving at the estimates and
the key judgements within those
estimates. The Committee reviewed
and challenged the key judgements
and estimates in valuing the insurance
assets and liabilities, including in relation
to reserving methods, longer-tailed
casualty lines and IFRS 17 assumptions
involving discounting, onerous contract
charge and risk adjustment.
The Committee is satisfied with both
the process that was conducted,
and the reporting and disclosure of
the resulting estimates. While there
remains uncertainty around the final
cost of these events to the Group,
the Committee notes that the Group
continues to adopt a conservative
approach where uncertainty exists
as to the final cost of settlement. As
with prior years, the Committee also
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considers the report of the external
auditor, following its re‑projection of
reserves using its own methodologies.
On the basis of this work, it reported
no material misstatements in respect
of the level of reserves held by the
Group at the end of the reporting
period. The Committee is satisfied
that the valuation of insurance
liabilities and reinsurance assets at
31 December 2024 is appropriate.
ii) Going concern assessment and
longer-term viability statements
The Committee noted the Group’s
going concern statements included
in the Interim Statement and in this
Annual Report and Accounts, and
the assessment reports prepared
by Management in support of such
statements. More information on
the going concern and longer-term
viability statements can be found on
pages 116 to 117.
iii) Treatment of investment vehicles
The Group invests in insurance-linked
securities and private credit funds. In
accordance with the requirements of
IFRS 10, the Group would consolidate
such investments if it had power over
the investment, exposure or rights to
variable returns and the ability to use
its power to affect the Group’s variable
returns. These arrangements can be
complex in nature and the ability to exert
power judgemental. The Committee
is satisfied the Group has adopted the
appropriate accounting treatment for
such investments.
iv) Recoverability of goodwill and other
intangible assets
Judgements in relation to impairment
testing relate primarily to the
assumptions underlying the calculation
of the value in use of the Group’s
businesses, being the achievability of
the long-term business plans and the
macroeconomic factors underlying
the valuation process. The Committee
received updates on impairment
testing and the analysis performed
by Management and assessed the
appropriateness of the assumptions
made. The Committee is satisfied
with the approach taken and the
recoverability of the goodwill and
intangible assets.
v) Accounting for DirectAsia
On 18 December 2024, the Group
divested the part of the DirectAsia
business which was based in
Thailand. The remaining DirectAsia
business, which is based in Singapore,
continues to be classified as a
disposal group held for sale and
valued according to the requirements
of IFRS 5. A sale is still considered
highly probable within the next 12
months and therefore the Committee
is satisfied the presentation and
valuation of the remaining DirectAsia
business in the consolidated financial
statements is appropriate.
vi) Valuation of the investment portfolio
The Group continues to measure
and report its investment assets at
fair value. Due to the nature of the
investments, as disclosed in notes 14
and 17, the fair values are based on
quoted prices or are measured using
directly or indirectly observable inputs.
A small proportion of investments rely
on a higher degree of judgement, due
to the limited availability of observable
market prices or observable inputs, to
estimate their fair value. The Committee
received updates on the valuation of
certain investments where the fair
value was particularly subjective, and
is satisfied with the valuations.
Sensitivity analysis on valuation
of assets is captured within the
financial risk section (note 3.3) of
the financial statements.
vii) Legacy portfolio transactions
The accounting treatment of legacy
portfolio transactions is judgemental as
the present value probability‑weighted
average fulfilment cash flows
associated with the transactions need
to be estimated. The Committee was
satisfied with the key assumptions
Management were making in respect
of these transactions.
viii) The recognition and recovery of
deferred tax assets
The estimation of the value of the Group’s
deferred tax asset requires significant
judgement. On 15 January 2025, the
OECD released new guidance which,
if enacted through legislation, would
mean that 80% of this asset would not
be recognised for global minimum tax
(GMT) purposes. This would result
in additional ‘top-up tax’ payable by
the Group in future periods of up to
80% of the deferred tax asset. IFRS
standards do not allow the recognition
of a deferred tax liability for this potential
future tax payable at the balance sheet
date. The Committee is satisfied with
Management’s approach to valuation
and recognition of the deferred tax asset.
Internal controls
The Committee receives quarterly
updates on the effectiveness of the
financial reporting control environment.
This includes metrics to evaluate
control effectiveness, attestations from
business unit chief financial officers and
the tracking of any control remediation
activity. The Committee also receives
updates on internal controls and
reporting matters from the significant
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regulated entity audit committees
operating within the Group. In 2024,
the Committee, on behalf of the Board,
undertook a review of the effectiveness
of the internal controls of the Group.
These activities are carried out at
least annually.
Regulatory changes
The Committee was updated on various
upcoming regulatory changes that fall
under its remit. These include: changes
to the UK Corporate Governance
Code; tax developments, notably
the global minimum tax; and various
environmental, social and governance
(ESG) reporting matters.
Internal audit
The Group’s Chief Auditor provided
quarterly updates to the Committee on
the progress of the internal audit plan,
the outcomes of recent audits, the
progress of audit-related actions, and
any other relevant activities including
its key performance measures and the
development of its resources. Updates
on aspects such as the assessment of
internal audit’s effectiveness and the
review of the internal audit policy are
shared annually. Detailed results of an
annual self-assessment against internal
audit standards and codes, and on
independence are reported annually
to the Committee. It is a requirement
that every five years this assessment
is carried out externally, though on
occasion it has been conducted
more frequently.
A new Group Chief Auditor has been
appointed and will join the organisation
in March 2025.
The internal audit plan is derived
using a risk-based approach. In
2024, key themes included core
underwriting and claims controls,
third-party vendor management,
business and IT operations, change,
financial control, data governance
and controls, consumer duty and
various regulatory themes.
External auditor
PwC has been the Group’s external
auditor since 2016 following a
competitive tender process. During
2024, an auditor tender process was
undertaken, for the period effective
1 January 2026. Seven firms responded
to a request for information, of which
five provided positive responses and
confirmed they could be independent
by 1 January 2025. The selection
criteria used were transparent and
non-discriminatory and communicated
clearly to the prospective firms. The
tender process was held price blind,
and a quality panel evaluated each
of the firms against the following four
themes as selection criteria: experience
and capability; audit approach; audit
transformation and innovation; and
value-add activity. Overall PwC had the
highest scoring. The tender process was
led by the Chair of the Audit Committee
with regular updates provided to all
Committee members throughout the
process. PwC was recommended
to the Hiscox Ltd Board and was
subsequently approved to continue
as the Group’s auditor.
As the Group’s auditor, PwC is
invited to attend all meetings of the
Committee, and it is the responsibility
of the Committee to monitor their
performance, objectivity and
independence. The Committee
discusses and agrees with PwC
the scope of its audit plan for the
full-year and the review plan for the
interim financial statements. No
shareholders requested any matters
be covered as part of the external
audit. The Committee also reviewed
and approved the remuneration and
terms of engagement with PwC.
The Audit Committee receives reports
from PwC at each meeting which
include the progress of the audit,
key matters identified and the views
of PwC on the judgements outlined
above. The Committee ensures that
PwC has full access to the Group’s
staff and records. The Committee also
invites challenge by PwC, giving due
consideration to points raised and
making changes to financial statements
in response, where appropriate. PwC
also reports on matters such as its
observations on the Group’s financial
control environment, developments in
the audit profession, and certain other
mandatory communications.
To provide a forum in which any
matters of concern could be raised
in confidence, the Non Executive
Directors met with the external and
internal auditors throughout the year
without Management present. To
safeguard auditor independence and
objectivity, non-audit services are not
contracted with PwC unless it is clear
that there is no practical alternative
and there are no conflicts of interest
or independence considerations.
The Committee has also managed its
non-audit relationships with audit firms,
ensuring that it had a fair choice of
suitable external auditor for the recent
tender process.
Throughout the year, the Committee
has assessed the independence,
effectiveness and quality of the external
audit process. This assessment
considers the Committee’s interactions
with the external auditor and considers a
variety of issues, including: the external
auditor’s experience and expertise; its
professional scepticism and approach
to challenging Management where
necessary; its efficiency in completing
the agreed external audit plan; and the
content, quality and robustness of its
reports. The Committee also takes into
account the perspectives of those in
Senior Management who interact with
the external auditor on a regular basis.
This process forms the basis for the
Committee’s reporting to the Board and
its recommendation to shareholders
to reappoint the external auditor, and
the Committee concluded that PwC
continued to perform effectively and
remains independent and that the audit
was of a sufficiently high quality.
Fair, balanced and understandable
The Committee assessed whether
the Annual Report and Accounts,
taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Group’s financial position
and performance, business model and
strategy. The Committee reviewed the
processes and controls that underpin
its preparation, ensuring that all
contributors and Senior Management
are fully aware of the requirements and
their responsibilities.
Donna DeMaio
Chair of the Audit Committee
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LEARN MORE
Underwritten by Hiscox Insurance Inc., a Chicago based insurer.
Key responsibilities and membership
The role of the Risk Committee
(the Committee) is to support
the Board in providing oversight
of principal and emerging risks
within Hiscox, and to review the
effectiveness of the Group’s risk
management framework.
The Committee is comprised of 11
Independent Non Executive Directors,
including the Committee Chair, each
of whom has relevant expertise gained
over the course of their executive and
non-executive careers. During 2024,
the Committee met quarterly.
The Committee relies on frequent
updates from within the business
and from independent risk experts.
As such, the Committee regularly
invites others relevant to Committee
matters to attend, in particular the
Group’s Executive Directors and
the Group Chief Risk Officer, with
the Group Chief Risk Officer having
unfettered access to the Chair and
other members of the Committee.
Risk monitoring and reporting
At each of its meetings during the
year, the Committee reviews and
discusses a risk dashboard and a
critical risk tracker which monitors
the most significant exposures to
the business.
The Committee receives and
reviews regular reporting from the
Group Chief Risk Officer which
highlights key information impacting
the Group-wide risk profile, as well as
updates on key activities undertaken
by the risk function to deliver on its
objectives, outputs of regular risk
monitoring activities, and relevant
regulatory developments.
The Committee also receives reports
focused on emerging risks throughout
the year. In 2024, emerging risks
considered include risks associated with
AI, climate change and demographic
change. An overview of the processes
for identifying emerging risks through
the Grey Swan Group is described on
page 82.
In addition, the Committee is
responsible for reviewing and
recommending to the Board for approval
the Group’s annual Group Solvency
Self Assessment (GSSA) report for
submission to the BMA. This is a
mandatory solvency self-assessment
filing for all BMA-regulated (re)insurers
which is designed to ensure an analysis
of internal capital needs is incorporated
into risk management frameworks.
As part of the GSSA process, stress
tests and reverse stress tests (scenarios
such as those shown on pages 45 to
46, which could potentially give rise to
business failure as a result of either a
lack of viability or capital depletion) are
also performed and reported to the
Risk Committee.
Key activities of the Committee
The main areas of focus for the
Committee in 2024 were as follows.
Enhancements to the risk
management framework
The Committee reviewed a number
of new and revised risk policies and
standards, as well as assessments of
risk maturity across different business
units and functions and plans to
enhance risk maturity against a set of
established risk management maturity
goals. The Committee also discussed
new metrics for monitoring the Group’s
climate risk.
Risk Committee report
During 2024 we have
further strengthened the
Group’s effective risk
management culture
and continued to evolve
our risk management
maturity, including
the consideration
of emerging risks
associated with
technology and AI.
Lynn Pike
Chair of the Risk Committee
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Continued assessment of risk culture
The Committee received updates on
the embedded process to assess risk
culture, which includes a risk culture
survey for staff that is completed as part
of annual risk management training.
Targeted risk reviews
There has been a continued focus
during the year on performing targeted
risk reviews at both Group and legal
entity level, the outputs of which are
shared with the Committee. During
2024, reviews have focused on risk
management maturity, capital model
validation deep dives, regulatory risk
and change, as well as specific topics
such as crisis management.
Technology and AI risks
The Committee received updates on the
development of the Group’s technology
and data strategies and reviewed the
Group’s new AI governance standard
which was developed and launched
during 2024.
Underwriting risks
The Committee received updates on
a number of relevant developments
including reinsurance purchasing,
managing the insurance market cycle
and exposure management.
Effectiveness review
The Committee also supports the
Board in its review of the effectiveness
of the Group’s risk management and
internal control systems through key
activities that took place over the
course of 2024, including: reviewing
its annual declaration of compliance
with the BMA’s Group Supervision
Rules, reviewing the results of the
annual Group-wide risk and control
self-assessment and associated
second-line review, reviewing changes
to Hiscox Group risk policies and the
Hiscox risk and control register, as
well as considering risk management
and internal control effectiveness as a
specific topic.
During 2024, the Board has, through
the Committee, conducted a robust
assessment of the emerging and
principal risks facing the Company,
including those that would threaten its
business model, future performance,
solvency or liquidity, and is satisfied
that no material changes to the key
risks are required.
Lynn Pike
Chair of the Risk Committee
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Directors’ report
The Directors have
pleasure in submitting
their Annual Report
and consolidated
financial statements
for the year ended
31 December 2024.
Management report
The Company is a holding company for
subsidiaries involved in the business of
insurance and reinsurance in Bermuda,
the USA, the UK, Guernsey, and Europe.
The information found on pages 28
to 37, 42 to 46, 174 to 228 and 229
to 230 fulfils the requirements of the
Management report as referred to in
Chapter 4 of the Disclosure Guidance
and Transparency Rules (DTR). This
includes additional explanation of
the figures detailed in the financial
statements and the office locations
of the Group in different countries.
The key performance indicators are
shown on pages 26 to 27. Details of the
use of financial instruments are set out
in notes 3.3 and 17 to the consolidated
financial statements. An analysis of
the development and performance of
the business during the financial year,
its position at the end of the year, any
important events since the end of the
year and the likely future development
can be found within the Chief Executive’s
report on pages 28 to 37. The Chief
Executive’s report also describes the
main trends and factors likely to affect
the future development, performance
and position of the Company’s business.
A description of the Company’s strategy
and business model is set out on pages
6 to 9. The Company is not involved
in any research and development
activities. A description of the key risks
and uncertainties and how they are
managed or mitigated can be found in
the key risks section on pages 22 to 25
and the risk management section on
pages 42 to 46. In addition, note 3 to
the consolidated financial statements
provides a detailed explanation of the
key risks which are inherent to the
Group’s business and how those risks
are managed.
Compliance with the UK Corporate
Governance Code 2018 (the Code)
Details of how the Company has applied
the principles set out in the Code and
complied with the provisions of the Code
are set out on pages 104 to 105.
Emerging and principal risks
The confirmation required by Provision
28 of the Code in relation to the Board’s
robust assessment of the Company’s
emerging and principal risks (referred
to in this document as key risks) can be
found on pages 22 to 25.
Corporate governance statement
The information that fulfils the
requirements of the corporate
governance statement as referred to in
DTR 7.2 can be found on pages 104 to
105 in this report.
Diversity
The diversity of the business is outlined
on pages 64 to 69.
Financial results
The Group delivered a record profit
before tax for the year of $685.4 million
(2023: $625.9 million). Detailed
results for the year are shown in the
consolidated income statement on
page 174.
Going concern
A review of the financial performance
of the Group is set out in the Chief
Executive’s report on pages 28 to 37.
The financial position of the Group, its
cash flows and borrowing facilities are
outlined on pages 33 to 36. The Group
has considerable financial resources
and a well-balanced book of business.
The Board has reviewed the Group’s
current and forecast solvency and
liquidity positions for the next twelve
months and beyond. As part of the
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consideration of the appropriateness
of adopting the going concern basis,
the Directors use scenario analysis and
stress testing to assess the robustness
of the Group’s solvency and liquidity
positions. Multiple experts within the
business review the provisional results
in order to reduce individual biases
and to try and ensure all possibilities
are considered and captured. In
undertaking this analysis, no material
uncertainty in relation to going concern
has been identified. This is due to the
Group’s strong capital and liquidity
positions, which provide resilience to
shocks, underpinned by the Group’s
approach to risk management which is
described in note 3 on pages 190 to 202.
After making enquiries, the Directors
have a reasonable expectation that
the Group has adequate resources to
continue in operational existence over
a period of at least 12 months from
the date of this report. For this reason,
the Group continues to adopt the
going concern basis in preparing the
consolidated financial statements.
Longer-term viability statement
The preparation of the longer-term
viability statement includes an
assessment of the Group’s long-term
prospects in addition to an assessment
of the ability to meet future commitments
and liabilities as they fall due.
It is fundamental to the Group’s
longer‑term strategy that the Directors
manage and monitor risk, taking into
account all key risks the Group faces,
including insurance risks, so that it
can continue to meet its obligations
to policyholders. The Group is also
subject to extensive regulation and
supervision including the Bermuda
Solvency Capital Requirement, which
is outlined on page 34.
Against this background, the Directors
have assessed the prospects of the
Group in accordance with Provision 31
of the UK Corporate Governance Code
2018, with reference to the Group’s
current position and prospects, its
strategy, risk appetite and key risks,
as detailed in the key risks section
on pages 22 to 25 and the risk
management section on pages 42 to
46, as well as note 3 to the consolidated
financial statements.
The assessment of the Group’s
prospects by the Directors covers the
three years to 2027 and is underpinned
by Management’s 2025-2027 business
plan. It includes projections of the
Group’s capital, liquidity and solvency
and reflects the Group’s risk profile of
a portfolio of diversified short-tailed
and medium-tailed insurance liabilities.
In making the viability statement,
the Board carried out, as part of the
Group’s solvency self-assessment
process, a robust assessment using
scenario analysis and stress testing
to consider the Group’s capacity to
respond to a series of relevant financial,
insurance‑related or operational shocks
should future circumstances or events
differ from these current assumptions.
The adequacy of the liquid resources
of the Group’s parent company has
been assessed by considering stress
scenarios that would result in additional
calls on central liquidity by the Group’s
business units. A 1-in-200 climate‑heavy
natural catastrophic year was assessed
to be the most severe liquidity stress.
Under this scenario the Group was
shown to have access to sufficient
liquidity sources to remain above risk
appetite, after taking into account the
Group’s $650 million undrawn revolving
credit facility. This analysis allows the
Board to review and challenge the risk
management strategy and consider
potential mitigating actions.
Based on these assessments, the
Board confirms that it has a reasonable
expectation that the Group will be
able to continue in operation and meet
its liabilities as they fall due over the
three‑year assessment period. Longer
term, the Group’s viability is underpinned
by the Group’s strategy of balancing big-
ticket with retail business, market growth
opportunities and underwriting expertise.
See pages 6 to 9 for further details of the
Group’s strategy and business model.
Dividends
An interim dividend of 13.2 cents per
share was paid on 24 September 2024
and, as in previous years, a Scrip
Dividend alternative was offered. The
Board is also proposing payment of
a final dividend in respect of the year
ended 31 December 2024 (subject to
shareholder approval) of 29.9 cents
per share, to be paid on 9 June 2025
to shareholders on the register at
25 April 2025.
Bye-laws
The Company’s Bye-laws contain no
specific provisions relating to their
amendment and any such amendments
are governed by Bermuda Company
Law and subject to the approval of
shareholders in a general meeting.
Share capital
Details of the structure of the
Company’s share capital and changes
in the share capital during the year are
disclosed in note 19 to the consolidated
financial statements. The ordinary shares
of 6.5p each are the only class of shares
presently in issue and carry voting rights.
There is power under Bye‑law 45 of the
Director duties
As a company incorporated under the laws
of Bermuda, Hiscox complies with Bermuda
Company Law and as such the UK Companies
Act 2006 and associated reporting regulations
do not apply. Although there is no prescription of
statutory duties in Bermuda, Directors are bound
by fiduciary duties to the Company and statutory
duties of skill and care. This includes exercising
care, diligence, and skill that a reasonably prudent
person would be expected to exercise in a
comparable circumstance. The Directors act in a
way that they consider in good faith would be most
likely to promote the success of the Company for
the benefit of its members as a whole.
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Company’s Bye-laws for voting rights
to be suspended if calls on shares are
unpaid. However, there are no nil or
partly paid shares in issue on which calls
could be made. The Bye-laws also allow
the Company to investigate interests
in its shares and apply restrictions
including suspending voting rights
where information is not provided.
No such restrictions are presently in
place. The Company was authorised
by shareholders at the 2024 AGM to
purchase in the market up to 10% of the
Company’s issued ordinary shares. The
Company announced on 5 March 2024
that it would commence a buyback of its
issued ordinary shares for a maximum
aggregate consideration of $150 million.
As part of the buyback programme,
which was implemented to reduce the
issued share capital of the Company,
the Company purchased 9,948,884
ordinary shares of 6.5p each for an
aggregate consideration of $150 million.
The Company concluded the buyback
programme in August 2024 and all shares
repurchased under the programme
have been cancelled. The Company
announced a further special capital
return via share buyback with its 2024
preliminary results and will update the
market accordingly.
Directors
The names and details of all Directors
of the Company who served during the
year and up to the date of this report
are set out on pages 92 to 93. Details
of the Interim Chair’s professional
commitments are included in his
biography on page 92.
The Bye-laws of the Company govern
the appointment and replacement of
Directors. In accordance with the Code,
the Directors will submit themselves for
re-election at the AGM.
Details of the Directors’ share
ownership are also set out on
page 137. Biographical details of
the Directors are set out on pages
92 to 93, as are the reasons why the
Board believes their contribution is
(and continues to be) important to the
Company’s long-term sustainable
success. This information will also
be set out in the circular which will
accompany the notice of AGM.
Major interests in shares
The Company has been notified of the
interests in voting rights in its ordinary
shares in accordance with DTR 5,
which are outlined in the table above.
Any acquisitions or disposals of major
shareholdings notified to the Company
in accordance with DTR 5.1 are
announced and those announcements
are available on the Company’s website,
hiscoxgroup.com.
Political donations and
charitable contributions
The Group made no political
donations during the year (2023: $nil).
Information concerning the Group’s
charitable activities is contained in
the sustainability section on pages
56 to 59.
Climate-related matters
In preparing and authorising this report,
the Board has considered the relevance
of material climate-related matters.
Climate-related matters are discussed
at all levels of the Company, including
Board level, in line with the sustainability
governance structure outlined on
page 57.
The Company also aligns its
climate‑related activities to the TCFD
framework, details of which can be
found on pages 74 to 88.
Directors and officers’ indemnity
The Company has granted indemnities
to each of its Directors and Officers in
respect of all losses arising out of, or in
connection with, the execution of their
powers, duties and responsibilities as
Directors and/or Officers to the extent
permitted by Bermuda Company law
and the Bye-laws of the Company.
Powers of Directors
The powers given to the Directors are
contained in the Company’s Bye-laws
and are subject to relevant legislation
and, in certain circumstances (including
in relation to the issuing and buying back
by the Company of its shares), approval
by shareholders in a general meeting.
At the 2024 AGM, the Directors were
granted authorities to allot and issue
shares and to make market purchases
of shares, and intend to seek renewal of
these authorities in 2025.
Disclosure under UK Listing Rule 6.6.1
The information that fulfils the reporting
requirements relating to the following
matters can be found at the pages
identified in the table above.
Annual General Meeting
The notice of the AGM, to be held
on 15 May 2025, will be sent to
shareholders alongside a copy of this
report. The deadline for submission of
proxies is 48 hours before the meeting.
By order of the Board
Marc Wetherhill
Company Secretary
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
26 February 2025
Major interests in shares
The Company has been notified of the following interests in voting rights in its
ordinary shares in accordance with DTR 5:
Number
of shares
% of issued
share capital
as at 31December
2024*
Sun Life Financial Group
30,231,189
8.89
BlackRock Inc.
21,336,052
6.28
The Capital Group Companies, Inc.
20,097,684
5.91
T. Rowe Price Associates, Inc.
17,839,762
5.25
Boston Partners
16,997,137
5.00
*There were 339,979,688 shares in issue (excluding Treasury shares) as at 31 December 2024.
As at 26 February 2025, no changes have been notified to the Company.
Disclosure under UK Listing Rule 6.6.1
Details of
long‑term
incentive
schemes
Directors’
remuneration report
(pages 133 to 135)
Allotment of
shares for
cash pursuant
to employee
share schemes
Note 19 to the
consolidated
financial statements
on employee share
schemes (page 222)
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The Board is responsible for ensuring
the maintenance of proper accounting
records which disclose with reasonable
accuracy the financial position of the
Group. It is required to ensure that the
financial statements present a fair view
for each financial period. The Directors
explain in the Annual Report their
responsibility for preparing the Annual
Report and Accounts.
We confirm that to the best of
our knowledge:
dthe financial statements, prepared
in accordance with UK-adopted
international accounting standards,
give a true and fair view of the
assets, liabilities, financial position
and profit or loss of the Company
and the undertakings included
in the consolidation taken as a
whole; and
dthe Management report includes
a fair review of the development
and performance of the business
and the position of the Company
and the undertakings included in
the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties
that they face.
The Directors responsible for authorising
the responsibility statement on behalf
of the Board are the Interim Chair,
Colin Keogh, and the Group Chief
Executive Officer, Aki Hussain. The
statements were approved for issue
on 26 February 2025.
The Directors consider that the Annual
Report and Accounts, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s
and the Group’s position, performance,
business model and strategy.
Directors’ responsibilities
statement
Advisors
Hiscox Ltd
Secretary
Marc Wetherhill
Registered office
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
Registered number
38877
Auditor
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Stockbrokers
Citigroup
Citigroup Centre
33 Canada Square
London
E14 5LB
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
Registrars
Equiniti (Jersey) Limited
c/o Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
United Kingdom
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YearEnd
24
Assureur des TPE
et des indépendants
mot compte triple !
hiscox.fr
Dear Shareholder
On behalf of the Board, I am pleased to
present Hiscox’s remuneration report
for the year ended 31 December 2024.
Firstly, I would like to say that I am
delighted to have joined the Hiscox
Board and to have been appointed as
Chair of the Remuneration Committee.
I cannot do so, however, without
acknowledging the tragic circumstances
of Jonathan Bloomer’s untimely death
which led to my predecessor, Colin
Keogh, assuming the role of Interim
Chair and me replacing him in this role
rather sooner than anticipated. As
Hiscox colleagues and fellow Directors
have expressed in other parts of this
report, my deepest condolences are
with Jonathan’s family and friends and I
join them in paying tribute to his service
to the Company and the Board.
On behalf of the Board, I would like to
thank Colin for his leadership of the
Remuneration Committee for the past
nine years. On a personal note, I am
grateful to him for the guidance he
has given me during the transition.
Our remuneration strategy is
designed to help attract and retain
talented, ambitious people, to foster
a culture of high performance and
to create sustainable long‑term
value for shareholders. I am
pleased to be presenting this report
against a backdrop of strong
business results and remuneration
outcomes for executives and wider
Hiscox employees.
2024 performance and
remuneration outcomes
During 2024, the Group delivered a
record profit before tax of $685.4 million
(2023: $625.9 million) and, for the
second consecutive year, a strong
undiscounted combined ratio of 89.2%
(2023: 89.8%), despite the active loss
environment. Along with an excellent
investment return of $383.9 million
(2023: $384.4 million), the Group has
generated a return on equity of 19.8%
(2023: 27.6%).
For both the short- and long-term
incentive plans, and consistent
with previous years, the Committee
assessed performance in the round
when determining variable pay
outcomes, including an assessment
of wider Group performance and the
employee, shareholder and wider
stakeholder experience, alongside
adherence to the risk framework.
Exercise of discretion
The ongoing impact on the
long-term incentive plan of the
change in accounting standard from
IFRS 4 to IFRS 17 is described in
more detail later in the report. The
Committee maintains the view that,
in principle, plan participants should
be no better or worse off due to this
change than they would have been
without it. Similarly, the Committee
has exercised discretion and
retrospectively adjusted incentive
targets and outcomes to reflect the
accounting-driven material change
in share capital during 2024, in order
to ensure that incentive payouts
are reflective only of underlying
Company performance.
As explained in previous years’
remuneration reports, ROE in
2022 was materially impacted by
unrealised investment losses on the
bond portfolio. The corresponding
upward adjustment made in 2022 to
calculate Executive Director and wider
Remuneration Committee report
Our remuneration
strategy is designed
to help attract and
retain talented,
ambitious people, to
foster a culture of high
performance and to
create sustainable
long‑term value
for shareholders.
Jane Guyett
Chair of the Remuneration Committee
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workforce bonuses was agreed to
be adjusted downward in 2023, 2024
and 2025 as the bonds return to par.
As such a deduction of $35.8 million
has been made to the pre-tax ROE for
bonus purposes in 2024.
2024 annual bonus
For the 2024 annual bonus,
performance metrics consisted
of: pre-tax ROE (75% weighting),
employee engagement (5%), retail
claims net promoter score (5%) and
individual strategic objectives (15%).
As a result of the strong pre-tax
adjusted ROE of 21.2% for 2024,
improvements in the retail claims
NPS, maintaining the ten-year high
engagement score, and the personal
contribution of the Executive Directors
(see page 132 for further details), the
Committee determined to award an
annual bonus equivalent to 94% of
the maximum bonus opportunity to
Aki Hussain (£2,325,000), 94% to
Paul Cooper (£1,600,000) and 89%
to Joanne Musselle (£2,000,000).
In line with the remuneration policy,
40% of each Executive Director’s
bonus for 2024 will be deferred into
Hiscox shares for three years to
further align their interests with those
of shareholders.
2022 long-term incentive awards
Awards made under the Performance
Share Plan in 2022 included a 40%
weighting on relative total shareholder
returns (TSR) and a 60% weighting on
growth in net asset value (NAV) per
share plus dividends.
The adjusted three-year average
growth in NAV of 16% resulted in
vesting of 100% of the maximum
weighting for this metric. Relative
TSR performance was below the
median of the peer group over the
three‑year period, resulting in zero
vesting of this portion of the award.
This resulted in an overall vesting of
60% of 2022 awards.
2025 remuneration
For 2025, Paul Cooper and Joanne
Musselle’s salaries will be increased by
1.8% and Aki Hussain by 2.5%, in line
with average workforce increases in
the UK of 2.8%.
The Committee has discretion to
determine the specific metrics and
targets attached to each compensation
cycle with reference to the business
strategy. There are no proposed
changes to the metrics used or
maximum award levels under the annual
bonus and long-term incentive plan.
Wider workforce
Since joining Hiscox, it has been
encouraging to see the commitment
to ensuring Hiscox’s reward
philosophy is applied successfully
across the entire workforce and
that we are looking after our lowest
paid employees. Hiscox has been
a Living Wage employer in the UK
since 2019. This is an important part
of our employee value proposition and
helps ensure that Hiscox employees
receive pay that recognises the
increased cost of living in the UK.
We published our eighth annual UK
gender pay report in 2024. Our pay
gap remains relatively well positioned
versus our peers, however we recognise
that we still have work to do.
2024 saw the first year of the
new short- and long-term incentive
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Our remuneration approach at a glance
+
+
+
+
=
Salary
Pension and
other benefits
Bonus:
cash
Bonus: deferred
into shares released
after three years
Performance
Share Plan
Total remuneration
Short term
Fixed
Variable
Long term
approach in operation for the wider
workforce. This refreshed approach
formed part of our overall reward
strategy and was built on three pillars:
dconsistent methodology:
allowing us to unite our reward
approach globally, so that
wherever a colleague is in the
organisation, their reward
reflects their performance,
the success of their business
unit or function, and our
Group’s profitability;
dmarket competitive: allowing us
to deliver competitive rewards in
every one of our markets;
dtransparent: giving colleagues
more visibility of the total reward
value they could receive, clarity
around performance measures
and how they can influence them.
The Committee also continued with
the following activities to ensure we are
appropriately rewarding and engaging
the entire workforce and reflecting this in
Board decision-making.
dBoard oversight: we are
regularly kept up to date by
the Chief People Officer on
wider workforce remuneration
trends and policies to aid our
understanding of how Executive
Directors’ remuneration aligns to
that of wider employees.
dEmployee engagement:
Anne MacDonald, Non
Executive Director, also
serves as Employee Liaison
and, as such, continues to
facilitate engagement sessions
through the established
representative Employee
Engagement Network to better
understand employee views
on issues, including but not
limited to, remuneration, and
provides periodic feedback on
these discussions to the Board.
We were pleased to hear the
feedback that Executive Director
remuneration is viewed as
appropriate and no concerns
were raised by the workforce.
2026 remuneration policy
The current remuneration policy was
approved by shareholders at the 2023
AGM and, as such, a new policy is
required to be put to vote at the 2026
AGM. We look forward to consulting
with shareholders over the coming
year ahead of the policy’s renewal.
In summary
The Remuneration Committee is
satisfied that 2024 remuneration
outcomes are aligned with the
experience of shareholders
and colleagues and reflective of
business performance.
Jane Guyett
Chair of the Remuneration Committee
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40%
60%
40%
60%
40%
60%
Aki Hussain
Paul Cooper
Joanne Musselle
344%
200%
269%
200%
357%
200%
Held Requirement
Aki Hussain
Paul Cooper
Joanne Musselle
94%
300%
94%
300%
89%
400%
2024 award (as % of max) Maximum opportunity (as % of salary)
898,055
610,046
623,446
2,325,000
1,600,000
2,000,000
1,350,897
1,534,463
942,362
Aki Hussain
£4,573,952
Paul Cooper
£3,744,509
Joanne Musselle
£3,565,808
Fixed pay Bonus LTIP/buy-out/Sharesave gain
Summary of remuneration arrangements
Aki Hussain
Paul Cooper
Joanne Musselle
2024 vested
vs lapsed
Total remuneration 2024
Annual bonus
Long-term incentive plan (Performance Share Plan)
Performance period ends 31 December 2024
Shareholding requirement
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£
2024
4,573,952
2023
3,870,426
2022
1,390,959
2021
1,332,964
2020
717,243
2019
698,196
2018
1,818,086
2017
2,394,428
2016
3,970,466
2015
3,358,894
Implementation of policy for 2024
Implementation of policy for 2025
Award subject to three-year performance
period and two-year holding period.
Maximum opportunity: 250% of salary for all
Executive Directors.
Vesting subject to: growth in NAV (50%
weighting) and relative TSR (50% weighting).
2024 award as percentage of salary:
dAki Hussain: 250%
dPaul Cooper: 200%
dJoanne Musselle: 200%
Holding period: awards subject to a further
two-year holding period following vesting.
No changes.
2025 award as percentage
of salary:
dAki Hussain: 250%
dPaul Cooper: 200%
dJoanne Musselle: 200%
Maximum opportunity:
dup to 300% of salary for CEO and CFO;
dup to 400% of salary for CUO.
Over the past ten years, the average bonus
awarded to the CEO has been equivalent to
35% of the current maximum opportunity.
Performance metrics: 75% weighting on
ROE and 25% on strategic performance
metrics. Further details are provided on
pages 128 to 129.
Deferral: flat rate of 40% of bonus deferred
into shares and released three years following
the end of the relevant performance year.
No changes to the maximum
opportunity or deferral.
Performance metrics are outlined
on page 140.
Salaries for 2024:
dAki Hussain: £821,500
dPaul Cooper: £565,000
dJoanne Musselle: £565,000
Base salary is set at a competitive level
to reduce reliance on variable pay and
discourage excessive risk taking.
Salaries for 2025:
dAki Hussain: £842,000
dPaul Cooper: £575,000
dJoanne Musselle: £575,000
Salary increases of 2.5% for the
CEO and 1.8% for other Executive
Directors in line with external market
data and other UK-based employees
where the average increase is 2.8%.
Share ownership guidelines of 200% of salary
for all Executive Directors, after five years in role.
2024 actual:
dAki Hussain: 344%
dPaul Cooper: 269%
dJoanne Musselle: 357%
Post-employment shareholding requirement:
maintain the level of the in-employment
shareholding guideline (or the actual
shareholding on stepping down, if lower) for two
years following stepping down from the Board.
Share ownership
guideline unchanged.
Key principles underpinning
remuneration at Hiscox
The Hiscox remuneration policy is
designed to drive a culture of high
performance and create sustainable
long-term value for shareholders.
The policy follows three clear principles:
dsimple and results-driven,
with variable rewards if Hiscox
delivers profits and shareholder
returns in excess of specified
return thresholds;
dincentivise Executive Directors
appropriately, over the short and
long term; and
dalign Executive Directors’ interests
with those of our shareholders,
focusing on effective risk
management, return on equity
(ROE) and net asset value growth,
which drives total shareholder
return over time.
Implementation of policy
The remuneration policy operated
as intended in terms of Company
performance and quantum during 2024
and no changes are necessary for 2025.
CEO single figure (ten-year history)
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Summary of
remuneration
arrangements
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PwC has been engaged to audit the sections in the Directors’ remuneration report 2024 below entitled ‘Executive Director
remuneration table’ and ‘additional notes to the Executive Director remuneration table’, ‘annual bonus’, ‘bonus outcomes for
2024’, ‘2024 key objectives and individual achievements by the Executive Directors’, ‘long‑term incentive plan’, ‘long-term
incentive plan outcomes for 2024’, ‘PSP awards granted during the 2024 financial year’, ‘Non Executive Director remuneration
table’, ‘Directors’ shareholding and share interest’, ‘Performance Share Plan’ and ‘Sharesave Schemes’, ‘deferred bonus’,
‘payments to past Directors’, ‘payments for loss of office’, to the extent that would be required by the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2013 as amended.
Executive Director remuneration table (audited)
Aki Hussain
Paul Cooper
Joanne Musselle
2024
£
2023
£
2024
£
2023
£
2024
£
2023
£
Salary
813,000
778,125
561,563
544,688
561,563
544,688
Benefits
11,149
10,703
9,217
8,945
9,621
9,349
Retirement
73,906
70,736
39,266
52,796
52,262
50,546
Bonus1
2,325,000
2,200,000
1,600,000
1,500,000
2,000,000
1,900,000
Long-term incentive plan2
1,346,261
810,8623
986,209
0
942,362
810,8623
Other4
4,636
0
548,254
963,600
0
0
Total
4,573,952
3,870,426
3,744,509
3,070,029
3,565,808
3,315,445
Total split
Fixed remuneration
898,055
859,564
610,046
606,429
623,446
604,583
Variable remuneration
3,675,897
3,010,862
3,134,463 2,463,600
2,942,362
2,710,862
140% of the bonus is deferred into shares for three years. No further performance conditions apply.
22024 long-term incentives for Executive Directors relate to performance share awards granted in 2022 where the performance period ends on 31 December
2024. The award is due to vest on 8 April 2025 for Aki Hussain and Joanne Musselle, and 16 May 2025 for Paul Cooper. The amount includes dividend
equivalents of an extra 9,184 shares for Aki Hussain, 5,408 shares for Paul Cooper and 6,428 shares for Joanne Musselle accrued on the award. For the
purpose of this table, the award has been valued using the average share price during the three‑month period 1 October 2024 to 31 December 2024 of £10.91.
Of the vested amount, £121,523 relates to share price appreciation for Aki Hussain, £108,273 for Paul Cooper and £85,065 for Joanne Musselle.
3The value of the 2023 long-term incentive awards has been updated from £687,550 (using a share price of £10.00) to £810,862 reflecting the actual share price
on the vesting date of 8 April 2024 of £11.89 and the final dividend equivalents.
4On 2 April 2024, the third tranche of the share buyout award for Paul Cooper vested. The total vested award was 44,429 shares including dividend
equivalents accrued on the award. The award was valued at £548,254 using the middle market quotation of £12.34 on 2 April 2024, which included
£113,375 share price appreciation. Aki Hussain has a Sharesave discount to market value of £4,636. See page 138 for further details.
Directors’ remuneration report
This report explains how the remuneration policy
was implemented for the financial year ended
31 December 2024.
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Additional notes to the Executive Director remuneration table (audited)
Salary
Salary reviews take place in the first quarter of the year, effective from 1 April. As noted in last year’s remuneration report,
Aki Hussain’s salary increased by 4.3% and the other Executive Directors’ salaries by 2.5%, effective 1 April 2024. The average
UK‑based employee salary increase was 4.3%.
Base salaries for Executive Directors from 1 April 2024 were as follows:
2024
£
Aki Hussain
821,500
Paul Cooper
565,000
Joanne Musselle
565,000
Benefits
For 2024, benefits provided for Executive Directors included the healthcare scheme, life insurance, income protection insurance
and critical illness policies, as well as a Christmas gift and fitness cash allowance.
Retirement benefits
Aki Hussain and Paul Cooper received a 10% of salary cash allowance in the year (less an offset for the employer’s UK
National Insurance liability) in lieu of the standard employer pension contribution. Joanne Musselle receives a combination
of cash allowance and employer pension contribution (£10,000 for 2024) totalling 10% of salary (less an offset for employer’s
UK National Insurance on the cash allowance). The value of these retirement benefits is shown in the Executive Director
remuneration table on page 126. Executive Director retirement benefits are consistent with those offered to the majority of
UK employees. This has been the policy at Hiscox for a number of years.
Variable pay
To ensure that remuneration is aligned with Company performance and the shareholder experience, a significant proportion of
pay is delivered through incentive awards, consisting of an annual bonus and share awards under the Performance Share Plan,
which can vary significantly based on the level of performance achieved. Although the remuneration structure has naturally
evolved over time to reflect market and best practice, the framework has been in place for more than 15 years.
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Annual bonus (audited)
The Executive Directors, along with other employees across the Group, participate in a performance-related short-term
incentive plan. Bonuses are based on the performance of the individual, the business unit and the Group as a whole.
The Remuneration Committee believes that the most appropriate measure for the calculation of the financial performance of
the Company is pre-tax return on equity (ROE), as this aligns Management’s interests with those of shareholders, minimises
the possibility of anomalous results, and ensures that incentives for Executive Directors and other employees are tied to
the Company’s profit performance. When setting targets, the Committee seeks to motivate strong performance while also
encouraging sustainable behaviours, in line with the defined risk appetite of the business.
In determining the bonuses to be paid to Executive Directors for 2024, the Committee based its judgement on the scorecard
shown on page 129. Assessment of retail claims transactional NPS and employee engagement was undertaken by external
third parties.
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Executive Director bonus scorecard
Metric
Weighting of maximum
opportunity
Performance criteria
Pre-tax ROE
75%
The pre-tax ROE threshold is set annually using an
investment benchmark rate and for 2024 was set at a pre-tax
ROE of 5%.
To aid the Committee’s assessment of bonus outcomes, the
following framework was in place for 2024.
Pre-tax ROE
Bonus % max for this metric
< 5%
0%
5%-12%
0-30%
11%-16%
25-55%
15%-20%
45-75%
18%-23%
65-90%
>21%
80-100%
Strategic personal
objectives
15%
The Committee undertakes a robust assessment of individual
achievements by the Executive Directors. See page 132 for
further details.
Retail claims
transactional NPS
5%
A weighted average half-yearly score is derived by an external
third party.
Threshold
Target
Stretch
61
(20% vest)
64
(50% vest)
69
(100% vest)
Threshold score of 61 and maximum outturn at 69 or above
for each six-monthly period.
Global employee
engagement score
5%
Engagement is measured through the annual employee
engagement survey run by an external third-party provider.
Threshold
Target
Stretch
79
(20% vest)
82
(50% vest)
87
(100% vest)
Threshold performance of 79% engagement and a stretch
score of 87% or above for maximum outturn.
Maximum bonus opportunities for 2024 remained unchanged from 2023, being 300% of salary for both the Group Chief Executive
Officer and Group Chief Financial Officer and 400% of salary for the Group Chief Underwriting Officer. 40% of annual bonuses are
deferred into Hiscox shares for a period of three years. The release of these shares and the associated accrued dividend shares are
generally subject to continued employment but are not subject to any further performance conditions. The remaining 60% of annual
bonus is paid in cash in March 2025. Malus and clawback provisions apply (see page 159 for more details).
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Bonus outcomes for 2024 (audited)
Pre-tax ROE
The Executive Directors led the business to achieve strong underwriting results against a challenging macroenvironment and an
active year for claims. The Group has delivered a pre-tax ROE result of 22.4%.
As explained in previous years’ remuneration reports, ROE in 2022 was materially impacted by unrealised investment losses on
the bond portfolio. The Committee previously agreed that the fairest treatment was to pay bonuses to Executive Directors and
the wider workforce on an adjusted profit basis, recognising the impact of unrealised investment losses on bonds. It was further
agreed that as the bonds return to par, adjustments would be made to the 2023-2025 bonus pools to remove the impact of any
future gains. This year, the Committee has therefore again deducted one-third of the profit adjustment made in 2022, from the
2024 ROE results. For the Executive Directors, the profit adjustment of $35.8 million results in an adjusted pre-tax ROE of 21.2%
for bonus purposes.
The Committee is of the view that paying 100% of the maximum bonus opportunity weighted to ROE performance is a fair
outcome for the Executive Directors and that payment of this level is aligned with the shareholder experience. Year-on-year
profit before tax is up $60 million, the majority of which was delivered by underwriting results, with investment income being
broadly flat.
Strategic personal objectives (audited)
The Committee used a scoring mechanism to calculate performance outcomes against key strategic objectives for each
Executive Director, outlined on page 132. The results are shown in the table on page 131.
Retail claims transactional NPS (audited)
Our customers are at the heart of what we do and their experience of dealing with us is intrinsically linked to our brand value.
Claims transactional net promoter score was measured by an external third party across our retail operations in Europe, the UK
and the USA. The weighted average half-yearly scores are shown below.
H1
71
H2
76
As performance exceeded the stretch target of 69 in both six-month periods, 100% of the maximum bonus opportunity
weighted to retail claims transactional NPS was paid.
Global employee engagement score (audited)
Employee engagement has proven to be strongly correlated with overall business performance and we regard it as an important
forward-looking leading measure of our success. We also believe it is largely a function of good leadership. Engagement was
measured during 2024 through an annual global employee engagement survey run by an external third-party provider. The
score was 82% and therefore 50% of the maximum bonus opportunity weighted to this metric was paid.
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Summary of annual bonus performance outcomes for 2024 (audited)
% of salary outcome
Aki Hussain
Paul Cooper
Joanne Musselle
Adjusted pre-tax ROE
225
225
300
Strategic objectives
35.5
35.5
24
Claims NPS
15
15
20
Employment engagement
7.5
7.5
10
Total
283
283
354
% maximum
94
94
89
The maximum bonus opportunity for both the Group Chief Executive Officer and Group Chief Financial Officer is 300%
salary and 400% of salary for the Group Chief Underwriting Officer. Having assessed the scorecard outturns and aggregate
performance, the Committee is of the view that paying 94% of the maximum bonus opportunity to Aki Hussain (£2,325,000),
94% to Paul Cooper (£1,600,000) and 89% to Joanne Musselle (£2,000,000) are fair outcomes for the Executive Directors,
reflective of the excellent business results and aligned with the shareholder experience.
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2024 key objectives and individual achievements by the Executive Directors (audited)
Key objectives
Achievements
Aki Hussain
Deliver the 2024
business plan
In 2024, Aki led the business to achieve accelerating momentum in the retail business and deliver
Group-wide ICWP growth of 3.7% and a net combined ratio (undiscounted) of 89.2% in a year
characterised by ongoing geopolitical uncertainty, economic pressures and an active year for
claims. The Group has delivered another year of strong results, a second consecutive year of record
pre-tax profits of $685.4 million, and a third consecutive year of double-digit ROE at 19.8%. The Group’s
success is attributed to disciplined capital allocation, high-quality underwriting and cost discipline
against a backdrop of favourable market conditions in big-ticket that continues to deliver results.
Lead an effective
Group Executive
Committee (GEC)
Aki has fostered a well-aligned and high-performing GEC, with a focus on optimising collective
performance in support of the Hiscox Group ambition. By defining individual objectives with clear and
measurable quarterly targets, Aki has introduced a process for greater accountability and alignment
across the leadership team. Morale across the business has been at a decade high, reflected in the
achievement of a record employee engagement score of 82% for the third consecutive year.
Oversee a
risk‑aware culture
In 2024, Aki has built upon and socialised the Group’s risk-aware culture, ensuring alignment across both
the Group and local business units. The Risk and Compliance framework was further refined to align
with evolving regulatory requirements and governance standards. Regular risk maturity evaluations,
supported by internal risk and control self-assessments, have facilitated ongoing improvement. The
Group is positioned to advance its risk maturity in the year ahead, enabling pro-active decision-making.
Paul Cooper
Deliver the 2024
expense ratio plan
Paul has continued to prioritise expense base efficiency and has led the business to achieve an expense
ratio of 47.3% which represents a 0.8 point improvement on prior year. Material drivers include further
scaling our business, process optimisation and increasing our use of automation.
Build a first-class
finance function
Establishing a market-leading finance function has been a key focus for Paul in 2024. Notable
achievements include further refining the financial risk and control framework to meet regulatory
developments and addressing updates to the UK Corporate reform and Global minimum tax legislation
through targeted initiatives. Through a combination of loss portfolio transfers (LPTs) executed over recent
years and prudent reserving, the portfolio has been well protected from unforeseen volatility. Paul has
also enriched finance’s ‘fit for the future’ workforce, with strategic hires in key areas across financial
planning and analysis, actuarial capabilities and systems and controls, the latter of which has led to
efficiencies with a faster reporting close process.
Technical
excellence
During 2024, Paul advanced the Group’s business planning capabilities by fostering greater alignment
across the trilogy of claims, underwriting, reserving and pricing, enabling earlier course correction and
improvements in decision-making. Paul implemented driver-based budgeting across all retail business
units, laying the foundation for more informed insights in 2025.
Joanne Musselle
Deliver the 2024
underwriting
growth strategy
Under Joanne’s leadership, our global underwriting teams have continued to demonstrate exceptional
discipline and performance, achieving an insurance service result of $553.5 million for 2024, an increase
of 12.4% on prior year despite a more active claims environment. The retail segment achieved net ICWP
growth of 5%, while our big-ticket portfolios continue to benefit from favourable market conditions,
particularly in Hiscox Re & ILS, which achieved net ICWP growth of 11.1%.
Technical
excellence
Joanne has continued to strengthen the alignment between underwriting, claims, reserving and pricing
– in collaboration with Paul – through the introduction of standardised data and analytics dashboard
packs, defined KPIs, and streamlined operating rhythms, leading to improved and earlier insight
into underwriting performance and allowing focus to shift to driving action across relevant teams.
Joanne has also led efforts to enhance our risk and control frameworks, particularly in the areas of
underwriting authorities, product governance, and pricing oversight. All business units now track pricing
governance in alignment with internal guidelines, while plans for digital underwriting controls are in flight.
Active portfolio
management
Joanne has overseen an ongoing focus on active portfolio management and, under her leadership, our
big-ticket businesses have delivered an excellent year of results having benefitted from an attractive rate
environment in property (re)insurance while effectively managing volatility. Our retail businesses have
sustained structural growth in chosen markets while strengthening our technical capabilities. Following
an extended period of favourable rate conditions, Joanne has developed robust market in transition
frameworks with tolerance thresholds, automated triggers, and trackers for cyclical trends to remain
resilient and adaptable in light of expected future rate movements.
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Long-term incentive plan (audited)
Share buy-out arrangements for Paul Cooper
As disclosed in the 2022 remuneration report, in lieu of forfeited long-term incentive plan awards with his previous employer,
Paul Cooper was compensated with awards of an equivalent face value and all vesting terms were mirrored. The Hiscox malus
and clawback provisions apply. Vesting is subject to continued employment.
On 2 April 2024, the third tranche of the buy-out award vested. Paul Cooper received an additional 1,484 shares equivalent to
the dividends payable with a record date between 16 May 2022 and 1 April 2024. The total vested award was 44,429 shares.
Performance Share Plan (PSP) awards where the performance period ends with the 2024 financial year (audited)
Aki Hussain was granted 190,355 nil-cost options under the PSP on 8 April 2022 for the three-year performance period
1 January 2022 to 31 December 2024. Joanne Musselle was similarly granted 133,248 nil-cost options. Paul Cooper’s grant
was made on 16 May 2022 following his appointment as Group Chief Financial Officer on 9 May 2022. He was awarded 141,646
nil-cost options.
The performance conditions for this award were set at the start of the performance period and are as follows.
60% of awards are based on three-year average growth in NAV per share, plus dividends:
Award vesting
(% of maximum)
Less than RFR + 6% p.a.
0
RFR + 6% p.a.
16
RFR + 14% p.a.
80
Equal to or greater than RFR +17% p.a.
100
Straight-line vesting in between each point.
The risk-free rate (RFR) for the awards granted in 2022 was set at 0%.
40% of awards are based on relative total shareholder return measured against a group of global insurance peers:
Award vesting
(% of maximum)
Below median
0
Median
20
Upper quartile
100
Straight-line vesting in between each point.
The peer group consists of the following 22 companies: Admiral Group, American Financial Group, Arch Capital, Axis Capital, Beazley, Cincinnati Financial,
Conduit, CNA Financial, Direct Line Insurance Group, Everest Re, Fairfax Financial Holdings, Hanover Insurance, James River Group, Kinsale Capital Group,
Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains Insurance Group, and WR Berkley.
An additional two-year holding period applies post vest.
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Measure
Relative TSR
Growth in NAV
Total
Outcome
Maximum
40%
60%
100%
0%
60%
60%
Long-term incentive plan outcomes for 2024 (audited)
Relative TSR
Following Berkshire Hathaway’s acquisition of Alleghany in 2022, Alleghany has been removed from the peer group. Argo
has also been removed following its acquisition by Brookfield Reinsurance. The TSR peer group has therefore reduced to
22 companies.
Hiscox’s TSR performance over the three-year period was 41.2% versus the median TSR performance for the comparator group
of 57.7%. This corresponds to zero vesting of this portion of the award.
Growth in NAV
The performance targets for awards granted in 2022 were set using the IFRS 4 accounting standard. 2022 calendar year
performance was measured on an IFRS 4 basis but 2023 and 2024 were measured using IFRS 17. The Committee agreed it was
appropriate to remove any variability in the 2023 and 2024 results driven by the transition between the two standards to align
with the guiding principle of ensuring no material benefit or deficit relative to performance absent the change. This resulted in a
1% reduction to the target ranges outlined on page 133, such that threshold vesting was at RFR+5% and maximum vesting at
RFR+16%.
During 2024, the Group transacted a $150 million share buyback programme. The Committee agreed it was appropriate to
adjust for the impact of this change in capital on the per share performance outcome.
The adjusted three-year average growth in NAV of 16% resulted in vesting of 100% of the maximum weighting for this metric.
Summary of long-term incentive outcomes for 2024 (audited)
The Committee is of the view that paying 60% of the maximum opportunity to the Executive Directors is a fair outcome and
reflective of overall Company financial performance. The Committee reviewed share price performance in concluding that no
windfall gains had occurred.
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PSP awards granted during the 2024 financial year (audited)
PSP awards granted to the Executive Directors in 2024 were set at 250% of salary for Aki Hussain and 200% of salary for both
Paul Cooper and Joanne Musselle. Awards are based on a three-year performance period commencing 1 January 2024 and
will vest on 8 April 2027 followed by a two-year holding period. The Committee has discretion to determine the performance
metrics, weightings and targets and has determined that 50% of awards are based on stretching growth in NAV plus dividends
plus shareholder returns, measured on a per-share basis, with 50% based on relative total shareholder return (TSR) against a
group of global insurance peers.
Executive Directors were granted nil-cost options under the PSP as shown below. Grants were made on 8 April 2024.
Number of
awards granted
Market price
at date of grant
£
Market value
at date of grant
£
Aki Hussain
168,478
11.89
2,003,203
Paul Cooper
92,698
11.89
1,102,179
Joanne Musselle
92,698
11.89
1,102,179
The performance condition for these awards, measured over the period 1 January 2024 to 31 December 2026, is as follows:
Growth in NAV per share plus dividends, plus shareholder returns
Award vesting
(% of maximum)*
< $0.42 p.a.
0
$0.42 p.a.
20
$1.21 p.a.
100
*Applies to 50% of awards. Straight-line vesting in between each point.
Relative TSR
Award vesting
(% of maximum)*
Below median
0
Median
20
Upper quartile
100
*Applies to 50% of awards. Straight-line vesting in between each point.
The peer group consists of the following 22 companies: Admiral Group, American Financial Group, Arch Capital, Axis Capital, Beazley, Cincinnati Financial,
CNA Financial, Conduit, Direct Line Insurance Group, Everest Re, Fairfax Financial Holdings, Hanover Insurance, James River Group, Kinsale Capital Group,
Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains Insurance Group, and WR Berkley.
Executive Directors will be required to retain any shares post vest (net of tax charges) for a further two years.
Payments for loss of office (audited)
No payments were made during the year for loss of office.
Payments to past Directors (audited)
There were no payments to past Directors.
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Membership of the Remuneration Committee
The Remuneration Committee members during the year were Beth Boucher, Donna DeMaio, Michael Goodwin, Jane Guyett,
Thomas Huerlimann, Colin Keogh, Anne MacDonald, Constantinos Miranthis and Lynn Pike. Jane joined the Board
in September 2024, replacing Colin as Remuneration Committee Chair.
Non Executive Director remuneration table (audited)
The table below sets out the remuneration received by the Non Executive Directors for the financial years ending
31 December 2024 and 31 December 2023.
2024
Ltd Board fee
£
Subsidiary
board fee
£
Total Hiscox fees
£
Jonathan Bloomer1
335,000
–
335,000
Beth Boucher
98,425
–
98,425
Donna DeMaio
106,299
61,417
167,716
Michael Goodwin
98,425
35,433
133,858
Jane Guyett 2
34,580
15,250
49,830
Thomas Huerlimann
98,425
154,760
253,185
Colin Keogh (Interim Chair)3
172,923
106,000
278,923
Anne MacDonald
106,299
–
106,299
Constantinos Miranthis
106,299
38,583
144,882
Lynn Pike
107,283
61,417
168,700
2023
Ltd Board fee
£
Subsidiary
board fee
£
Benefits
£
Total Hiscox fees
£
Jonathan Bloomer (Chair)1
195,417
–
–
195,417
Robert Childs4
147,500
–
7,041
154,541
Beth Boucher5
64,213
–
–
64,213
Donna DeMaio
108,871
62,903
–
171,774
Michael Goodwin
100,806
36,290
–
137,096
Thomas Huerlimann
100,806
119,804
–
220,610
Colin Keogh
121,774
106,000
–
227,774
Anne MacDonald
108,871
–
–
108,871
Constantinos Miranthis
108,871
39,516
–
148,387
Lynn Pike
106,452
62,903
–
169,355
1Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023. He passed away in August 2024.
2Jane Guyett joined the Board in September 2024, replacing Colin as Remuneration Committee Chair.
3Colin Keogh was appointed Interim Chair August 2024.
4Robert Childs retired from the Hiscox Ltd Board on 30 June 2023.
5Beth Boucher was appointed to the Hiscox Ltd Board on 12 May 2023.
Fees are paid in multiple currencies – 2024 fees were converted using £1: €1.21 and £1: $1.27. 2023 fees were converted using £1: €1.15 and £1: $1.24.
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Directors’ shareholding and share interests (audited)
To align their interests with those of Hiscox shareholders, senior managers are expected to own a minimum number of
Hiscox shares. Executive Directors are required to hold Hiscox shares valued at 200% of salary within five years of becoming
an Executive Director. Shares owned by the Executive Director (and any connected person) count towards the guidelines,
as do vested but unexercised share awards net of assumed taxes and bonus deferred into shares net of assumed taxes.
Executive Directors are expected to retain a shareholding at the level of the in-employment shareholding guideline for two
years after termination.
All three Executive Directors have met the share ownership requirement using their annual salary and closing share price on
31 December 2024. Aki Hussain has holdings of 344% salary, Paul Cooper 269% and Joanne Musselle 357%.
The interests of Executive and Non Executive Directors are set out below, including shares held by connected persons.
There have been no changes in the Director share interests between 31 December 2024 and 27 February 2025.
2024
31 December
2024
6.5p ordinary
shares
number
of shares
beneficial
31 December
2023
6.5p ordinary
shares
number
of shares
beneficial
Executive Directors:
Aki Hussain
186,688
174,188
Paul Cooper
114,395
77,174
Joanne Musselle
117,309
117,309
Non Executive Directors:
Jonathan Bloomer1
20,000
20,000
Beth Boucher
–
–
Donna DeMaio
–
–
Michael Goodwin
12,678
12,678
Jane Guyett
–
–
Thomas Huerlimann
16,970
16,548
Colin Keogh
59,667
59,667
Anne MacDonald
43,720
42,629
Constantinos Miranthis
6,832
6,832
Lynn Pike
1,538
1,538
1Shareholding as at date of death.
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Performance Share Plan (PSP) (audited)
Awards in the form of nil-cost options are granted under the PSP as a percentage of salary. All awards are subject to
performance conditions and a further two-year holding period post release, with the exception of Paul Cooper’s buy-out.
The interests of Executive Directors are set out below.
Name
Number of
awards at
1 January
2024
Number of
awards granted
Number of
awards lapsed
Number of
awards exercised
Number of
awards at
31 December
2024
Mid-market price
at date of grant
£
Market price
at date
of exercise
£
Date from
which
released
Aki Hussain
144,436
3,721
(79,960)
0
68,197
8.59
08-Apr-24
190,355
0
0
0
190,355
9.85
08-Apr-25
168,269
0
0
0
168,269
11.74
23-May-26
0
168,478
0
0
168,478
11.89
08-Apr-27
Paul Cooper
42,9451
1,484
0
(44,429)
0
9.70
12.34
01-Apr-24
11,0371
0
0
0
11,037
9.70
01-Apr-25
141,646
0
0
0
141,646
9.85
08-Apr-25
106,009
0
0
0
106,009
11.74
23-May-26
0
92,698
0
0
92,698
11.89
08-Apr-27
Joanne Musselle
144,436
3,721
(79,960)
0
68,197
8.59
08-Apr-24
133,248
0
0
0
133,248
9.85
08-Apr-25
106,009
0
0
0
106,009
11.74
23-May-26
0
92,698
0
0
92,698
11.89
08-Apr-27
Total
1,188,390
362,800
(159,920)
(44,429) 1,346,841
1Denotes buy-out award.
Sharesave Schemes (audited)
The scheme offers a three-year savings contract where the exercise price of the options is calculated on an average share price
over five days prior to the invitation date, with a 20% discount. Sharesave options are not subject to performance. The interests
of Executive Directors under the Sharesave Schemes are set out below.
Name
Number of
options at
1 January
2024
Number of
options granted
Number of
options lapsed
Number of
options exercised
Number of
options at
31 December
2024
Exercise price
£
Market price
at date
of exercise
£
Date from
which
exercisable
Expiry date
Aki Hussain
2,500
0
0
(2,500)
0
7.20
11.50 01-Jun-24 30-Nov-24
0
1,944
0
0
1,944
9.54
01-Dec-27 31-May-28
Paul Cooper
2,452
0
0
0
2,452
7.34
01-Dec-25 31-May-26
Joanne Musselle
2,380
0
0
0
2,380
7.56
01-Dec-24 31-May-25
Total
7,332
1,944
0
(2,500)
6,776
Aki Hussain was granted 1,944 options during 2024 with a discount to market value in the option price of £4,636.
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Deferred bonus (audited)
40% of annual bonuses are deferred into Hiscox shares for a period of three years. The shares are not subject to any further
performance conditions. The interests of Executive Directors are set out below.
Name
Number of
awards at
1 January
2024
Number of
awards granted
Number of
awards lapsed
Number of
awards exercised
Number of
awards at
31 December
2024
Mid-market price
at date of grant
£
Market price
at date
of exercise
£
Date from
which
released
Aki Hussain
0
71,661
0
0
71,661
12.24
25-Mar-27
Paul Cooper
0
48,859
0
0
48,859
12.24
25-Mar-27
Joanne Musselle
0
61,889
0
0
61,889
12.24
25-Mar-27
Total
0
182,409
0
0
182,409
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Implementation of the remuneration policy for 2025
There are no significant changes to the implementation of the policy for 2025 when compared to 2024.
Salary
Annual salary reviews take effect from April each year. The Committee takes account of a number of factors, primarily the
increase applied to other UK-based employees. The Committee applies judgement when using external market data.
For 2025, salaries will be increased by 2.5% for the Group Chief Executive Officer and 1.8% for the other Executive Directors.
This is in line with external market data and other UK-based employees where the average increase is 2.8%. Salaries from
April 2025 will be as follows:
2025
£
Aki Hussain
842,000
Paul Cooper
575,000
Joanne Musselle
575,000
Bonus
The Committee has discretion to determine the specific performance conditions attached to each bonus cycle and to set annual
targets for these measures with reference to the strategy approved by the Board. 75% of the Executive Director bonuses for
2025 will be based on pre-tax ROE. The Group Chief Executive Officer will have 17.5% of his bonus based on specific strategic
objectives, 5% on employee engagement and the remaining 2.5% on retail claims NPS. The Group Chief Financial Officer
and Group Chief Underwriting Officer will both have bonuses based 20% on specific strategic objectives, 2.5% on employee
engagement and 2.5% on retail claims NPS. The strategic objectives for each Executive Director are considered commercially
sensitive and will be disclosed in full in the 2025 Directors’ remuneration report.
The maximum opportunity remains unchanged at 300% salary for the Group Chief Executive Officer and Group Chief Financial
Officer, and 400% salary for the Group Chief Underwriting Officer.
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Long-term incentive plan: Performance Share Plan (PSP)
The performance conditions for awards are set to align with the long-term objectives of the Group. The Committee reviews the
targets prior to each grant to ensure that they remain appropriate. The maximum opportunity for the awards to be granted to the
Executive Directors in 2025 will remain unchanged at 250% of salary. Awards in the form of nil-cost options will continue to be
based on a three-year performance period (1 January 2025 to 31 December 2027) followed by a two-year holding period post
vest. The Group Chief Executive Officer will receive an award of 250% salary and the Group Chief Financial Officer and Group
Chief Underwriting Officer will each receive 200% of salary.
For 2025, 50% of awards will be based on stretching growth in NAV plus dividends plus shareholder returns, measured on a
per‑share basis. The Committee considers that growth in NAV continues to be a key metric for the PSP given that our strategy
is built around the objective of generating long-term shareholder value and NAV is aligned with shareholder value creation.
The targets below represent an expected aggregate increase in shareholder value of between $423 million and $1,204 million
over three years.
Growth in NAV plus
dividends plus
shareholder
returns per share
Proportion of
PSP vesting*
%
Minimum threshold vesting
$0.42 p.a.
20
Maximum vesting
$1.19 p.a.
100
*Applicable to 50% of awards. Straight-line vesting between threshold and maximum.
50% of awards will be based on relative TSR, aligned to our strategy of generating long-term value for shareholders.
Relative TSR
Proportion of
PSP vesting*
%
Below median
0
Median
20
Upper quartile
100
*Applicable to 50% of awards. Straight-line vesting in between each point.
The peer group consists of the following companies: Admiral Group, American Financial Group, Arch Capital, Axis Capital, Beazley, Conduit,
Cincinnati Financial, CNA Financial, Direct Line Insurance Group (will be removed once acquisition receives regulatory approval), Everest Re, Fairfax Financial
Holdings, Hanover Insurance, James River Group, Kinsale Capital Group, Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains
Insurance Group, and WR Berkley.
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Non Executive Director fees
The Non Executive Director fees for 2025 remain unchanged from 2024, however a review is planned in the first half of 2025.
All Board members sit on each of the Committees (Audit, Remuneration, Risk, Nominations and Governance) so the Committee
fees have been aggregated into the basic fee.
2025
fees
Board Chair and subsidiary services
£335,000
Non Executive Director basic fee
$125,000
Additional fees for:
Audit Committee Chair
$10,000
Remuneration Committee Chair
$9,000
Risk Committee Chair
$7,000
Senior Independent Director
$17,000
Employee Liaison
$10,000
Bermuda Committee
$10,000
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External Non Executive Directorships
Executive Directors may not accept any external appointment that may give rise to a conflict of interest, and all external
appointments require the consent of the Chair. Aki Hussain held a directorship at Visa Europe Limited during 2024 and received
a fee of £138,750. Joanne Musselle was remunerated £42,000 for her directorship at Realty.
External advisors
The Committee received independent advice from WTW during 2024. WTW was appointed by the Committee in June 2022,
following a competitive tender process. WTW is a signatory to the Remuneration Consultants Group Code of Conduct and,
as such, voluntarily operates under its code of conduct. During the year, the Committee received advice on developments
in market practice, corporate governance, institutional investor views, and on the design of the Company’s remuneration
arrangements. Total fees for advice provided to the Committee during the year were £177,697 based on a time and
materials basis.
The Committee regularly reviews the advice it receives and is satisfied that this has been objective and independent. During the
year, WTW also provided other consulting services to the Company.
In addition to the external advisors, the Group Chief Executive Officer and Chief People Officer attend the Committee meetings
by invitation and provided material assistance to the Remuneration Committee during the year. No Director or Committee
member was involved in determining their own remuneration during the year.
Other remuneration matters
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97.58%
2.42%
Executive Directors’ cash incentives and return on equity
0%
5%
10%
15%
20%
25%
30%
35%
40%
400
350
300
250
200
150
100
50
0
Post-tax return on equity
2020
2011 2017
2018
2008
2010
2007
2009
2016
2013
2015
2012
2014
Below zero
Average bonus as a % of salary
2019
2021
2022
2023
2024
ROE is a measured on IFRS 4 basis until 2023, after which it is measured on IFRS 17 basis.
95.39%
4.61%
Directors’ remuneration policy
For
Against
Directors’ remuneration report
Statement of shareholder voting
At the AGM on 9 May 2024, the Directors’ remuneration report received the shareholder votes shown in the table below.
The Committee was pleased with the level of support received from shareholders.
Directors
remuneration
report
(9 May 2024)
Remuneration
policy
(11 May 2023)
For
280,273,321
274,610,137
%
95.39%
97.58%
Against
13,539,032
6,811,674
%
4.61%
2.42%
Withheld
1,269,666
10,302
The remuneration policy approved by shareholders on 11 May 2023 can be viewed in the 2022 Annual Report and Accounts at
hiscoxgroup.com.
ROE performance
The chart below shows the relationship between the Group ROE performance and bonus awards for Executive Directors over
an extended period. It demonstrates the strong link between business performance and bonus outcomes.
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Total shareholder return
(%)
180
160
140
120
100
80
60
40
20
0
-20
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Dec 23
Dec 24
Hiscox
FTSE All-Share
FTSE Non-Life Insurance
Total shareholder return performance
The graph below shows the total shareholder return of the Group against the FTSE All-Share and FTSE Non-Life Insurance
indices. These reference points have been shown to assess performance against the general market and industry peers.
Between December 2014 and 2024, Hiscox delivered total shareholder return of 75.5%.
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Chief Executive historical remuneration
The table below shows the total remuneration figure for the Group Chief Executive Officer for the past ten years. The Group
Chief Executive Officer was Bronek Masojada up to and including 2021. From 1 January 2022 the Group Chief Executive Officer
is Aki Hussain.
Name
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
CEO single
figure of
remuneration
(£)
3,358,894 3,970,466 2,394,428 1,818,086
698,196
717,243 1,332,964 1,390,959 3,870,426 4,573,952
Annual
bonus as
percentage of
current max
39
64
0
9
0
0
30
25
93
94
PSP
vesting as
percentage
of maximum
opportunity
100
100
85
47
0
0
0
0
45
60
Comparator data
Remuneration for the wider workforce
When considering the remuneration arrangements for senior management, the Committee takes into account remuneration
throughout the wider workforce, which is based on broadly consistent principles. The remuneration philosophy supports
a culture where employees are rewarded for sustained individual and collective performance and demonstrating the right
behaviours. Goals and measures for Executive Directors cascade to Senior Management and much of the wider workforce.
Every colleague has the opportunity to share in the long-term success of our business via our all-employee share plans.
The Remuneration Committee receives information on Group-wide remuneration and uses internal and external measures to
assess the appropriateness of the remuneration policy and outcomes for Executive Directors. During the year, the Committee
reviewed information on market levels of pay in our peer group, bonus pools split by business area, levels of share plan
participation and pay ratios between Executives and average employees.
The Committee received employee feedback on executive remuneration during 2024 via our Employee Engagement Network
led by Employee Liaison and Non Executive Director Anne MacDonald. The wider workforce representatives did not believe
that Executive Director remuneration was excessive or that Executive Directors benefitted from any arrangements that targeted
them in a disproportionate manner. No concerns were raised with the remuneration approach.
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Group Chief Executive Officer pay ratio
The Group Chief Executive Officer’s total remuneration compared with the median (50th percentile) remuneration of the
Company’s UK employees as at 31 December 2024 is shown below, along with the 25th and 75th percentiles.
The Committee selected calculation method ‘Option A’ as it is the more robust approach and favoured by investors. This
method captures all pay (excluding overtime due to its volatility) and benefits for the financial year to 31 December 2024 and
aligns with how the ‘single figure’ table is calculated (from which there has been no deviation). Part-time employee single figures
were annualised to provide more meaningful comparison.
Full year
Calculation
methodology
P25
(lower quartile)
P50
(median)
P75
(upper quartile)
2024
A
87:1
56:1
38:1
2023
A
79:1
49:1
32:1
2022
A
31:1
20:1
13:1
2021
A
34:1
20:1
12:1
2020
A
20:1
12:1
8:1
2019
A
19:1
11:1
7:1
The table below shows the salary and total remuneration of each employee at the 2024 quartile positions.
2024
P25
£
P50
£
P75
£
Salary
41,660
57,813
89,250
Total remuneration
52,687
81,466
121,110
The Committee has considered the pay data for the three employees identified and believes that it fairly reflects pay at the
relevant quartiles among the UK employee population. The increase in the Group Chief Executive Officer pay ratio for 2024 is a
result of improved vesting of the long-term incentive plan and another year, like 2023, of high bonus outturns. Given the greater
weighting of variable remuneration versus fixed pay for senior roles, including the Group Chief Executive Officer, these positive
business outcomes translate into an increase in the Group Chief Executive Officer pay ratio.
The Committee is comfortable that the pay ratio for 2024 aligns to the pay and progression policies for employees, in particular
that pay is truly linked to performance and that individuals are appropriately motivated and rewarded according to their
knowledge and seniority within the business.
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Percentage change in remuneration of the Board Directors
The table below shows the percentage change in remuneration for each Executive and Non Executive Director, between
the years 2020 and 2024. Salary and bonus are compared against all employees globally, benefits are compared against all
UK‑based employees, reflecting the location of the Executive Directors.
2020
% change
2021
% change
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
All employees1
4.3
5.9
(36.1)
1.8
(3.7)
147
Executive Directors:
Aki Hussain
2.8
(6.9)
–
2.2
3.3
–
Paul Cooper
–
–
–
–
–
–
Joanne Musselle
–
–
–
22.1
21.6
–
Non Executive Directors:2
Jonathan Bloomer3
–
–
–
–
–
–
Beth Boucher4
–
–
–
–
–
–
Donna DeMaio
–
–
–
–
–
–
Michael Goodwin
4.2
–
–
(0.7)
–
–
Jane Guyett5
–
–
–
–
–
–
Thomas Huerlimann
(2.0)
–
–
(1.4)
–
–
Colin Keogh
(2.5)
–
–
32.4
–
–
Anne MacDonald
2.2
–
–
(0.7)
–
–
Constantinos Miranthis
(5.2)
–
–
5.0
–
–
Lynn Pike
(6.3)
–
–
(0.7)
–
–
1Median employee salary, benefits and bonus have been calculated on a full-time equivalent basis. Salary and benefits are calculated as at 31 December 2024,
bonus is that earned during the year ending 31 December 2024.
2Non Executive Director fees are subject to exchange rate fluctuations.
3Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023.
4Beth Boucher joined the Board on 12 May 2023.
5Jane Guyett joined the Board in September 2024.
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2022
% change
2023
% change
2024
% change
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
5.8
2.6
11.6
3.6
8.6
29.7
7.4
5.0
(8.0)
46.8
43.3
21.7
3.8
3.8
291.1
4.5
4.2
5.7
–
–
–
60.2
68.0
532.4
3.1
3.0
6.7
2.2
(6.4)
(4.5)
4.3
14.3
261.9
3.1
2.9
5.3
–
–
–
–
–
–
71.4
–
–
–
–
–
–
–
–
53.3
–
–
536.2
–
–
10.4
–
–
(2.4)
–
–
19.0
–
–
(6.5)
–
–
(2.4)
–
–
–
–
–
–
–
–
–
–
–
12.5
–
–
38.7
–
–
14.8
–
–
9.6
–
–
(3.6)
–
–
22.5
–
–
19.0
–
–
(6.5)
–
–
(2.4)
–
–
19.0
–
–
(6.5)
–
–
(2.4)
–
–
19.0
–
–
(6.5)
–
–
(0.4)
–
–
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Profi t before tax ($m)
+9.4% (% change)
Dividend and return of capital to
shareholders ($m)
+131.0% (% change)
Additional return of capital via the
share buyback announced in March 2024
Dividend equivalent
Total employee remuneration ($m)
+5.8 (% change)
626
129
447
685
473
2023
2023
2023
2024
2024*
2024
* Includes a fi nal dividend in respect of the year
ended 31 December 2024 of 29.9c per share,
subject to shareholder approval.
149
149
Relative importance of the spend on pay
The charts below show the relative movement in profit, shareholder returns and employee remuneration for the 2023 and
2024 financial years. Shareholder return for the year incorporates the distribution made in respect of that year. Employee
remuneration includes salary, benefits, bonus, long-term incentives and retirement benefits. Profit is the ultimate driver behind
the performance metrics of the bonus and long-term incentive schemes. See profit before tax on the consolidated income
statement on page 174.
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How we have addressed the following factors in the UK Corporate Governance Code 2018
Factor
Consideration of how this is addressed for Hiscox
Clarity – remuneration arrangements
should be transparent and promote
effective engagement with
shareholders and the workforce.
dWe are committed to transparent communication with all our stakeholders
including shareholders.
dIn 2024, a range of people-related topics, including remuneration, were
discussed by our Employee Engagement Network.
Simplicity – remuneration structures
should avoid complexity and their
rationale and operation should be
easy to understand.
The remuneration philosophy is a simple one: to reward performance.
dHiscox’s remuneration framework comprises three main elements:
•fixed pay (base salary, benefits and pension);
•annual bonus; and
•performance share plan award.
Risk – remuneration arrangements
should ensure that reputational and
other risks from excessive rewards,
and behavioural risks that can arise
from target-based incentive plans,
are identified and mitigated.
The remuneration policy incorporates a number of design features to take account
of and minimise risk:
dthe Committee has the ability to apply independent judgement and override
formulaic outcomes to ensure that incentive awards are a fair reflection of
both the Company’s performance and that of the individual over that period;
dpart of the annual bonus is subject to deferral, and share awards are
subject to a post-vesting holding period and a post-employment
shareholding requirement;
dall variable remuneration is subject to malus and clawback provisions.
Predictability – the range of possible
values of rewards to individual Directors
and any other limits or discretions
should be identified and explained at
the time of approving the policy.
dThe range of possible values is set out in the performance scenario charts in
the remuneration policy on pages 162 to 163.
dLimits and ability to exercise discretion are also set out in the notes to the
policy on page 159.
Proportionality – the link between
individual awards, the delivery
of strategy and the long-term
performance of the Company
should be clear. Outcomes should
not reward poor performance.
dVariable incentive pay-outs have a strong link to Company performance.
The Committee is satisfied that the remuneration outcomes for 2024, detailed
on pages 130 to 134, are reflective of Company performance over the
respective performance periods.
Alignment to culture – incentive
schemes should drive behaviours
consistent with Company purpose,
values and strategy.
dThe variable incentive schemes, including quantum, time horizons, form
of award, performance measures and targets, are all designed with the
Company’s purpose, values and strategy in mind.
dStrategic non-financial measures, including retail claims NPS, are included in
the annual incentive.
dThe pay arrangements for the Executive Directors are aligned with those of the
broader workforce and senior team.
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Remuneration policy
Hiscox has a forward-looking remuneration policy for its Board members
Hiscox has a forward-looking remuneration policy for its Executive Directors. The policy was approved at the 11 May 2023 AGM
and can be viewed in the 2022 Annual Report and Accounts at hiscoxgroup.com. It is replicated below.
Future policy table
Executive Director remuneration
Base salary
Purpose and link to strategy
Fixed-pay elements enable the Company to be competitive in the recruitment
market when looking to employ individuals of the calibre required by the business.
Operation
Base salary is normally reviewed annually, taking into account a range of factors
including inflation rate movements by country, relevant market data and the
competitive position of Hiscox salaries by role.
Individual salaries are set by taking into account the above information, as well
as the individual’s experience, performance and skills, increases to salary levels
across the wider Group, and overall business performance.
By exception, an individual’s salary may be amended outside of the annual
review process.
Maximum potential value
The salaries for current Executive Directors which apply for 2025 are set out on
page 140.
Executive Directors’ salary increases will normally be in line with overall employee
salary increases in the relevant location.
Increases above this level may be considered in other circumstances as
appropriate (for example, to address market competitiveness, development in
the role, or a change in role size, scope or responsibility).
Performance metrics
Individual and business performance are taken into account when setting
salary levels.
Application to broader
employee population
Process for review of salaries is consistent for all employees.
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Benefits (including retirement benefits)
Purpose and link to strategy
Fixed-pay elements enable the Company to be competitive in the recruitment
market when looking to employ individuals of the calibre required by the business.
Operation
Retirement benefits
These vary by local country practice, but all open Hiscox retirement schemes are
based on defined contributions or an equivalent cash allowance. This approach will
be generally maintained for any new appointments other than in specific scenarios
(for example, where local market practice dictates other terms). For current
Executive Directors, a cash allowance of up to 10% of salary is paid in lieu of the
standard employer pension contribution, or a combination of pension contributions
and cash allowance, totalling 10% of salary.
Other benefits
Benefits are set within agreed principles but reflect normal practice for each
country. Hiscox benefits include, but are not limited to: health insurance, life
assurance, long‑term disability schemes and participation in all-employee share
plans such as the Sharesave Scheme. Executive Directors are included on the
directors and officers’ indemnity insurance.
The Committee may provide reasonable additional benefits based on
circumstances (for example, travel allowance and relocation expenses) for
new hires and changes in role.
Maximum potential value
Set at an appropriate level by reference to the local market practice and reflecting
individual and family circumstances.
Pension benefits will be in line with the standard employer contribution taking into
account any local requirements.
Performance metrics
None.
Application to broader
employee population
Executive Directors’ benefits are determined on a basis consistent with
all employees.
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Annual bonus
Purpose and link to strategy
To reward for performance against the achievement of financial results over the
financial year and key objectives linked to Company strategic priorities.
To provide a direct link between reward and performance.
To provide competitive compensation packages.
Operation
Performance metrics and targets are set annually.
The payment outcome at the end of the performance period is based on an
assessment of the level of performance achieved with reference to the performance
targets set at the start of the year, including an assessment of risk factors.
Amounts are paid in accordance with the bonus deferral mechanism described on
page 155. Bonus awards are non-pensionable.
Bonus awards are subject to malus and clawback provisions as described in the
notes to the policy table on page 159.
Maximum potential value
The maximum bonus opportunity for the Executive Directors will be as follows:
Group Chief Executive Officer and Group Chief Financial Officer – 300% of salary;
Group Chief Underwriting Officer – up to 400% of salary.
Where performance is deemed to be below acceptable levels, pay-outs will be nil.
Performance metrics
Performance is assessed against relevant financial and non-financial targets
designed to incentivise the achievement of Company strategy.
The Committee has the discretion to determine the specific performance
conditions attached to each bonus cycle and to set annual targets for these
measures with reference to the strategy approved by the Board. The financial
measures used will typically include return or profit-based targets. Up to 25%
of the bonus can be based on non-financial measures including environmental,
social and governance (ESG) related measures. For the measures and weightings
to be used in a particular year, please refer to the Directors’ remuneration report.
The discretion available to the Committee in assessing the achievement of the
performance targets is as set out in the notes to the policy table on page 159.
Application to broader
employee population
The operation of the annual incentive is consistent for the majority of employees
across the Group.
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Bonus deferral
Purpose and link to strategy
To align with sound risk management, encourage retention of employees, share
ownership and alignment with shareholder interests.
Operation
Executive Directors are required to defer a percentage (currently 40%) of their
total annual bonus into Hiscox shares for a period of three years. The release of
these shares and the associated accrued dividend shares are generally subject to
continued employment but are not subject to any further performance conditions.
The remaining 60% will be paid as cash following the end of the financial year.
The Remuneration Committee may exercise discretion and agree to early payment
of deferred bonuses to Executive Directors on an exceptional basis.
Deferred awards are subject to malus and clawback provisions as described in the
notes to the policy table on page 159.
Maximum potential value
In accordance with the operation of the annual bonus plus accrued
dividend shares.
Performance metrics
In accordance with the operation of the annual bonus.
Application to broader
employee population
Bonus deferral is applied in line with regulatory requirements.
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Executive Director remuneration
Long-term incentive plan – Performance Share Plan (PSP)
Purpose and link to strategy
To motivate and reward for the delivery of long-term objectives in line with
Company strategy.
To encourage share ownership and align interests with shareholders.
To provide competitive compensation packages.
Operation
Awards are granted under, and governed by, the rules of the PSP as approved by
shareholders from time to time.
Share awards are made at the discretion of the Remuneration Committee.
Awards normally vest after a three-year period subject to the achievement of
performance conditions. Dividend equivalents may accrue prior to the vesting date.
An additional holding period, which is currently two years, applies.
Awards are generally subject to continued employment, however awards may vest
to leavers in certain scenarios.
Dividends (or equivalents) may accrue on vested shares prior to release. Awards are
subject to malus and clawback provisions as described in the notes to the policy
table on page 159.
Maximum potential value
PSP awards are subject to a maximum annual grant of up to 250% of salary in
respect of any one financial year plus accrued dividends (or equivalents).
Performance metrics
The performance conditions for awards are set to align with the long-term
objectives of the Company.
The Committee reviews the targets prior to each grant to ensure that they remain
appropriate. The policy provides for a minimum aggregate weighting of 70%
for financial metrics and for up to 30% to be based on strategic non-financial
performance metrics. For the weightings used in a particular year, please refer
to the annual remuneration report.
For delivery of threshold performance, up to 20% of the relevant portion of the
award can vest. For full vesting, the stretch hurdles need to be met in full.
The discretion available to the Committee in assessing the achievement of the
performance targets is as set out in the notes to the policy table on page 159.
Where the Committee considers it appropriate to do so, under the plan rules the
Committee is able to modify performance criteria for outstanding awards on the
occurrence of certain events (for example, a major disposal).
Application to broader
employee population
Participation in the PSP is normally restricted to senior individuals.
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Shareholding guidelines
Purpose and link to strategy
To ensure Executive Directors are aligned with shareholder interests.
Operation
Within five years of becoming an Executive Director, individuals will normally be
expected to have acquired an interest in Hiscox shares valued at 200% of salary.
Shares owned by the Executive Director (and any connected person) count towards
the guidelines as do shares subject to any vested but unexercised PSP awards (net
of assumed taxes).
Executive Directors are also expected to remain aligned with the interests of
shareholders for an extended period after leaving the Company. Executive
Directors will typically be expected to retain a shareholding at the level of the
in‑employment shareholding guideline (or the actual shareholding on stepping
down, if lower) for two years after termination unless the Committee determines
otherwise in exceptional circumstances.
Maximum potential value
N/A.
Performance metrics
N/A.
Application to broader
employee population
Post-employment shareholding guidelines only apply to Executive Directors.
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Non Executive Director remuneration
General approach
The total aggregate fees payable are set within the limit specified by the Company’s
Bye-laws. The fees paid are determined by reference to the skills and experience
required by the Company, as well as the time commitment associated with the
role. The decision-making process is informed by appropriate market data. Non
Executive Directors are not eligible for participation in the Company’s incentive
plans or pension arrangements. Travel and other reasonable expenses incurred
in the course of performing their duties are reimbursed to Non Executive Directors
(including any tax thereon where these are deemed to be taxable benefits).
Non Executive Directors are included on the directors and officers’ indemnity
insurance. The current fees payable to Non Executive Directors are set out on
page 142.
Chair
The Chair receives an all-inclusive fee in respect of the role. In addition to their
fee the Chair may be provided with incidental benefits, for example private
healthcare and life assurance (including any tax thereon where these are deemed
to be taxable benefits). The remuneration of the Chair is determined by the
Remuneration Committee.
Non Executive Directors
Non Executive Directors receive an annual fee in respect of their Board and
Committee appointments together with additional compensation for further duties
(for example, chairmanship, subsidiary boards, SID fee and employee liaison fee).
The fees for the Non Executive Directors (excluding the Chair) are determined by
the Nominations and Governance Committee.
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Notes to the policy table
Performance measures, target setting
and assessment
The performance targets for the annual
bonus and Performance Share Plan
(PSP) awards are closely aligned with
the Company’s short- and long-term
strategic objectives. The intention is to
provide a direct link between reward
levels and performance.
The Company operates a performance
scorecard-based approach for the
annual bonus. This ensures that both
individual bonus levels and overall
spend are commensurate with the
performance of the Company across a
number of key metrics, some financial
and some non-financial. The Committee
considers performance metrics and
targets prior to the start of each financial
year to ensure that these remain suitable
and relevant. It is the intention of the
Committee that the bonus payments
should normally reflect the outcome of
the performance measures set, although
the Committee has the ability to apply
independent judgement to ensure
that the outcome is a fair reflection of
the performance of the Company and
individual over the performance period.
When making this judgement, the
Committee has scope to consider any
such factors as it deems relevant.
PSP performance measures are
intended to motivate and reward
delivery of long-term Company success.
The Committee considers performance
metrics and targets prior to the grant
of each award to ensure that these
remain suitable and relevant. It is the
intention of the Committee that the
vesting of PSP awards should normally
reflect the outcome of the performance
measures set, although the Committee
has the ability to apply independent
judgement to ensure that the outcome
is a fair reflection of the performance of
the Company and individual over the
performance period. When making
this judgement, the Committee has
scope to consider any such factors as
it deems relevant.
Detailed provisions
The Committee reserves the right to
use discretion within the remuneration
policy to aid in its operation or
implementation (for example, for
regulatory or administrative purposes),
provided that any such change is not
to the material advantage of Directors.
The Committee may continue to
satisfy remuneration payments and
payments for loss of office (including
the exercise of any discretions available
to the Committee in connection with
such payments) where the terms of
the payment were: i) agreed before
15 May 2014 when the first approved
remuneration policy came into effect;
ii) agreed before the policy set out
above came into effect, provided
that the terms of the payment were
consistent with the shareholder-
approved Directors’ remuneration
policy in force at the time they were
agreed; or iii) agreed at a time when the
relevant individual was not a Director
of the Company and, in the opinion
of the Committee, the payment was
not in consideration for the individual
becoming a Director of the Company.
For these purposes, such payments
include the Committee satisfying awards
of variable remuneration.
Malus and clawback provisions
Bonus deferral applied from 2023
and PSP awards granted from 2023
are subject to malus and clawback
provisions as set out below.
The Committee may, in its absolute
discretion, determine at any
time prior to the vesting of an
award to reduce, defer, cancel or
impose further conditions in the
following circumstances:
da retrospective material
restatement of the audited
financial results of the Group;
dan error in assessing a
performance condition applicable
to the award or in the information
or assumptions on which the award
was granted, or vests;
dactions of gross misconduct or
material error, including fraud, by
the participant or their team;
dsignificant reputational or financial
damage to the Company as a result
of the participant’s conduct;
da failure of adequate risk
management and/or controls
by the participant or their team,
resulting in a material impact to
the Group;
da material corporate failure in
the Group;
da regulatory or law enforcement
investigation which results in
significant censure.
Annual bonus and PSP awards granted
to Executive Directors shall also be
subject to clawback provisions for up to
two years from the date of payment or
vesting in the above circumstances.
The malus and clawback provisions that
apply to awards made prior to 2023 are
as set out in the relevant remuneration
policy as at the date of award.
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Recruitment policy
A new hire will ordinarily be remunerated
in accordance with the policy described
in the table on the previous pages. In
order to define the remuneration for
an incoming Executive Director, the
Committee will take account of:
dprevailing competitive pay levels
for the role;
dexperience and skills of
the candidate;
dawards (shares or earned bonuses)
and other elements which will be
forfeited by the candidate;
dtransition implications on
initial appointment;
dthe overall Hiscox approach.
A buy-out payment/award may be
necessary in respect of arrangements
forfeited on joining the Company.
The size and structure of any such
buy‑out arrangement will take account
of relevant factors in respect of the
forfeited terms including potential value,
time horizons and any performance
conditions which apply. The objective
of the Committee will be to suitably limit
any buy-out to the commercial value
forfeited by the individual.
On initial appointment (including interim
Director appointments) the maximum
level of variable remuneration (excluding
any buy-outs) is capped at the maximum
level set out in the policy table on pages
152 to 157. Within these limits, and
where appropriate, the Committee may
tailor the award (for example, timeframe,
form, performance criteria) based
on the commercial circumstances.
Shareholders would be informed of
the terms for any such arrangements.
Ordinarily, it would be expected that
the package on recruitment would
be consistent with the usual ongoing
Hiscox incentive arrangements.
On the appointment of a new
Non Executive Chair or Non
Executive Director, the fees will
normally be consistent with the
policy. Fees to Non Executives will
not include share options or other
performance-related elements.
Service contracts
It is the Company’s policy that
Executive Directors should have
service contracts with an indefinite
term which can be terminated by the
Company by giving notice not exceeding
12 months or the Director by giving
notice of six months.
The terms set out in the service
contracts for the current Executive
Directors do not allow for any payments
that are not in line with this policy.
Non Executive Directors are appointed
for a three-year term, which is
renewable, with three months’
notice on either side, no contractual
termination payments being due and
subject to re‑election pursuant to the
Bye-laws at the Annual General Meeting.
The contract for the Chair is subject
to a six‑month notice provision on
either side.
Policy on payment for loss of office
Subject to the execution of an
appropriate general release of claims
an Executive Director may receive
on termination of employment by
the Company:
1. Notice period of up to 12 months
In the normal course of events, an
Executive will remain on the payroll but
may be placed on gardening leave for
the duration of the notice period (or until
they leave early by mutual agreement,
whichever is sooner). During this period
they will be paid as normal, including
base pay, pension contributions (or cash
allowance as appropriate) and other
benefits (for example, healthcare).
In the event of a termination where
Hiscox requests that the Executive
Director ceases work immediately, a
payment in lieu of notice may be made
that is equal to fixed pay, pension
entitlements and other benefits (benefits
may continue to be provided). Payments
may be made in instalments and would
ordinarily be subject to mitigation
should the individual find alternative
employment during the unexpired
notice period.
2. Bonus payment for the financial
year of exit
Bonuses will normally only be paid to
Executive Directors who are granted
‘good leaver’ status in accordance with
the bonus plan rules. The bonus amount
would normally be pro-rated depending
on the proportion of the financial year
which has been completed by the time
of the termination date and paid in line
with the normal bonus scheme timings
and performance metrics.
3. Release of any deferred bonuses
All outstanding bonuses deferred
from the annual incentive scheme will
normally be paid in full at the normal
vesting date.
4. Unvested Performance Share
Plan awards
Treatment would be in accordance
with the plan rules and relevant grant
documentation. The intended approach
is summarised below.
dAwards will vest in line with the
normal plan vesting date (unless
the Committee determines
otherwise). Awards vest to
the extent that the relevant
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performance targets are
considered to have been met.
dThe award will normally be
pro‑rated to reflect the period
which has elapsed from the
commencement of the award to
the date of termination unless the
Committee determines otherwise.
If the departing Executive Director
does not sign a release of claims, they
would normally be entitled to payments
defined under point 1 only. In the event
that the Executive is dismissed for
gross misconduct, they would forfeit
all payments.
The Committee may also make a
payment in respect of outplacement
costs, legal fees and costs of settling
any potential claims where appropriate.
5. Change of control
In the event of a change of control,
outstanding PSP awards will normally
vest early to the extent that the
performance condition, as determined
by the Committee in its discretion,
has been satisfied and, unless the
Committee determines otherwise, would
be pro-rated to reflect the period which
has elapsed from the commencement
of the award to the date of the relevant
corporate event.
Deferred bonus awards will vest in full.
Outstanding awards under all-employee
share plans will be treated in accordance
with the relevant plan rules.
Consideration of employment
conditions elsewhere
We are proud of our reward offering
across the Company and apply
principles consistent with how we pay
our Executive Directors. We ensure
employees are paid fairly in line with
their responsibilities, experience and
the market rate for the role. Employees
participate in an annual bonus scheme
and senior individuals are eligible
for awards under the Performance
Share Plan. We also offer a generous
benefit package.
Variable remuneration for the most
senior employees is more highly
performance geared towards the longer
term in order to encourage delivery of
strong returns across the insurance
cycle and create sustainable long-term
value for our shareholders.
Hiscox encourages all employees
to become shareholders through
our Sharesave Schemes, enabling
employees to share in the success of
the Company.
While the Committee did not consult
directly with the broader workforce on
the remuneration policy for Executive
Directors, we have introduced a
process by which employee views
are gathered on a range of topics and
presented to the Board (see page 146
for further details). The Remuneration
Committee also receives an update on
the broader workforce remuneration
policies and practices during the
year, which informs the Committee’s
consideration of the policy for
Executive Directors.
Consideration of shareholder views
Hiscox regularly discusses remuneration
policy matters with a selection of
shareholders. The Remuneration
Committee takes into consideration
the range of views expressed in
making its decisions.
The Committee consulted with major
shareholders during Q1 2023 and took
shareholder feedback into account
when finalising the revised policy.
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Illustration of application of the remuneration policy
(£000s)
Chief Executive
Chief Financial Officer
Chief Underwriting Officer
Long-term variable remuneration
Annual variable remuneration
Fixed remuneration
Maximum
Max with
share price
appreciation
On target
100%
927
Below target
29%
39%
38%
6,611
32%
3,243
5,558
45%
17%
14%
38%
48%
100%
623
28%
39%
33%
2,205
3,786
46%
16%
14%
38%
48%
Maximum
Max with
share price
appreciation
On target
Below target
4,505
38%
100%
637
25%
46%
33%
53%
4,374
45%
14%
13%
Maximum
Max with
share price
appreciation
On target
Below target
42%
5,093
29%
2,506
The charts above have been compiled using the following assumptions.
Fixed remuneration
Fixed reward (base salary, benefits and retirement benefit).
dSalary with effect from 1 April 2025.
dBenefits as received during 2024, as disclosed in the Executive Director
remuneration table on page 126.
dRetirement benefit as received during 2024, as disclosed in the Executive
Director remuneration table on page 126.
Variable remuneration
Assumptions have been made in respect of the annual incentive and the long-term
incentive (PSP) for the purpose of these illustrations.
dAnnual incentive: the amounts shown in the scenarios are for illustration only.
In practice, the award would be determined based on a range of performance
factors and therefore vary depending on the circumstances. The maximum
award reflects the incentive caps described at the beginning of this report.
dPSP: scenario analysis assumes awards are granted at the maximum level set
out in the policy table on page 156. In practice, award levels are determined
annually and are not necessarily granted at the plan maximum every year.
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Performance scenarios
Below target performance
Fixed reward only.
On target performance
Fixed reward plus variable pay for the purpose of illustration as follows.
dAnnual incentive: assume a bonus equivalent to 50% of the
maximum opportunity.
dPSP: assume vesting of 50% of the maximum award.
Maximum performance
Fixed reward plus variable pay for the purpose of illustration as follows.
dAnnual incentive: maximum bonus equivalent to 300% of salary for the Group
Chief Executive Officer and Group Chief Financial Officer and 400% of salary
for the Group Chief Underwriting Officer.
dPSP: vesting of 100% of the maximum award.
Maximum performance with share
price appreciation
Fixed reward plus variable pay for the purpose of illustration as follows.
dAnnual incentive: maximum bonus equivalent to 300% of salary for the Group
Chief Executive Officer and Group Chief Financial Officer and 400% of salary
for the Group Chief Underwriting Officer.
dPSP: vesting of 100% of the maximum award plus assumed share price
growth of 50%.
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BUSINESS IST
NICHT IMMER
USUAL.
Eine normale Business-Versicherung kriegt jeder.
Sie kriegen Hiscox. Individuelle Absicherung
und persönlicher Schadenservice.
Wir schützen, was Sie schätzen.
Mehr erfahren auf
hiscox.de/herzblut
Jonas Deichmann
Entrepreneur & Extremsportler
Financial summary
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Materiality
Group
scoping
Key audit
matters
Report on the audit of the consolidated financial statements
Our opinion
In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of Hiscox Ltd (the Company) and its subsidiaries
(together the Group) as at 31 December 2024, and their
consolidated financial performance and their consolidated
cash flows for the year then ended in accordance with
UK‑adopted international accounting standards.
What we have audited
The Group’s consolidated financial statements comprise:
•the consolidated statement of financial position as at
31 December 2024;
•the consolidated income statement for the year
then ended;
•the consolidated statement of comprehensive income
for the year then ended;
•the consolidated statement of changes in equity for the
year then ended;
•the consolidated statement of cash flows for the year
then ended; and
•the notes to the consolidated financial statements
comprising material accounting policy information
and other explanatory information.
Our opinion is consistent with our reporting to the
Audit Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)). Our responsibilities
under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with
the ethical requirements that are relevant to our audit of
the consolidated financial statements, which includes the
FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, we declare that
non‑audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in note 10, we have provided no
non-audit services to the Company in the period under audit.
Independent auditor’s report to the Board of Directors
and the Shareholders of Hiscox Ltd
•Overall group materiality: $45 million, which
represents 1% of insurance revenue for the year
ended 31 December 2024.
Our audit comprised:
•full scope audit procedures over four components;
•for certain other components, audit procedures
over financial statement line-item balances or
specified procedures; and
•for the remaining components that were not
inconsequential, analytical procedures on their
financial information.
•Valuation of insurance contract liabilities and reinsurance
contract assets – assumptions and judgements.
Our audit approach
Overview
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Audit scope
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in
the consolidated financial statements. In particular,
we considered where Management made subjective
judgements, for example, in respect of significant
accounting estimates that involved making assumptions
and considering future events that are inherently
uncertain. As in all of our audits we also addressed
the risk of Management override of internal controls,
including, among other matters, consideration of
whether there was evidence of bias that represented
a risk of material misstatement due to fraud.
Tailoring of Group audit scope
•The scope of our audit was tailored in order to perform
sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking
into account the structure of the Group, the accounting
processes and controls, and the industry in which the
Group operates.
•The Group is structured into four segments (see
note 4 to the consolidated financial statements) and
is a consolidation of over 50 separate legal entities.
The Group is a global specialist insurer and reinsurer,
and its operations primarily consist of the legal entity
operations in the United Kingdom, Europe, the
United States and Bermuda.
•A full scope audit was performed for four
components located in the United Kingdom and
Bermuda. Financial statement line‑item audit
procedures or specified procedures were also
performed over components in the United Kingdom,
the United States and Bermuda. Taken together this
work provided over 80% coverage of the Group’s
insurance revenue and over 80% of the Group’s
total assets.
•The four full scope audit components are: (i) Hiscox
Dedicated Corporate Member Syndicate No. 33,
(ii) Hiscox Dedicated Corporate Member Syndicate
No. 3624, (iii) Hiscox Insurance Company Limited,
and (iv) the parent company, Hiscox Ltd (including
consolidation). For certain other components,
account balances were identified which were
considered to be significant in size or audit risk at
the financial statement line-item level in relation
to the consolidated financial statements, financial
statement line-item audit procedures, or specified
procedures were performed over these specified
balances. Analytical procedures over the financial
information of the remaining components that were
not inconsequential were performed.
•We tailored our in scope components based on
our assessment of inherent risk and their financial
significance to the consolidated financial results.
•In establishing the overall approach to the Group
audit a determination was made of the type of work
that needed to be performed at the components by
the Group engagement team, or by the component
audit teams within the PwC United Kingdom,
PwC United States and PwC Bermuda firms. A
determination was made of the level of involvement
of the Group engagement team that was necessary
in the audit work at those components to be able to
conclude whether sufficient appropriate audit evidence
had been obtained. The Group engagement team had
regular interaction with the component teams during
the audit process. The engagement leader and senior
members of the Group engagement team reviewed
in detail all reports with regards to the audit approach
and findings submitted by the component auditors.
This together with additional procedures performed,
as described above, gave us the evidence we needed
for our opinion on the consolidated financial statements
as a whole.
The impact of climate risk on our audit
•As part of our audit, enquiries were made of
Management (both within and outside of the
Group’s finance function) to understand the process
Management adopted to assess the extent of the
potential impact of climate risk on the Group’s
financial statements and support the disclosures
made within the notes to the consolidated financial
statements. The key areas where Management has
evaluated that climate risk has a potential to impact
the business are in relation to underwriting risk,
financial risk, and regulatory, legal, and reputational
risk. Management considers that the impact of climate
change does not give rise to a material financial
statement impact.
•Our knowledge of the Group was applied to evaluate
Management’s assessment of the impact on the
financial statements. An evaluation was performed of
the completeness of management’s assessment of
climate change risk under the categories of physical
risk, transition risk, and litigation risk and how these
may affect the consolidated financial statements, and
the audit procedures performed.
•As part of this, our audit procedures included:
•reading the minutes of meetings of the Group’s
Sustainability Steering Committee;
•reading submissions to regulators;
•reading the Group’s Climate Report 2024; and
•considering the Group’s memberships,
accreditations and public commitments.
The risks of material misstatement to the consolidated
financial statements as a result of climate change
were assessed and it was concluded that for the year
ended 31 December 2024, there was no impact on
the key audit matters or the assessment of the risks of
material misstatement.
Finally, the consistency of the disclosures in relation to
climate change (including the disclosures in the Task Force
on Climate‑related Financial Disclosures (TCFD) section)
within the Report and Accounts was considered against
the consolidated financial statements and our knowledge
obtained from our audit including challenging the disclosures
given in the narrative reporting within the consolidated
financial statements.
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Materiality
The scope of our audit was influenced by our application
of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated financial statements
are free from material misstatement. Misstatements may
arise due to fraud or error. They are considered material
if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of the users
taken on the basis of the consolidated financial statements.
Based on our professional judgement, certain quantitative
thresholds for materiality were determined, including the
overall Group materiality for the consolidated financial
statements as a whole as set out in the table below. These,
together with the qualitative considerations, helped to
determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and in aggregate,
on the consolidated financial statements as a whole.
For each component in the scope of our group audit,
we allocated a materiality that is less than our overall
Group materiality.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example, in determining sample sizes. Our performance
materiality was 75% (2023: 75%) of overall materiality,
amounting to $33.75 million (2023: $33 million) for the
consolidated financial statements.
In determining the performance materiality, we considered
a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls – and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
$2.25 million (2023: $2 million), as well as misstatements
below that amount that, in our view, warranted reporting
for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the consolidated financial statements of the current
period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified
by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in
the audit; and directing the efforts of the engagement team.
These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context
of our audit of the consolidated financial statements, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters. This is not a complete list of all risks
identified by our audit.
We have removed the following key audit matters identified
last year:
•implementation of IFRS 17 – transition and restatement
of comparatives – as the Group has now restated
comparatives and successfully transitioned to IFRS 17,
this is no longer included;
•valuation of deferred tax asset – on enactment of
Bermuda Corporate Income Tax – the estimation
uncertainty has been reduced as the deferred tax
asset has now been recognised.
Otherwise, the key audit matter below is consistent with
last year.
Materiality
Overall group materiality
$45 million
(2023: $44 million).
How we determined it
In determining materiality,
we considered a range of
financial metrics believed to
be relevant to the primary
users of the consolidated
financial statements. We
selected a materiality amount
using our professional
judgement which represents
1% of insurance revenue
for the year ended
31 December 2024.
Rationale for
benchmark applied
The materiality amount
selected is appropriate
to the size and nature of
the business. Expressing
materiality in terms of
insurance revenue,
one of the key metrics
relevant to key users of
the consolidated financial
statements, provides a
good representation relative
to the size and complexity
of the business and it is
not distorted by insured
catastrophe events to which
the Group is exposed, or the
levels of external reinsurance
purchased by the Group.
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Key audit matters
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contract liabilities and reinsurance
contract assets – assumptions and judgements
Refer to notes 2.11, 2.19 and 20 to the consolidated financial
statements for disclosures of related accounting policies
and balances.
As at 31 December 2024, insurance contract liabilities
comprised $355.6 million of liabilities for remaining coverage
(LRC), and $6 billion of liabilities for incurred claims (LIC).
Reinsurance contract assets comprised $69.7 million of
assets for remaining coverage (ARC) and $2 billion of assets
for incurred claims (AIC). Insurance contract liabilities and
reinsurance contract assets are inherently uncertain and
contain material estimates.
LIC and AIC – the most subjective element continues to be
the incurred but not yet reported claims cash flows, which
form part of the LIC, and the associated reinsurers’ share of
incurred but not yet reported claim cash flows, which form
part of AIC.
Management bases these estimates on the estimated ultimate
cost of all claims, together with estimates of the related claims
handling costs, these estimates can be materially impacted by
numerous factors including:
•the underlying volatility attached to estimates for
certain classes of business, where small changes in
assumptions can lead to large changes in the levels of
the estimate held;
•the risk of inappropriate assumptions used in determining
current year estimates, especially for ‘long‑tailed’ classes
of business, means that there is necessarily greater use
of Management judgement;
•the risk that key assumptions in respect of
natural catastrophes and other large claim losses
(‘specific IBNR’) are inappropriate. There is significant
judgement involved in those loss estimates, particularly
as they are often based on limited data;
•the valuation of AIC is uncertain due to the significant
degree of judgement applied in valuing the underlying
insurance contracts that have been reinsured, the
complexity of the application and coverage of the
reinsurance programme;
•the determination of discount rates (including choice of
illiquidity premium) and payment patterns used to derive
the cash flow for incurred claims.
Risk adjustment – the LIC and AIC also include the risk
adjustment to reflect Management’s view of the compensation
that it requires for bearing uncertainty about the amount and
timing of cash flows from non-financial risks.
LRC and ARC – we consider the most significant judgements
to be:
•the determination of the premium allocation approach
(PAA) measurement model for groups of contracts that
are not automatically eligible, including the selection of
‘reasonably expects’ assumptions;
We assessed the valuation of the insurance contract
liabilities and assets by performing the following procedures:
•evaluated the process and the design and
implementation of controls in place to determine
the insurance contract liabilities and reinsurance
contract assets;
•tested the underlying data to source documentation;
•evaluated and challenged the robustness of the
key judgements adopted in relation to LIC and
AIC, including the risk adjustment;
•applied our industry knowledge and experience
and compared the methodology, models
and assumptions used against recognised
actuarial practices;
•for the undiscounted best estimate liabilities,
we developed independent point estimates for
classes of business considered to be higher
risk, focusing on the largest and most uncertain
classes, as well as for certain other classes
for unpredictability, as at Q3 and rolled‑forward
for year end;
•our roll-forward approach considered the impact
of key movements during the fourth quarter such as:
•actual versus expected emerging
claims experience;
•the earning of new business during the quarter;
•any updates to specific IBNR estimates; and
•changes in premium estimates;
•for the remaining classes we have evaluated the
methodology and assumptions or performed a
diagnostic check (key indicator testing) to identify
and investigate any anomalies;
•tested the accuracy of application of reinsurance
contract terms; and
•understood any updates made to the actuarial
assumptions impacting the forecast future claims
cash flows, testing the discount rate applied
and evaluated any changes for reasonableness.
For specific IBNR, we:
•validated management’s industry loss picks, as
well as the key management methodology and
assumptions applied for each event. We focused
on new and large events in 2024;
•for prior year catastrophes, reviewed the incurred
development and understood how Management
responded to the information available and assessed
the reserve adequacy and development compared to
others in the market from the data available;
•on the Covid-19 reserves, performed independent
analysis by considering alternative scenarios relating
to litigation risk and possible deterioration;
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Key audit matters
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contract liabilities and reinsurance
contract assets – assumptions and judgements (continued)
Refer to notes 2.11, 2.19 and 20 to the consolidated financial
statements for disclosures of related accounting policies
and balances.
•the appropriateness of methodologies and assumptions
adopted to value reinsurance assets associated with
retrospective reinsurance arrangements measured
under the general measurement model (GMM);
•the judgement on the degree of risk that will transfer with
respect to retrospective reinsurance arrangements.
•challenged Management’s ground up analysis
and inspected evidence at a cedant level to test
for accuracy of the data; and
•challenged Management on the reasonableness
of the margin including ‘bulk IBNR’ and the uplift of
cedant notification values prior to applying the margin.
Risk adjustment – assessed the appropriateness of the policy
applied to determine the risk adjustment, read the disclosure
of the basis in the accounting policies, and tested the
consistent application, and derivation of the adjustment.
LRC – to assess PAA eligibility we:
•assessed the appropriateness of the judgements and
supporting estimates used to determine use of the
PAA and GMM measurement models;
•tested the completeness and accuracy of the
supporting data;
•assessed the scenarios used to stress the modelled
GMM and PAA liability for remaining coverage
(LFRC); and
•considered the qualitative attributes that may impact the
eligibility risk, for example, seasonality or long-tail risks
that drive a mismatch between GMM and PAA.
Through the procedures detailed above and having
considered the specific nature and circumstances of the
Group’s business, we have concluded that the valuation of
insurance contract liabilities and reinsurance contract assets
is appropriate.
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Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of
accounting included:
•validating Management’s going concern analysis based
on audit work performed, considering the Group’s
capital, solvency and liquidity positions;
•considering information obtained during the audit
and publicly available market information to identify
any evidence that would contradict Management’s
assessment of going concern; and
•reviewing the disclosures included in the consolidated
financial statements in relation to going concern,
including the ‘basis of preparation’.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
In auditing the consolidated financial statements, we have
concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the consolidated financial
statements is appropriate.
However, because not all future events or conditions can
be predicted, this conclusion is not a guarantee as to the
Group’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
Management is responsible for the other information. The
other information comprises the Report and Accounts (but
does not include the consolidated financial statements and
our auditor’s report thereon). The other information also
includes reporting based on the TCFD recommendations.
Our opinion on the consolidated financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.
Responsibilities for the consolidated financial statements
and the audit
Responsibilities of Management and those charged with
governance for the consolidated financial statements
Management is responsible for the preparation and fair
presentation of the consolidated financial statements in
accordance with the applicable framework and for being
satisfied that they present fairly, in all material respects.
Management is also responsible for such internal control
as they determine is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements,
Management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless Management either intends to
liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for
overseeing the Group’s financial reporting process.
Auditors’ responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
•identify and assess the risks of material misstatement
of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or
the override of internal control;
•obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Group’s internal control;
•evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management;
•evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the
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consolidated financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation; and
•obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express an opinion on
the consolidated financial statements.
We are responsible for the direction, supervision and
performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated
in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.
Irregularities, including fraud, are instances of
non‑compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the Group and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to the Bermudian
Companies Act, taxation, and regulatory principles such
as those governed by the Bermuda Monetary Authority
(BMA) and other local regulatory authorities in which the
Group operates, and we considered the extent to which
non‑compliance might have a material effect on the
financial statements.
We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements
(including the risk of override of controls) and determined
that the principal risks were related to management bias
in accounting estimates and judgemental areas of the
consolidated financial statements as shown in our ‘key
audit matters’. The Group engagement team have shared
this risk assessment with the component auditors so they
could include appropriate audit procedures in response
to such risks in their work. Audit procedures performed
by the Group engagement team and/or component
auditors included:
•discussions with the Board, Management, internal
audit, management involved in the risk and compliance
functions and Group legal function, including
consideration of known or suspected instances of
non‑compliance with laws and regulation and fraud;
•evaluation and testing of the operating effectiveness
of Management’s controls designed to prevent and
detect irregularities;
•assessment of matters reported on the Group
whistleblowing helpline and fraud register and the
results of Management’s investigation of such matters;
•designing audit procedures to incorporate
unpredictability around the nature, timing or extent
of our testing;
•reviewing relevant meeting minutes including
those of the Board of Directors, audit, risk, and
Remuneration Committees;
•reading key correspondence with the BMA and
other local regulators, including those in relation to
compliance with laws and regulations;
•reviewing the Group’s register of litigation and claims,
internal audit reports, and compliance reports so
far as they related to non-compliance with laws and
regulations and fraud; and
•attendance at Audit Committee meetings.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations
that are not closely related to events and transactions
reflected in the consolidated financial statements. Also,
the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting
a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit
of the consolidated financial statements is located on the
FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Report on other legal and regulatory requirements
Other voluntary reporting – Directors’ remuneration
The Company voluntarily prepares a report on Directors’
remuneration in accordance with the provisions of the UK
Companies Act 2006. The Directors have requested an audit
of the part of the report on Directors’ remuneration specified
172
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Writing our next chapter
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Governance
Remuneration
Financial summary
Independent
auditor’s report
by the UK Companies Act 2006 to be audited as if the
Company were a UK-registered company.
In our opinion, the part of the report on Directors’
remuneration to be audited has been properly prepared
in accordance with the UK Companies Act 2006.
Corporate governance statement
ISAs (UK) require us to review the Directors’ statements
in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to
the Company’s compliance with the provisions of the UK
Corporate Governance Code, which the Listing Rules of the
Financial Conduct Authority specify for review by the auditor.
Our additional responsibilities with respect to the corporate
governance statement as other information are described in
the ‘reporting on other information’ section of this report.
Based on the work undertaken as part of our audit,
it was concluded that each of the following elements
of the corporate governance statement is materially
consistent with the consolidated financial statements and
our knowledge obtained during the audit, and there is
nothing material to add or draw attention to in relation to:
•the Directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
•the disclosures in the Report and Accounts that
describe those principal risks, what procedures are
in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
•the Directors’ statement in the consolidated financial
statements about whether they considered it appropriate
to adopt the going concern basis of accounting in
preparing them, and their identification of any material
uncertainties as to the Group’s ability to continue to do
so over a period of at least twelve months from the date
of approval of the consolidated financial statements;
•the Directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers
and why the period is appropriate; and
•the Directors’ statement as to whether they have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
The review of the Directors’ statement regarding the
longer-term viability of the Group was substantially less in
scope than an audit and only consisted of making inquiries
and considering the Directors’ process supporting their
statements; checking that the statements are in alignment
with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent
with the consolidated financial statements and our knowledge
and understanding of the Group and its environment obtained
in the course of the audit.
In addition, based on the work undertaken as part of our audit,
it was concluded that each of the following elements of the
corporate governance statement is materially consistent with
the consolidated financial statements and our knowledge
obtained during the audit:
•the Directors’ statement that they consider the
Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides the
information necessary for the shareholders to assess
the Group’s position, performance, business model
and strategy;
•the section of the Report and Accounts that describes
the review of effectiveness of risk management and
internal control systems; and
•the section of the Report and Accounts describing the
work of the Audit Committee.
There is nothing to report in respect of our responsibility
to report when the Directors’ statement relating to the
Company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Other matter
The Company is required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rules to include
these consolidated financial statements in an annual financial
report prepared under the structured digital format required
by DTR 4.1.15R - 4.1.18R and filed on the National Storage
Mechanism of the Financial Conduct Authority. This auditor’s
report provides no assurance over whether the structured
digital format annual financial report has been prepared in
accordance with those requirements.
Following the recommendation of the Audit Committee,
PricewaterhouseCoopers LLP was appointed on
10 April 2024 and reappointed at the Annual General
Meeting of the Company on 9 May 2024 to audit the
financial statements for the year ended 31 December
2024 and subsequent financial periods. The period of
uninterrupted appointment of the firm is 11 months.
(Previously PricewaterhouseCoopers Ltd., Bermuda, were
appointed continuously to audit the financial statements for
the years ended 31 December 2016 to 31 December 2023).
The engagement partner on the audit resulting in this
independent auditors’ report is Thomas Robb.
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
26 February 2025
173
Hiscox Ltd Report and Accounts 2024
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
Independent
auditor’s report
For the year ended 31 December 2024
2024
2023
Note
$m
$m
Insurance revenue
4
4,672.5
4,483.2
Insurance service expenses
4
(3,331.0)
(3,189.3)
Insurance service result before reinsurance contracts held
1,341.5
1,293.9
Allocation of reinsurance premiums
4
(1,209.4)
(1,119.4)
Amounts recoverable from reinsurers for incurred claims
4
421.4
317.8
Net expenses from reinsurance contracts held
(788.0)
(801.6)
Insurance service result
4
553.5
492.3
Investment result
7
383.9
384.4
Net finance expenses from insurance contracts
(225.5)
(220.7)
Net finance income from reinsurance contracts
73.4
81.0
Net insurance finance expenses
7
(152.1)
(139.7)
Net financial result
7
231.8
244.7
Other income
8
113.5
91.1
Other operational expenses
8
(149.4)
(125.5)
Net foreign exchange losses
(11.2)
(27.0)
Other finance costs
9
(53.1)
(50.0)
Share of profit of associates after tax
13
0.3
0.3
Profit before tax
685.4
625.9
Tax (expense)/credit
22
(58.2)
86.1
Profit for the year (all attributable to owners of the Company)
627.2
712.0
Earnings per share on profit attributable to owners of the Company
Basic
25
183.2¢
206.1¢
Diluted
25
178.1¢
201.5¢
Consolidated statement of comprehensive income
For the year ended 31 December 2024
2024
2023
Note
$m
$m
Profit for the period
627.2
712.0
Other comprehensive (expense)/income
Items that will not be reclassified to the income statement:
Remeasurements of the net defined benefit pension scheme
24
(4.8)
(4.1)
Income tax effect
1.5
(1.7)
(3.3)
(5.8)
Items that may be reclassified subsequently to the income statement:
Exchange (losses)/gains on translation of foreign operations
(11.9)
25.0
Other comprehensive (expense)/income net of tax
(15.2)
19.2
Total comprehensive income for the period (all attributable to the owners of the Company)
612.0
731.2
The notes on pages 178 to 228 are an integral part of these consolidated financial statements.
Consolidated income statement
174
Hiscox Ltd Report and Accounts 2024
31 December
2024
31 December
2023
Note
$m
$m
Assets
Employee retirement benefit asset
24
40.0
44.4
Goodwill and intangible assets
11
308.8
323.9
Property, plant and equipment
12
125.6
130.3
Investments in associates
13
0.8
0.8
Deferred tax assets
23
179.4
180.7
Assets included in disposal group classified as held for sale
8
52.5
59.1
Reinsurance contract assets
20
1,976.8
2,098.3
Financial assets carried at fair value
14
7,077.6
6,574.4
Trade and other receivables
15
249.0
206.5
Current tax assets
3.3
5.1
Cash and cash equivalents
18
1,227.0
1,437.0
Total assets
11,240.8 11,060.5
Equity and liabilities
Shareholders’ equity
Share capital
19
38.1
38.8
Share premium
19
405.6
528.8
Contributed surplus
19
184.0
184.0
Currency translation reserve
(391.1)
(379.2)
Retained earnings
3,452.2
2,923.2
Equity attributable to owners of the Company
3,688.8
3,295.6
Non-controlling interest
1.1
1.1
Total equity
3,689.9
3,296.7
Employee retirement benefit obligations
24
–
–
Deferred tax liabilities
23
75.8
56.9
Liabilities included in disposal group classified as held for sale
8
52.7
54.8
Insurance contract liabilities
20
6,396.3
6,604.0
Financial liabilities
14
663.5
674.7
Current tax liabilities
19.7
10.9
Trade and other payables
21
342.9
362.5
Total liabilities
7,550.9
7,763.8
Total equity and liabilities
11,240.8 11,060.5
The notes on pages 178 to 228 are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors on 26 February 2025 and signed on its behalf by:
Aki Hussain
Group Chief Executive Officer
Paul Cooper
Group Chief Financial Officer
Consolidated statement of financial position
Hiscox Ltd Report and Accounts 2024
175
Share capital
Share premium
Contributed
surplus
Currency
translation
reserve
Retained
earnings
Equity
attributable to
owners of the
Company
Non-controlling
interest
Total equity
Note
$m
$m
$m
$m
$m
$m
$m
$m
Balance at 1 January 2023
38.7
517.6
184.0
(404.2) 2,297.8 2,633.9
1.1 2,635.0
Profit for the year
–
–
–
–
712.0
712.0
–
712.0
Other comprehensive income
net of tax
–
–
–
25.0
(5.8)
19.2
–
19.2
Total comprehensive income
–
–
–
25.0
706.2
731.2
–
731.2
Employee share options:
Equity settled share-based
payments
–
–
–
–
43.2
43.2
–
43.2
Proceeds from shares issued
19
0.1
9.6
–
–
–
9.7
–
9.7
Deferred and current tax on
employee share options
–
–
–
–
2.1
2.1
–
2.1
Shares issued in relation
to Scrip Dividend
19
–
1.6
–
–
–
1.6
–
1.6
Dividends paid to owners
of the Company
26
–
–
–
–
(126.1)
(126.1)
–
(126.1)
Balance at 31 December 2023
38.8
528.8
184.0
(379.2) 2,923.2 3,295.6
1.1 3,296.7
Profit for the year
–
–
–
–
627.2
627.2
–
627.2
Other comprehensive expense
net of tax
–
–
–
(11.9)
(3.3)
(15.2)
–
(15.2)
Total comprehensive income
–
–
–
(11.9)
623.9
612.0
–
612.0
Employee share options:
Equity settled share-based
payments
–
–
–
–
33.4
33.4
–
33.4
Proceeds from shares issued
19
0.1
21.3
–
–
–
21.4
–
21.4
Share buyback*
19
(0.8)
(148.3)
–
–
–
(149.1)
–
(149.1)
Deferred and current tax on
employee share options
–
–
–
–
2.5
2.5
–
2.5
Shares issued in relation
to Scrip Dividend
19
–
3.8
–
–
–
3.8
–
3.8
Dividends paid to owners
of the Company
26
–
–
–
–
(130.8)
(130.8)
–
(130.8)
Balance at 31 December 2024
38.1
405.6
184.0
(391.1) 3,452.2 3,688.8
1.1 3,689.9
*In the year ended 31 December 2024, $149.1 million of shares were purchased and shares with a nominal value of $0.8 million have been cancelled as part of the
share buyback programme.
The notes on pages 178 to 228 are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
176
Hiscox Ltd Report and Accounts 2024
For the year ended 31 December 2024
2024
2023
Note
$m
$m
Profit before tax
685.4
625.9
Adjustments for:
Net foreign exchange losses
11.2
27.0
Interest and equity dividend income
7
(316.4)
(237.0)
Interest expense
9
53.1
50.0
Net fair value gains on financial assets
7
(71.5)
(170.6)
Depreciation, amortisation and impairment
8
60.7
77.1
Charges in respect of share-based payments
19
49.1
43.2
Realised gain on sale of subsidiary undertaking, intangible assets
and property, plant and equipment
(0.5)
(4.0)
Changes in operational assets and liabilities:
Insurance and reinsurance contracts
(12.1)
248.3
Financial assets carried at fair value
(479.6)
(549.6)
Financial liabilities carried at fair value
(0.3)
–
Financial liabilities carried at amortised cost
0.7
0.7
Other assets and liabilities
(97.0)
(15.6)
Cash paid to the pension fund
24
–
(24.8)
Interest received
302.4
218.1
Equity dividends received
1.4
1.5
Interest paid
(51.9)
(48.5)
Tax paid
(20.3)
(9.6)
Net cash flows from operating activities
114.4
232.1
Proceeds from sale of associate
0.5
9.5
Purchase of property, plant and equipment
(5.1)
(1.1)
Proceeds from the sale of property, plant and equipment
0.1
–
Purchase of intangible assets
11
(34.0)
(42.6)
Net cash flows used in investing activities
(38.5)
(34.2)
Proceeds from the issue of ordinary shares
5.2
9.6
Distributions made to owners of the Company
(127.0)
(124.5)
Shares repurchased
(149.1)
–
Principal elements of lease payments
(11.7)
(14.0)
Net cash flows used in financing activities
(282.6)
(128.9)
Net (decrease)/increase in cash and cash equivalents
(206.7)
69.0
Cash and cash equivalents at 1 January
1,437.0
1,350.9
Net (decrease)/increase in cash and cash equivalents
(206.7)
69.0
Effect of exchange rate fluctuations on cash and cash equivalents
(3.3)
17.1
Cash and cash equivalents at 31 December
18
1,227.0
1,437.0
The purchase, maturity and disposal of financial assets and liabilities, including derivatives, is part of the Group’s insurance
activities and is therefore classified as an operating cash flow.
Included within cash and cash equivalents held by the Group are balances totalling $156 million (2023: $181 million) not
available for immediate use by the Group outside of the Lloyd’s syndicate within which they are held. Additionally, $32.6 million
(2023: $108.1 million) is pledged cash held against Funds at Lloyd’s, and $19.5 million (2023: $10.1 million) is held within trust
funds against reinsurance arrangements.
The notes on pages 178 to 228 are an integral part of these consolidated financial statements.
Consolidated cash flow statement
Hiscox Ltd Report and Accounts 2024
177
1 General information
The Hiscox Group, which is headquartered in Hamilton,
Bermuda, comprises Hiscox Ltd (the parent company, referred
to herein as the ‘Company’) and its subsidiaries (collectively,
the ‘The Hiscox Group’ or the ‘Group’). For the current period
the Group provided insurance and reinsurance services to its
clients worldwide. It has operations in Bermuda, UK, Europe,
Asia and USA and currently has over 3,000 staff.
The Company is registered and domiciled in Bermuda and its
ordinary shares are listed on the London Stock Exchange.
The address of its registered office is: Chesney House,
96 Pitts Bay Road, Pembroke HM 08, Bermuda.
2 Basis of preparation
The financial statements of the Group have been prepared
in accordance with UK-adopted International Accounting
Standards, and Section 4.1 of the Disclosure and
Transparency Rules and the Listing Rules, both issued by
the Financial Conduct Authority (FCA) and in accordance
with the provisions of the Bermuda Companies Act 1981.
The consolidated financial statements have been
prepared under the historical cost convention, as modified
by the revaluation of financial assets and financial liabilities
(including derivative instruments) at fair value through profit
or loss.
The consolidated financial statements have been prepared on
a going concern basis. In adopting the going concern basis,
the Board has reviewed the Group’s current and forecast
solvency and liquidity positions for the next 12 months and
beyond. As part of the consideration of the appropriateness of
adopting the going concern basis, the Directors use scenario
analysis and stress testing to assess the robustness of the
Group’s solvency and liquidity positions. In undertaking this
analysis, no material uncertainty in relation to going concern
has been identified, due to the Group’s strong capital and
liquidity positions providing resilience to shocks, underpinned
by the Group’s approach to risk management described in
note 3. After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence over a period of at least
12 months from the date of this report. For this reason,
the Group continues to adopt the going concern basis in
preparing the consolidated financial statements.
Items included in the financial statements of each of the
Group’s entities are measured in the currency of the primary
economic environment in which that entity operates (the
functional currency). The consolidated financial statements
are presented in US Dollars millions ($m) and rounded to the
nearest hundred thousand Dollars, unless otherwise stated.
The consolidated statement of financial position is presented
in order of increasing liquidity. All amounts presented in the
income statement and statement of comprehensive income
relate to continuing operations.
The financial statements were approved for issue by the Board
of Directors on 26 February 2025.
2.1 Material accounting policies information
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out below.
The most critical individual components of these financial
statements that involve the highest degree of judgement or
significant assumptions and estimations are identified in
note 2.19. Except as described in section (a) below, the
accounting policies adopted are consistent with those of
the previous financial year.
(a) New accounting standards, interpretations and
amendments to published standards
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not
yet effective. New standards, amendments to standards and
interpretations, as adopted by the UK, that are effective for
annual periods beginning on 1 January 2024 have been
applied in preparing these consolidated financial statements
and had no material impact on the Group.
• Amendments to IFRS 16 Leases – Lease Liability in
a Sale and Leaseback.
• Amendments to IAS 1 – Presentation of Financial
Statements – Classification of Liabilities as Current or
Non-Current and Non-Current Liabilities with Covenants.
• Amendments to IAS 7 – Statement of Cash Flows and
IFRS 7 – Financial Instruments: Disclosures – Supplier
Finance Arrangements.
(b) Future accounting developments
The following new standards, and amendments to standards,
are effective for annual periods beginning on or after 1 January
2025 and have not been applied in preparing these
consolidated financial statements:
• Amendments to IFRS 10 and IAS 28 – Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture (not yet endorsed, effective
date postponed indefinitely).
• Amendments to IAS 21 – The Effects of Changes in
Foreign Exchange Rates – Lack of Exchangeability
(endorsed, effective date 1 January 2025).
• Amendments to IFRS 9 – Financial Instruments and IFRS
7 Financial Instruments: Disclosures – Classification and
Measurement of Financial Instruments (not yet endorsed,
effective date 1 January 2026).
• Amendments to IFRS 1 – First-time Adoption of
International Financial Reporting Standards (not yet
endorsed, effective date 1 January 2026).
• Amendments to IFRS 7 – Financial Instruments:
Disclosures and its accompanying Guidance on
implementing IFRS 7 (not yet endorsed, effective
date 1 January 2026).
• Amendments to IFRS 10 – Consolidated Financial
Statements (not yet endorsed, effective date
1 January 2026).
• Amendments to IAS 7 – Statement of Cash Flows
(not yet endorsed, effective date 1 January 2026).
• IFRS 18 – Presentation and Disclosure in Financial
Statements (not yet endorsed, effective date
1 January 2027).
• IFRS 19 – Subsidiaries without Public Accountability:
Disclosures (not yet endorsed, effective date
1 January 2027).
Notes to the consolidated financial statements
178
Hiscox Ltd Report and Accounts 2024
2.2 Basis of consolidation
(a) Subsidiaries
Subsidiaries are those entities controlled by the Group. Control
exists when the Group has power over an entity, exposure or
rights to variable returns from its involvement with the investee
and ability to use its power to affect those returns. The
consolidated financial statements include the assets, liabilities
and results of the Group up to 31 December each year.
The financial statements of subsidiaries are included in the
consolidated financial statements only from the date that
control commences until the date that control ceases.
The Group applies the acquisition method to account for
business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any
asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired, liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The
Group recognises any non-controlling interest in the acquiree
on an acquisition-by-acquisition basis, either at fair value or at
the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
Transactions with non-controlling interests that do not result in
loss of control are accounted for as equity transactions – that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid
and the relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests are also
recorded in equity.
(b) Associates
Associates are those entities in which the Group has significant
influence, but not control, over the financial and operating
policies. Significant influence is generally identified with a
shareholding of between 20% and 50% of an entity’s voting
rights. The consolidated financial statements include the
Group’s share of the total recognised gains and losses of
associates on an equity-accounted basis from the date that
significant influence commences until the date that significant
influence ceases.
The Group’s share of its associates’ post-acquisition profits or
losses after tax is recognised in the income statement for each
period, and its share of the movement in the associates’ net
assets is reflected in the investments’ carrying values on the
statement of financial position. When the Group’s share of
losses equals or exceeds the carrying amount of the associate,
the carrying amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group has
incurred obligations in respect of the associate.
(c) Transactions eliminated on consolidation
Intragroup balances, transactions and any unrealised gains
arising from intragroup transactions are eliminated in preparing
the consolidated financial statements. Unrealised losses are
also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Foreign currency gains
and losses on intragroup monetary assets and liabilities may
not fully eliminate on consolidation when the intragroup
monetary item concerned is transacted between two Group
entities that have different functional currencies. Unrealised
gains arising from transactions with associates are eliminated
to the extent of the Group’s interest in the entity. Unrealised
losses are eliminated in the same way as unrealised gains, but
only to the extent that there is no evidence of impairment.
2.3 Foreign currency translation
(a) Functional currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the
‘functional currency’). Entities operating in France, Germany,
The Netherlands, Spain, Portugal, Ireland and Belgium have a
functional currency of Euros; those subsidiary entities operating
from the USA, Bermuda, Guernsey and Syndicates have a
functional currency of US Dollars with the exception of Hiscox
Ltd, a public company incorporated and domiciled in Bermuda
with a functional currency of Sterling. Functional currencies
of entities operating in Asia include US Dollars, Singapore
Dollars and Thai Baht. All other entities have a functional
currency of Sterling.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the
retranslation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised
in the income statement, except when deferred in equity as
IFRS 9 effective net investment hedges or when the underlying
balance is deemed to form part of the Group’s net investment
in a subsidiary operation and is unlikely to be settled in the
foreseeable future. Non-monetary items carried at historical
cost are translated on the statement of financial position at
the exchange rate prevailing on the original transaction
date. Non-monetary items measured at fair value are
translated using the exchange rate ruling when the fair
value was determined.
(c) Group companies
The results and financial position of all the Group entities that
have a functional currency different from the presentation
currency are translated into the presentation currency
as follows:
• assets and liabilities for each statement of financial
position presented are translated at the closing rate at
the end of the reporting period;
• income and expenses for each income statement are
translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the date of
the transactions); and
• all resulting exchange differences are recognised as a
separate component of equity.
When a foreign operation is sold, such exchange differences
are recognised in the income statement as part of the gain, or
loss, on sale.
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2.4 Property, plant and equipment
Property, plant and equipment are stated at historical cost less
depreciation and any impairment loss. Historical cost includes
expenditure that is directly attributable to the acquisition of the
items. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance items
are charged to the income statement during the financial
period in which they are incurred.
Land is not depreciated as it is deemed to have an indefinite
useful economic life. The cost of leasehold improvements is
amortised over the unexpired term of the underlying lease
or the estimated useful life of the asset, whichever is
shorter. Depreciation on other assets is calculated using
the straight-line method to allocate their cost, less their
residual values, over their estimated useful lives.
The rates applied are as follows:
• buildings
20-50 years
• vehicles
3 years
• leasehold improvements including
fixtures and fittings
10-15 years
• furniture, fittings and equipment
3-15 years
The assets’ residual values and useful lives are reviewed at the
end of the reporting period and adjusted if appropriate.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing proceeds with the
carrying amount. These are included in the income statement.
2.5 Intangible assets
(a) Goodwill
Goodwill represents amounts arising on acquisition of
subsidiaries and associates. In respect of acquisitions that
have occurred since 1 January 2004, goodwill represents
the excess of the fair value of consideration of an acquisition
over the fair value of the Group’s share of the net identifiable
assets and contingent liabilities assumed of the acquired
subsidiary or associate at the acquisition date. In respect
of acquisitions prior to 1 January 2004, goodwill is included
on the basis of its deemed cost, which represents the
amount recorded under previous generally accepted
accounting principles.
Goodwill on acquisition of subsidiaries is included in intangible
assets. Goodwill on acquisition of associates is included in
investments in associates.
Goodwill is not amortised but is tested at least annually
for impairment and carried at cost, less accumulated
impairment losses.
Goodwill is allocated to the Group’s cash-generating units
identified according to the smallest identifiable group of
assets from which cash flows are generated that are largely
independent of the cash flows generated by other assets or
group of assets.
The impairment review process examines whether or not
the carrying value of the goodwill attributable to individual
cash-generating units exceeds its recoverable amount.
Any excess of goodwill over the recoverable amount arising
from the review process indicates impairment. Any impairment
charges are presented as part of operational expenses. Gains
and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(b) Other intangible assets
Intangible assets acquired separately from a business are
carried initially at cost. An intangible asset acquired as part of a
business combination is recognised outside of goodwill if the
asset is separable or arises from contractual or other legal
rights and its fair value can be measured reliably. Customer
relationships, syndicate capacity and software acquired are
capitalised at cost, being the fair value of the consideration
paid. Software is capitalised on the basis of the costs incurred
to acquire and bring it into use. Intangible assets with indefinite
lives such as syndicate capacity are subsequently valued at
cost and are subject to annual impairment assessment.
Intangible assets with finite useful lives are consequently
carried at cost, less accumulated amortisation and impairment.
The useful life of the asset is reviewed annually. Any changes in
estimated useful lives are accounted for prospectively with the
effect of the change being recognised in the current and future
periods, if relevant.
Amortisation is calculated using the straight-line method to
allocate the cost over the estimated useful lives of the
intangible assets.
Subsequent expenditure on other intangible assets is
capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred.
Those intangible assets with finite lives are assessed for
indicators of impairment at each reporting date. Where there
is an indication of impairment then a full impairment test is
performed. An impairment loss recognised for an intangible
asset in prior years should be reversed if, and only if, there
has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss
was recognised.
2.6 Impairment of non-financial assets
Non-financial assets (such as goodwill, an intangible asset
or item of property, plant and equipment) that have an
indefinite useful life are not subject to amortisation and are
tested annually or whenever there is an indication of
impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable.
Objective factors that are considered when determining
whether a non-financial asset or group of non-financial assets
may be impaired include, but are not limited to, the following:
• adverse economic, regulatory or environmental conditions
that may restrict future cash flows and asset usage
and/or recoverability;
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• the likelihood of accelerated obsolescence arising from
the development of new technologies and products; and
• the disintegration of the active market(s) to which the
asset is related.
An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less
costs to sell or value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating
units). Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but only to the extent that
the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment
loss been recognised for the asset in prior periods. A reversal
of an impairment loss is recognised as income immediately.
Impairment losses recognised in respect of goodwill are not
subsequently reversed.
2.7 Financial assets and liabilities
The Group classifies its financial assets in the following
measurement categories, which depend on the business
model for managing the financial assets and the contractual
terms of the cash flows.
• Amortised cost: assets that are held for collection of
contractual cash flows, where those cash flows
represent solely payments of principal and interest
(SPPI), and that are not designated at fair value
through profit or loss (FVPL), are measured at
amortised cost. Interest income from these
financial assets is included in interest income using
the effective interest rate method. Such assets
held by the Group include cash and cash equivalents,
receivables from brokers, prepayments and accrued
income, receivables and accrued interest and
other debtors.
• Fair value through other comprehensive income (FVOCI):
assets that are held for collection of contractual cash
flows and for selling the financial assets, and where
the cash flows represent SPPI, and that are not
designated as FVPL, are measured at FVOCI.
Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains
or losses, interest revenue and foreign exchange
gains and losses which are recognised in profit or
loss. When the financial asset is derecognised, the
cumulative gain or loss on the instrument’s amortised
cost previously recognised in OCI is reclassified from
equity to profit or loss. Interest from these financial
assets is included in interest income using the
effective interest rate method. The Group does not
hold any assets at FVOCI as the business model
criteria are not met.
• Fair value through profit or loss (FVPL): assets that
do not meet the criteria for amortised cost or
FVOCI are measured at FVPL. Assets can also be
designated to FVPL if in doing so it eliminates, or
significantly reduces, an accounting mismatch. The
gains or losses arising from fair value changes on
assets measured at FVPL are recognised in profit or
loss and presented within the investment result in the
period in which it arises. The Group’s investment
assets in this category include government bonds,
corporate bonds, asset and mortgage-backed
securities, other fixed income holdings, equities,
investment funds, private credit funds, insurance-linked
funds and derivatives. All these assets are at
FVPL because of the business model test and
the characteristics of the associated contractual
cash flows.
(a) Recognition
The Group recognises a financial asset or a financial
liability in its statement of financial position when, and
only when, it becomes a party to the contractual
provisions of the instrument. At initial recognition, the
Group measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit
or loss, transaction costs that are incremental and directly
attributable to the acquisition or issue of the financial asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
(b) Impairment allowances
An expected credit loss (ECL) model is applicable for all assets
measured at amortised cost and FVOCI. The assessment of
credit risk and the estimation of an ECL are unbiased,
probability-weighted and incorporate all available information
relevant to the assessment, including information about past
events, current conditions and reasonable and supportable
forecasts of economic conditions at the reporting date. The
forward-looking aspect of IFRS 9 requires judgement as to
how changes in economic factors affect ECLs. Impairment
charges are recognised in the Income Statement within
operational expenses.
The ECL is a three-stage model based on forward-looking
information regarding changes in credit quality since inception.
Credit risk is measured using a probability of default (PD);
exposure at default (EAD); and loss given default (LGD)
approach as follows.
• PD is an estimate of the likelihood of default of the asset.
• EAD is an estimate of the exposure at that future default
date, taking into account expected changes in the
exposure after the reporting date.
• LGD is an estimate of the loss arising in the case where
a default occurs at a given time. It is based on the
difference between the contractual cash flows due and
those that the Group would expect to receive. It is usually
expressed as a percentage of the exposure at default.
The three stages of ECL are defined and assessed as follows.
• Stage 1 – no significant increase in credit risk since
inception, ECL is calculated using a 12-month PD.
• Stage 2 – a significant increase in credit risk since
inception, ECL is calculated using a lifetime PD.
• Stage 3 – credit impaired, ECL is calculated using a
lifetime PD.
A significant increase in credit risk is considered to have
incurred when payments are 30 days past due, or earlier if
other factors indicate the risk has increased significantly since
inception. Financial assets are written off when there is no
reasonable expectation of recovery on a case-by-case basis.
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2.6 Impairment of non-financial assets (continued)
(c) Derecognition
Financial assets are derecognised when the contractual
rights to receive the cash flows from the financial assets
have expired; or they have been transferred and the Group
transfers substantially all the risks and rewards of ownership;
or they have been transferred and the Group neither transfers
nor retains substantially all the risks and rewards of ownership
and the Group has not retained control. Any gain or loss
arising from derecognition is recognised directly in the
income statement. A financial liability is derecognised when
the obligation under that liability is discharged, cancelled
or expires.
(d) Investment income
The total gain/loss from financial assets carried at fair
value through profit or loss (FVPL) is recognised in profit
or loss and disclosed in the notes as investment income
comprising interest received, realised gains/losses and
unrealised gains/losses.
(e) Financial liabilities
At initial recognition, the Group classifies a financial liability
at fair value and subsequently at amortised cost using the
effective interest rate method. Financial liabilities mainly
include payables to brokerage customers, short-term
borrowings, long-term borrowings and bonds payable.
When all or part of the current obligations of a financial liability
have been discharged, the Group derecognises the portion of
the financial liability or obligation that has been discharged. The
difference between the carrying amount of the derecognised
liability and the consideration is recognised in profit or loss.
Derivative financial liabilities are measured at fair value through
profit or loss. All the related realised and unrealised gains or
losses and transaction costs are recognised in profit or loss.
2.8 Cash and cash equivalents
The Group has classified cash deposits and short-term
highly-liquid investments as cash and cash equivalents.
These assets are readily convertible into known amounts of
cash and are subject to inconsequential changes in value.
Cash equivalents are financial investments with less than
three months to maturity at the date of acquisition.
2.9 Derivative financial instruments
Derivatives are initially recognised at fair value on the date
on which a derivative contract is entered into and are
subsequently valued at fair value at the end of the reporting
period. Fair values are obtained from quoted market values
and, if these are not available, valuation techniques including
option pricing models are used as appropriate. The method of
recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument and, if so, the
nature of the item being hedged. For derivatives not formally
designated as a hedging instrument, fair value changes are
recognised immediately in the consolidated income statement.
Changes in the value of derivatives and other financial
instruments formally designated as hedges of net investments
in foreign operations are recognised in the currency translation
reserve to the extent they are effective; gains or losses relating
to the ineffective portion of the hedging instruments are
recognised immediately in the consolidated income statement.
The Group had no derivative instruments designated for hedge
accounting during the current period and prior financial year.
2.10 Own shares
Where any Group company purchases the Parent Company’s
equity share capital (own shares), the consideration paid,
including any directly attributable incremental costs (net of
income taxes) is deducted from equity attributable to the
Company’s owners on consolidation. Where such shares are
subsequently sold, reissued or otherwise disposed of, any
consideration received is included in equity attributable to the
Company’s owners, net of any directly attributable incremental
transaction costs and the related tax effects.
2.11 Insurance and reinsurance contracts
The accounting policy set out below is applicable to insurance
and reinsurance contracts that are issued by the Group
and reinsurance contracts held by the Group unless
indicated otherwise.
(a) Classification
Insurance contracts are defined as those containing significant
insurance risk. Significant insurance risk criteria are met if,
and only if, an insured event could cause an insurer to make
significant additional payments in any scenario, excluding
scenarios that lack commercial substance, at the inception
of the contract. Such contracts remain insurance contracts
until all rights and obligations are extinguished or expire.
The Group issues short-term casualty and property
(re)insurance contracts in the normal course of business,
under which it accepts significant insurance risk from its
policyholders. The Group also enters into ceded reinsurance
contracts with reinsurers under which the Group transfers
significant insurance risk to reinsurers and is compensated
for claims on contracts issued by the Group.
(b) Separating components
The Group assesses its insurance and reinsurance products
to determine whether they contain distinct components which
must be accounted for under another IFRS instead of under
IFRS 17. After separating any distinct components, the Group
applies IFRS 17 to all remaining components of the (host)
insurance contract. Currently, the Group’s products do not
include any distinct components that require separation.
Some reinsurance contracts issued contain profit commission
arrangements. Under these arrangements, there is a
guaranteed minimum amount that the policyholder will always
receive – either in the form of profit commission, or as claims,
or another contractual payment irrespective of the insured
event happening. The guaranteed minimum amounts have
been assessed to be highly interrelated with the insurance
component of the reinsurance contracts and are, therefore,
non-distinct investment components which are not accounted
for separately. However, receipts and payments of these
investment components are excluded from insurance revenue
and expenses.
(c) Level of aggregation
Insurance contracts are aggregated into groups for
measurement purposes. The level of aggregation for the Group
is determined firstly by grouping contracts into portfolios which,
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2.7 Financial assets and liabilities (continued)
with some limited exceptions, are set as the reserving classes
of each legal entity. Portfolios comprise groups of contracts
with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception
into three categories: onerous contracts, contracts with no
significant risk of becoming onerous, and the remainder.
No group for level of aggregation purposes may contain
contracts issued more than one year apart. The grouping
of contracts is not subsequently reconsidered.
A group of insurance contracts is considered to be onerous
at initial recognition if the fulfilment cash flows allocated to
that group of contracts in total are a net outflow. That is if
the present value of expected claims, attributable expenses
and risk adjustment exceeds the premium.
Portfolios of reinsurance contracts held are assessed
for aggregation separately from portfolios of insurance
contracts issued. Reinsurance contracts held cannot
be onerous.
(d) Recognition and derecognition
Groups of insurance contracts issued are initially recognised
from the earliest of the following:
• the beginning of the coverage period;
• the date when the first payment from the policyholder
is due, or actually received if there is no due date; and
• when the Group determines that a group of contracts
becomes onerous.
Insurance contracts acquired in a business combination
within the scope of IFRS 3 Business Combinations or a
portfolio transfer are accounted for as if they were entered
into at the date of acquisition or transfer.
Reinsurance contracts held are recognised as follows:
• a group of reinsurance contracts held that provide
proportionate coverage is recognised at the later of
the following dates (unless underlying contracts are
onerous, in which case earlier recognition is required):
o the beginning of the coverage period of the
group; and
o the initial recognition of any underlying
insurance contract;
• all other groups of reinsurance contracts held are
recognised from the beginning of the coverage period
of the group of reinsurance contracts held; unless the
Group entered into the reinsurance contract held at
or before the date when an onerous group of
underlying contracts is recognised prior to the
beginning of the coverage period of the group of
reinsurance contracts held, in which case the
reinsurance contract held is recognised at the same
time as the group of underlying insurance contracts
is recognised.
Only contracts that individually meet the recognition criteria
by the end of the reporting period are included in the
groups. When contracts meet the recognition criteria in
the groups after the reporting date, they are added to
the groups in the reporting period in which they meet the
recognition criteria. The composition of the groups is not
reassessed in subsequent periods.
An insurance contract is derecognised when it is:
• extinguished (that is, when the obligation specified in
the insurance contract expires or is discharged or
cancelled); or
• the contract is modified such that the modification results
in a change in the measurement model (for example, the
general measurement model (GMM)) or the applicable
standard for measuring a component of the contract,
substantially changes the contract boundary, or requires
the modified contracts to be included in a different group.
When a modification is not treated as a derecognition,
the Group recognises amounts paid or received for the
modification of the contract as an adjustment to the
relevant liability or asset for remaining coverage.
When a group of insurance contracts is derecognised,
adjustments to remove related rights and obligations result
in the following amounts being charged immediately to
consolidated income statement:
• if the contract is extinguished, any net difference
between the derecognised part of the liability for
remaining coverage (LRC) of the original contract and
any other cash flows arising from extinguishment;
• if the contract is transferred to the third party, any net
difference between the derecognised part of the LRC
of the original contract and the premium charged by
the third party; or
• if the original contract is modified resulting in its
derecognition, any net difference between the
derecognised part of the LRC and the hypothetical
premium that the entity would have charged if it had
entered into a contract with equivalent terms as the new
contract at the date of the contract modification, less
any additional premium charged for the modification.
(e) Contract boundary
The Group uses the concept of contract boundary to
determine what cash flows should be considered in the
measurement of groups of insurance contracts. Cash flows
are within the boundary of an insurance contract if they
arise from substantive rights and obligations that exist during
the reporting period in which the Group can compel the
policyholder to pay the premiums, or in which the Group has a
substantive obligation to provide the policyholder with services.
A substantive obligation to provide services ends when:
• the Group has the practical ability to reassess the risks of
the particular policyholder and, as a result, can set a price
or level of benefits that fully reflects those risks; or
• both of the following criteria are satisfied:
o the Group has the practical ability to reassess the
risks of the portfolio of insurance contracts that
contain the contract and, as a result, can set a
price or level of benefits that fully reflects the risk
of that portfolio;
o the pricing of the premiums for coverage up to the
date when the risks are reassessed does not take
into account the risks that relate to periods after the
reassessment date.
A liability or asset relating to expected premiums or claims
outside the boundary of the insurance contract is not
recognised. Such amounts relate to future insurance contracts.
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2.11 Insurance and reinsurance contracts
(c) Level of aggregation (continued)
(f) Measurement – premium allocation approach
Initial measurement
The Group applies the premium allocation approach (PAA)
to the majority of the insurance contracts that it issues and
reinsurance contracts that it holds, because:
• the coverage period of each contract in the group is
one year or less; or
• for contracts longer than one year, the Group has
modelled possible future scenarios and reasonably
expects that the measurement of the LRC for the
group containing those contracts under the PAA does
not differ materially from the measurement that would
be produced applying the general model.
For insurance contracts issued, on initial recognition, the Group
measures the LRC as the amount of premiums received, less
any acquisition cash flows paid and any amounts arising from
the derecognition of the insurance acquisition cash flows asset
and the derecognition of any other relevant pre-recognition
cash flows.
For reinsurance contracts held, on initial recognition, the
Group measures assets for the remaining coverage at the
amount of ceding premiums paid, plus broker fees paid to a
party other than the reinsurer and any amounts arising from the
derecognition of any other relevant pre-recognition cash flows.
For insurance contracts issued, insurance acquisition cash
flows allocated to a group are recognised over the coverage
period of contracts in the group. For reinsurance contracts
held, broker fees are recognised over the coverage period
of contracts in a group.
Subsequent measurement
For insurance contracts issued, at each of the subsequent
reporting dates, the LRC is:
• increased for premiums received in the period;
• decreased for insurance acquisition cash flows paid
in the period;
• decreased for the amounts of expected premium
receipts recognised as insurance revenue for the
services provided in the period;
• increased for the amortisation of insurance acquisition
cash flows in the period recognised as insurance
service expenses; and
• decreased for any investment component paid or
transferred to the liability for incurred claims.
For reinsurance contracts held, at each of the subsequent
reporting dates, the remaining coverage is:
• increased for ceding premiums paid in the period;
• increased for broker fees paid in the period;
• decreased for the expected amounts of ceding premiums
and broker fees recognised as reinsurance expenses for
the services received in the period; and
• decreased for any investment component paid or
transferred to the reinsurance assets for incurred claims.
The Group does not adjust the LRC for insurance contracts
issued or the remaining coverage for reinsurance contracts
held for the effect of the time value of money, because
associated premiums are due within one year of the coverage
period. The Group only adjusts the remaining coverage for
reinsurance contracts held for the time value of money in
relation to the legacy portfolio transactions (LPT) that were
held, as the associated premiums are not due within one year
of the coverage period.
The Group estimates the liability for incurred claims (LIC) as the
fulfilment cash flows related to incurred claims. The fulfilment
cash flows incorporate, in an unbiased way, all reasonable and
supportable information available without undue cost or effort
about the amount, timing and uncertainty of those future
cash flows.
If facts and circumstances indicate that a group of insurance
contracts measured under the PAA is onerous on initial
recognition or has become onerous subsequently, the Group
increases the carrying amount of the LRC, recognising a loss
component, to the amounts of the excess of the fulfilment cash
flows that relate to the remaining coverage of the group of
contracts, over the carrying amount of the LRC of the group.
The amount of such an increase is recognised in insurance
service expenses. Subsequently, the loss component is
amortised over the coverage period of the group of contracts.
When a loss is recognised on initial recognition of an onerous
group of underlying insurance contracts or on addition of
onerous underlying insurance contracts to that group, the
carrying amount of the reinsurance asset for remaining
coverage for reinsurance contracts held measured under the
PAA is increased by the amount of expected recoveries that
will be in the consolidated income statement and a loss
recovery component is established or adjusted for that
amount. The loss recovery component is calculated by
multiplying the loss component recognised on underlying
insurance contracts by the percentage of claims on underlying
insurance contracts that the Group expects to recover from the
reinsurance contracts held that are entered into before or at
the same time as the loss is recognised on the underlying
insurance contracts. When underlying insurance contracts that
are reinsured are included in the same group as insurance
contracts issued that are not reinsured, the Group applies a
systematic and rational method of allocation to determine the
portion of losses that relates to underlying insurance contracts.
(g) Insurance revenue
The insurance revenue for the period is the amount of
expected premium receipts (excluding any investment
component) allocated to the period. The Group allocates
the expected premium receipts to each period of insurance
contract services on the basis of the passage of time. But if the
expected pattern of release of risk during the coverage period
differs significantly from the passage of time, for example a
group of contracts that is exposed to large natural catastrophe
risk concentrated in the first or second half of the year, then
the allocation is made on the basis of the expected timing of
incurred insurance service expenses.
Changes to the basis of allocation are accounted for
prospectively as a change in accounting estimate.
(h) Insurance service expenses
Insurance service expenses include the following:
• incurred claims, excluding investment components
reduced by loss component allocations;
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2.11 Insurance and reinsurance contracts (continued)
• other incurred directly attributable expenses;
• insurance acquisition cash flows amortisation using the
pattern that is consistent with the insurance revenue;
• changes that relate to past service;
• changes that relate to future service;
• insurance acquisition cash flows assets impairment; and
• mandatory reinstatement premiums.
Other expenses not meeting the above categories are
included in other operating expenses in the consolidated
income statement.
(i) Allocation of reinsurance premiums
The allocation of reinsurance premiums includes reinsurance
premiums and other incurred directly attributable expenses.
Reinsurance premium and expenses are recognised similarly
to insurance revenue. The amount of reinsurance expenses
recognised in the reporting period depicts the transfer of
received insurance contract services at an amount that reflects
the portion of ceding premiums that the Group expects to pay
in exchange for those services. Additionally, broker fees and
ceding commissions that are not contingent on claims of the
underlying contracts issued reduce ceding premiums and are
accounted for as part of reinsurance premiums.
In addition, the allocation of reinsurance premiums also
includes changes in the reinsurance assets arising from
retroactive reinsurance contracts held and voluntary
reinstatement ceded premiums.
(j) Amounts recoverable from reinsurers for incurred claims
The amounts recoverable from reinsurers for incurred
claims include:
• incurred claims recoveries, excluding
investment components;
• loss-recovery component allocations;
• changes that relate to past service;
• effect of changes in the risk of reinsurers’
non-performance;
• amounts relating to accounting for onerous groups
of underlying insurance contracts issued;
• ceding commissions that are contingent on claims
of the underlying contracts issued reduce incurred
claims recovery; and
• mandatory reinstatement ceded premiums.
(k) Insurance finance income or expenses
Insurance finance income or expenses comprise the change
in the carrying amount of the group of insurance contracts
arising from:
• the effect of the time value of money and changes in
the time value of money. This mainly comprises interest
accreted on the LIC and interest unwind on the assets
for incurred claims (AIC); and
• the effect of financial risk and changes in financial risk.
This mainly includes the effect of changes in interest
rates (for example, discount rates).
The Group does not disaggregate changes in the risk
adjustment for non-financial risk between insurance service
result and insurance finance income or expenses. The change
in the risk adjustment is entirely presented as part of the
insurance service result.
Foreign exchange gains and losses continue to be presented
in the net other foreign exchange (losses)/gains line item.
2.12 Taxation
Current tax, including corporation tax and foreign tax, is
provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively
enacted by the end of the reporting period. A provision is
recognised for those matters for which the tax determination is
uncertain but it is considered probable that there will be a
future outflow of funds to a tax authority. The provisions are
measured at the best estimate of the amount expected to
become payable. The assessment is based on the judgement
of tax professionals within the Group supported by previous
experience in respect of such activities and in certain cases
based on advice sought from specialist tax advisors.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements. However, if the deferred income tax arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss, it is
not recognised. With the exception of deferred tax related to
top-up income taxes arising from tax law enacted to implement
Pillar Two legislation, deferred tax is determined using tax rates
and laws that have been enacted or substantively enacted by
the end of the reporting period and are expected to apply
when the related deferred tax asset is realised or the deferred
tax liability is settled. Deferred tax assets are recognised to
the extent that it is probable that future taxable profit will be
available against which the temporary differences can be
utilised. Deferred tax is provided on temporary differences
arising on investments in subsidiaries and associates, except
where the Group controls the timing of the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
2.13 Employee benefits
(a) Pension obligations
The Group has defined contribution and defined benefit
pension schemes. The defined benefit scheme closed to
future accrual with effect from 31 December 2006 and
active members were offered membership of the defined
contribution scheme from 1 January 2007. A defined
contribution plan is a pension plan under which the Group
pays fixed contributions into a separate entity and has no
further obligation beyond the agreed contribution rate. A
defined benefit plan is a pension plan that defines an amount
of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years
of service and compensation.
For defined contribution plans, the Group pays contributions
to publicly or privately administered pension insurance plans
on a contractual basis. The contributions are recognised as
an employee benefit expense when they are due. Prepaid
contributions are recognised as an asset to the extent that
a cash refund or a reduction in future payments is available.
The amount recognised on the statement of financial position
in respect of defined benefit pension plans is the present value
of the defined benefit obligation at the end of the reporting
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2.11 Insurance and reinsurance contracts
(h) Insurance service expenses (continued)
period, less the fair value of plan assets. The calculation of the
defined benefit obligation is performed annually by a qualified
actuary using the projected unit method. As the plan is closed
to all future benefit accruals, each participant’s benefits under
the plan are based on their service to the date of closure or
earlier leaving date and their final pensionable earnings.
The service cost is the expected administration cost during
the year. Past service costs are recognised immediately in
the income statement.
Remeasurements of the net defined benefit liability, which
comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any),
are recognised immediately in other comprehensive income.
The Group determines the net interest expense (income) on
the net defined benefit liability (asset) for the period by applying
the discount rate used to measure the defined benefit
obligation at the beginning of the annual period to the then
net defined benefit liability (asset), taking into account any
changes in the net defined benefit liability (asset) during the
period as a result of contributions and benefit payments.
Net interest expense and other expenses related to defined
benefit plans are recognised in the income statement
through operating expenses.
To the extent that a surplus emerges on the defined benefit
obligation, it is only recognisable as an asset when it is
probable that future economic benefits will be recovered
by the Group.
(b) Other long-term employee benefits
The Group provides sabbatical leave to employees on
completion of every five years’ service. The present value
of the expected costs of these benefits is accrued over
the period of employment. In determining this liability,
consideration is given to future increases in salary
levels, experience with employee departures and
periods of service.
(c) Share-based compensation
The Group operates equity settled share-based
employee compensation plans. These include the share
option schemes, and the Group’s Performance Share
Plans, outlined in the Directors’ remuneration report,
together with the Group’s Save As You Earn (SAYE)
schemes. The fair value of the employee services
received, measured at grant date, in exchange for the
grant of the awards is recognised as an expense, with
the corresponding credit being recorded in retained
earnings within equity. The total amount to be expensed
over the vesting period is determined by reference to the
fair value of the awards granted, excluding the impact of
any non-market vesting conditions (for example, profitability
or net asset growth targets). Non-market vesting conditions
are included in assumptions about the number of awards
that are expected to become exercisable. At the end of
the reporting period, the Group revises its estimates of
the number of awards that are expected to vest.
The Group recognises the impact of the revision of
original estimates, if any, in the income statement, and
a corresponding adjustment to equity, in periods in
which the estimates are revised.
When the terms and conditions of an equity settled
share-based employee compensation plan are modified,
and the expense to be recognised increases as a result of the
modification, then the increase is recognised evenly over the
remaining vesting period. When a modification reduces the
expense to be recognised, there is no adjustment recognised
and the pre-modification expense continues to be applied.
The proceeds received net of any directly attributable
transaction costs are credited to share capital and
share premium when the options are exercised.
(d) Termination benefits
Termination benefits are payable when employment is
terminated before the normal retirement date, or whenever
an employee accepts voluntary redundancy in exchange for
these benefits. The Group recognises termination benefits
when it is demonstrably committed to either: terminating the
employment of current employees according to a detailed
formal plan without possibility of withdrawal; or providing
termination benefits as a result of an offer made to encourage
voluntary redundancy.
(e) Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses
and profit sharing, based on a formula that takes into
consideration the profit attributable to the Company’s
shareholders after certain adjustments. The Group
recognises a provision where a contractual obligation to
employees exists, or where there is a past practice that
has created a constructive obligation.
2.14 Finance costs
Finance costs consist of interest charges accruing on the
Group’s borrowings and bank overdrafts together with
commission fees charged in respect of Letters of Credit
and interest in respect of lease liabilities and funds withheld.
Arrangement fees in respect of financing arrangements are
charged over the life of the related facilities.
2.15 Leases
(a) Hiscox as lessee
The Group recognises right-of-use assets at the
commencement date of the lease (for example, the date the
underlying asset is available for use). Right-of-use assets are
measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the
amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the
commencement date, less any lease incentives received.
Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the recognised
right-of-use assets are depreciated on a straight-line basis over
the shorter of their estimated useful life and the lease term.
Right-of-use assets are subject to impairment. Right-of-use
assets are presented on the statement of financial position as
‘property, plant and equipment’.
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments
include fixed payments less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and
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2.13 Employee benefits
(a) Pension obligations (continued)
amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the
Group and payments of penalties for terminating a lease, if
the lease term reflects the Group exercising the option to
terminate. The variable lease payments that do not depend
on an index or a rate are recognised as an expense in the
period in which the event or condition that triggers the
payment occurs. Lease liabilities are included in ‘trade and
other payables’ on the statement of financial position.
In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is
not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is
a modification that is not accounted for as a separate lease:
future lease payments that are linked to a rate or index, a
change in the lease term, a change in the in-substance fixed
lease payments, a change in the assessment to purchase the
underlying asset or a change in the amounts expected to be
payable under a residual value guarantee.
The Group applies the short-term lease recognition exemption
to its applicable short-term leases. It also applies the low-value
assets recognition exemption to leases of office equipment that
are considered of low value. Lease payments on short-term
leases and leases of low-value assets are recognised as an
expense on a straight-line basis over the lease term.
(b) Hiscox as lessor
Rental income from operating leases is recognised on
a straight-line basis over the term of the relevant
contractual agreement.
2.16 Dividend distribution
Dividend distribution to the Company’s shareholders is
recognised as a liability in the Group’s financial statements
in the period in which the dividends are approved.
2.17 Operations held for sale
Assets and liabilities held for disposal as part of operations
which are held for sale are shown separately in the
consolidated statement of financial position. Operations
held for sale are recorded at the lower of their carrying
amount and their fair value less the estimated selling costs.
2.18 Provisions and contingent liabilities
Provisions are recognised when there is a present legal or
constructive obligation as a result of a past event that can be
measured reliably, and it is probable that an outflow of
economic benefits will be required to settle that obligation.
The amount recorded as a provision is the best estimate
of the expenditure required to settle the present obligation
at the end of the reporting period. Discounting is applied
to the provision where the effect of the time value of
money is material. Provisions are not recognised for
future operating losses. A provision for restructuring is
recognised when the Group has approved a detailed
and formal restructuring plan and the restructuring has
either commenced or has been announced publicly.
A provision for onerous contracts is recognised when the
expected benefits to be derived by the Group from the
contracts are less than the related unavoidable cost of
meeting its obligations under the contract.
A provision for a termination payment is recognised when the
Group has a demonstrable commitment to either terminate
the employment of an employee or group of employees
before the normal retirement date, or to provide termination
benefits as a result of an offer made in order to encourage
voluntary redundancy.
Where the Group expects a provision to be reimbursed, for
example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the
reimbursement is virtually certain.
Contingent liabilities are disclosed if there is a possible future
obligation as a result of a past event, or if there is a present
obligation as a result of a past event but either a payment is
not probable or the amount cannot be reasonably estimated.
2.19 Use of significant accounting judgements, estimates
and assumptions
The preparation of financial statements requires the Group to
select accounting policies and make judgements (other than
those involving estimations) that have a significant impact on
the amounts recognised and to make estimates and
assumptions that affect the reported amounts of assets,
liabilities, income and expenses in the consolidated
financial statements.
The Audit Committee reviews the reasonableness of critical
judgements, estimates and assumptions applied and the
appropriateness of material accounting policies information.
The significant issues considered by the Committee in the
year are included within the Audit Committee report on pages
110 to 112.
Significant accounting judgements
The following accounting policies are the critical judgements,
apart from those involving estimations (which are presented
separately below), that the Directors have made in the process
of applying the Group's accounting policies and that have the
most significant impact on the amounts recognised in the
consolidated financial statements.
• Consolidation: assessment of whether the Group controls
or has significant influence over an underlying entity, for
example, the treatment of insurance-linked securities
funds including consideration of its decision-making
authority and its rights to the variable returns from
the entity.
• Financial investments: classification and measurement
of investments including the application of the fair
value option.
(a) Liability for incurred claims
The ultimate cost of outstanding claims is estimated by using a
range of standard actuarial claims projection techniques. The
Group relies on actuarial analysis to estimate the settlement
cost of future claims. Via a formal governed process, there is
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2.15 Leases
(a) Hiscox as lessee (continued)
close communication between the actuaries and other key
stakeholders, such as the underwriters, claims and finance
teams when setting and validating the assumptions. The main
assumption underlying these techniques is that a Group’s past
claims development experience can be used to project future
claims development and hence ultimate claims costs. These
methods extrapolate the development of paid and incurred
losses, average costs per claim (including claims handling costs),
and claim numbers based on the observed development of
earlier years and expected loss ratios. Historical claims
development is mainly analysed by accident years, but can also
be further analysed by geographical area, as well as by significant
business lines and claim types. In most cases, no explicit
assumptions are made regarding future rates of claims inflation
or loss ratios. Instead, the assumptions used are those implicit in
the historical claims development data on which the projections
are based. Additional qualitative judgement is used to assess the
extent to which past trends may not apply in future (for example,
to reflect one-off occurrences, changes in external or market
factors such as public attitudes to claiming, economic conditions,
levels of claims inflation, judicial decisions and legislation, as well
as internal factors such as portfolio mix, policy features and
claims handling procedures) in order to arrive at the estimated
ultimate cost of claims that present the probability-weighted
expected value outcome from the range of possible outcomes,
taking account of all the uncertainties involved.
(b) Premium allocation approach eligibility assessment
A simplified measurement model, the PAA, can be applied if
certain eligibility criteria are met. The majority of the Group’s
policies have a coverage period of 12 months or less and so
are eligible for the PAA. Management applies significant
judgement whether applying PAA to those groups of
contracts differ materially from general measurement model
(GMM) with a coverage period extending beyond 12 months.
Significant accounting estimates
The key assumptions concerning the future, and other key
sources of estimation uncertainty at the reporting period that
may have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year, are discussed below.
All estimates are based on management’s knowledge of
current facts and circumstances, assumptions based on
that knowledge and their predictions of future events. Actual
results may differ from those estimates, possibly significantly.
Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future
periods affected.
The most critical estimate included within the consolidated
statement of financial position is the measurement of insurance
contract liabilities and reinsurance contract assets, and in
particular the estimate of the liability for incurred claims (LIC).
The total gross estimate of LIC as at 31 December 2024 is
$6,040.7 million (2023: $6,249.6 million). The total estimate for
reinsurance asset for incurred claims as at 31 December 2024
is $2,046.5 million (2023: $2,217.1 million).
Insurance and reinsurance contracts
In applying IFRS 17 measurement requirements, the following
inputs and methods were used that include significant
estimates. The present value of future cash flows is
estimated using deterministic scenarios. The assumptions
used in the deterministic scenarios are derived to approximate
the probability-weighted mean of a full range of scenarios.
For the sensitivities with regard to the assumptions made
that have the most significant impact on measurement under
IFRS 17 please refer to note 3 management of risk.
(a) Discount rates
Insurance contract liabilities are calculated by discounting
expected future cash flows at a risk-free rate, plus an illiquidity
premium where applicable. Risk-free rates were derived using
swap rates available in the market denominated in the same
currency as the insurance contracts being measured. When
swap rates are not available, highly liquid sovereign bonds with
the highest (for example, AAA/AA) credit rating were used.
Management uses judgement to assess liquidity characteristics
of the liability cash flows. The illiquidity premium was estimated
based on market observable liquidity premiums in financial
assets, adjusted to reflect the illiquidity characteristics of the
liability cash flows. The illiquidity premium is determined by
reference to market observable AA-rated bonds yield curve
in the currency of the insurance contract being measured,
adjusted to remove both expected and unexpected credit risk.
The following discount rates were applied for the currencies
and periods presented below:
Year end 31 December 2024
1 year
3 year
5 year
%
%
%
USD
4.27
4.18
4.24
GBP
4.68
4.40
4.35
EUR
2.46
2.35
2.49
CAD
2.96
2.88
2.98
Year end 31 December 2023
1 year
3 year
5 year
%
%
%
USD
4.83
3.92
3.74
GBP
4.97
4.12
3.82
EUR
3.49
2.75
2.65
CAD
4.63
3.69
3.39
(b) Estimates of future cash flows to fulfil insurance contracts
Included in the measurement of each group of contracts within
the scope of IFRS 17 are all of the future cash flows within the
boundary of each group of contracts. The estimates of these
future cash flows are based on probability-weighted expected
future cash flows. The Group estimates which cash flows are
expected and the probability that they will occur as at the
measurement date. In setting these expectations, the Group
uses information about past events, current conditions and
forecasts of future conditions. The Group’s estimate of
future cash flows is the mean of a range of scenarios that
reflect the full range of possible outcomes. Each scenario
specifies the amount, timing and probability of cash flows.
The probability-weighted average of the future cash flows is
calculated using a deterministic scenario representing the
probability-weighted mean of a range of scenarios.
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2.19 Use of significant accounting judgements, estimates and assumptions
(a) Liability for incurred claims (continued)
Where estimates of expenses-related cash flows are determined
at the portfolio level or higher, they are allocated to groups of
contracts on a systematic basis, such as activity-based costing
method. The Group has determined that this method results in
a systematic and rational allocation. Similar methods are
consistently applied to allocate expenses of a similar nature.
Acquisition cash flows are typically allocated to groups of
contracts based on gross premiums written. This includes an
allocation of acquisition cash flows among existing groups of
insurance contracts issued. Claims settlement-related expenses
are largely allocated based on claims costs.
Uncertainty in the estimation of future claims and benefit
payments arises primarily from the severity and frequency
of claims and uncertainties regarding future inflation rates
leading to claims and claims-handling expenses growth.
Assumptions used to develop estimates about future cash
flows are reassessed at each reporting date and adjusted
where required.
(c) Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation
that the Group requires for bearing the uncertainty about the
amount and timing of the cash flows of groups of insurance
contracts. The risk adjustment reflects an amount that an
insurer would charge to make it indifferent between the cash
flows with a range of probable scenarios versus equivalent
fixed cash flows.
To determine the risk adjustment for non-financial risk for
reinsurance contracts, the Group applies a combination
of a value at risk (VaR) (or a percentile) approach and a
scenario-based approach, both gross and net of reinsurance,
and derives the amount of risk being transferred to the
reinsurer as the difference between the two results. Most
business is measured under the PAA model and therefore
the Group does not calculate a risk adjustment in relation
to LRC excluding loss component.
The Group calculates the risk adjustment for incurred
claims liabilities at each insurance undertaking entity level in
accordance with its risk profile using a combination of the VaR
method and scenario analysis, targeting an overall confidence
level range for the aggregate risk distribution. Scenario analysis
is used to determine the level of compensation that the Group
requires for bearing uncertainty for qualitative risks not
captured in the risk distribution and large event-driven claims,
such as natural catastrophes. Given the nature of the
underlying business and losses it is normal for new risks to
become apparent or for the magnitude of existing risks to
change over time. The risk adjustment in its entirety is judged
to provide adequate compensation for the risk in the reserves.
Group diversification benefit is not considered at the
individual insurance undertaking entity level but is considered
in determining the confidence level at a consolidated level
for disclosure purposes. At 31 December 2024, the risk
adjustment in respect of the LIC net of reinsurance is at
the 83rd percentile (2023: 83rd percentile).
(d) Fair value measurement
The Group carries its financial investments at fair value through
profit or loss, with fair values determined using published price
quotations in the most active financial markets in which the
assets trade, where available. Where quoted market prices are
not available, valuation techniques are used to value financial
instruments. These include third-party valuation reports and
models utilising both observable and unobservable market
inputs. Valuation techniques involve judgement, including the
use of valuation models and their inputs, which can lead to a
range of plausible valuations for financial investments. Note
3.3(a) discusses the reliability of the Group’s fair values.
(e) Employee benefit
The employee retirement benefit scheme obligations are
calculated and valued with reference to a number of actuarial
assumptions including mortality, inflation rates and discount
rate, many of which have been subject to recent volatility.
This complex set of economic variables can have a significant
impact on the financial statements, as shown in note 24.
(f) Tax
The Group operates in a multinational environment, and
legislation concerning the determination of taxation of assets
and liabilities is complex and continually evolving. In preparing
the financial statements, the Group applies significant
judgements in identifying uncertainties over tax treatments
and in the measurement of the provision being the best estimate
of the amount expected to become payable. The assessment is
based on the judgement of tax professionals within the Group
supported by previous experience in respect of such activities
and based on advice sought from specialist tax advisors.
A deferred tax asset can be recognised only to the extent
that it is recoverable. The recoverability of deferred tax assets in
respect of carry forward losses requires consideration of the
future levels of taxable profit in the Group. In preparing the
Group’s financial statements, management estimates taxation
assets and liabilities after taking appropriate professional advice,
as shown in note 22. Significant estimates and assumptions
used in the valuation of deferred tax relate to the forecast
taxable profits, taking into account the Group’s financial and
strategic plans. See note 23 for further details of adjustments
made to deferred tax during the year.
The determination and finalisation of agreed taxation assets
and liabilities may not occur until several years after the
reporting date and consequently the final amounts payable
or receivable may differ from those presented in these
financial statements.
2.20 Reporting of alternative performance measures
The Directors consider that the combined, claims and expense
ratio measures reported in respect of operating segments and
the Group overall in note 4, net asset value per share and return
on equity measures disclosed in notes 5 and 6 and prior-year
developments disclosed in note 20, provide useful information
regarding the underlying performance of the Group’s businesses.
These measures are widely recognised by the insurance industry
and are consistent with the internal performance measures
reviewed by senior management including the chief operating
decision-maker. However, these measures are not defined
within the accounting standards and interpretations, and
therefore may not be directly comparable with similarly titled
alternative performance measures reported by other companies.
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2.19 Use of significant accounting judgements, estimates and assumptions
(b) Estimates of future cash flows to fulfil insurance contracts (continued)
3 Management of risk
The Group’s overall appetite for accepting and managing
varying classes of risk is defined by the Group’s Board
of Directors. The Board has developed a governance
framework and has set Group-wide risk management
policies and procedures which include risk identification, risk
management and mitigation and risk reporting. The objective
of these policies and procedures is to protect the Group’s
shareholders, policyholders and other stakeholders from
negative events that could hinder the Group’s delivery of its
contractual obligations and its achievement of sustainable
profitable economic and social performance.
The Board exercises oversight of the development and
operational implementation of its risk management policies
and procedures through the Risk Committee, and ongoing
compliance through a dedicated internal audit function,
which has operational independence, clear terms of
reference influenced by the Board’s Non Executive Directors
and a clear upwards reporting structure back into the
Board. The Group, in line with the non-life insurance industry
generally, is fundamentally driven by a desire to originate,
retain and service insurance contracts to maturity. The
Group’s cash flows are funded mainly through advance
premium collections and the timing of such premium inflows
is reasonably predictable. In addition, the majority of material
cash outflows are typically triggered by the occurrence of
insured events, although the timing, frequency and severity
of claims can fluctuate.
The principal sources of risk relevant to the Group’s operations
and its financial statements fall into three broad categories:
operational risk, insurance risk and financial risk, which are
described in notes 3.1, 3.2 and 3.3 below. The Group also
actively manages its capital risks as detailed in note 3.4 and
tax risks as detailed in note 3.5. Additional unaudited
information is also provided in the corporate governance,
risk management and capital sections of this Annual Report
and Accounts.
3.1 Operational risk
The Group is exposed to the risk of direct or indirect loss
resulting from internal processes, people or systems, or
from external events. This includes cyber security risk, as
well as major IT, systems or service failures. The Group has
demonstrated continued resilience, underscoring the benefits
of its business model, disciplined risk management and
ongoing investment in technology and infrastructure.
Hiscox has implemented several operational risk
management processes, which include a continued focus on
Group-wide crisis management response planning and
enhancing its defences and response to information security
and cyber threats. Hiscox regularly reassesses its information
security standards and methodologies to ensure appropriate
governance and consistency in its approach. In 2024, we
also introduced an artificial intelligence (AI) standard to
ensure we have appropriate governance and controls
around our own use of AI.
In 2024, Hiscox introduced a Governance, Control and Risk
system which is used to perform the annual Risk and Control
Self Assessment exercise. It also enables more robust
reporting and analysis of operational risk events, driving greater
insight and lessons learnt.
Our third-party suppliers are often crucial to our business,
enabling the delivery of high-quality service to our customers.
We have an established supplier code of conduct which sets
out the standards we expect our suppliers to operate to. Due
diligence is carried out not only as part of an initial sourcing
exercise but refreshed on an annual basis. We are investing in
supply chain management tools and processes which help us
better manage risk, including being part of the Financial
Services Qualification Scheme, utilising ESG ratings and
verification tooling.
3.2 Insurance risk
The predominant risk to which the Group is exposed is
insurance risk which is assumed through the underwriting
process. Insurance risk can be sub-categorised into
i) underwriting risk including the risk of catastrophe,
systemic insurance losses and the market cycle, and
ii) reserving risk.
i) Underwriting risk
The Board sets the Group’s underwriting strategy and risk
appetite, seeking to exploit identified opportunities in light of
other relevant anticipated market conditions.
The Board requires all underwriters to operate within an overall
Group appetite for individual events. This defines the maximum
exposure that the Group is prepared to retain on its own
account for any one potential catastrophe event or disaster.
In addition, the Group’s overall underwriting risk appetite
seeks to ensure that in a 1-in-200 bad year we are within the
underwriting risk limit. The limit is calibrated each year based
on exposure, expected profit and the size of other correlated
risks to enable us to continue in business and take advantage
of market opportunities that arise.
Specific underwriting objectives such as aggregation limits,
reinsurance protection thresholds and geographical disaster
event risk exposures are prepared and reviewed by the Group
Chief Underwriting Officer in order to translate the Board’s
summarised underwriting strategy into specific measurable
actions and targets. These actions and targets are reviewed
and approved by the Board in advance of each underwriting
year. The underwriting strategy is continually reviewed
throughout each underwriting year in light of the evolving
market pricing and loss conditions and as opportunities
present themselves. The Group’s underwriters and
management consider underwriting risk at an individual
contract level, and also from a portfolio perspective where the
risks assumed in similar classes of policies are aggregated and
the exposure evaluated in light of historical portfolio experience
and prospective factors.
To assist with the process of pricing and managing
underwriting risk, the Group routinely performs a wide range
of activities including the following:
• regularly updating the Group’s risk models;
• documenting, monitoring and reporting on the Group’s
strategy to manage risk;
• developing systems that facilitate the identification of
emerging issues promptly;
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• utilising sophisticated computer modelling tools to
simulate catastrophes and measure the resultant
potential losses before and after reinsurance;
• monitoring legal developments and amending the
wording of policies when necessary;
• regularly aggregating risk exposures across individual
underwriting portfolios and known accumulations of risk;
• examining the aggregated exposures in advance of
underwriting further large risks; and
• developing processes that factor market intelligence
into the pricing process.
The delegation of underwriting authority to specific individuals,
both internally and externally, is subject to regular review.
All underwriting staff and binding agencies are set with strict
parameters in relation to the levels and types of business they
can underwrite, based on individual levels of experience and
competence. These parameters cover areas such as the
maximum sums insured per insurance contract, maximum
gross premiums written and maximum aggregated exposures
per geographical zone and risk class. Regular meetings are
held between underwriting, claims and actuarial teams in order
to monitor claims development patterns and discuss individual
underwriting issues as they arise. The Group compiles
estimates of losses arising from extreme loss events using
statistical models alongside input from its underwriters. These
require significant management judgement. The extreme loss
scenarios, shown on pages 45 to 46, represent hypothetical
major events occurring in areas with large insured values.
They also represent areas of potentially significant exposure for
Hiscox. In addition to understanding the loss Hiscox may suffer
from an event, it is important to ensure that the risk models
used are calibrated to the risks faced today. This includes
recognising and forecasting inflationary trends, updating trends
in claims payments, and capturing climate change-related
impacts. Hiscox has a climate risk framework, which is used
to assess where research resources should be focused,
and models updated, and as a result improves not only the
Group’s understanding of the potential impact of a changing
climate but also the Group’s ability to respond.
The selection of extreme loss scenario events is adjusted each
year and they are not therefore necessarily directly comparable
from one year to the next. The events are extreme and
unprecedented, and as such these estimates may prove
inadequate as a result of incorrect assumptions, model
deficiencies, or losses from unmodelled risks. This means that
should an extreme loss event actually occur, the Group’s final
ultimate losses could materially differ from those estimates
modelled by management. The Group’s insurance contracts
include provisions to contain losses, such as the ability to
impose deductibles and demand reinstatement premiums in
certain cases. In addition, in order to manage the Group’s
exposure to repeated catastrophic events (both man-made
and natural catastrophes), relevant policies frequently contain
payment limits to cap the maximum amount payable from
these insured events over the contract period. In the case
of climate-exposed risks specifically, the vast majority of
contracts written by the Group are annual in nature and
thus can be revised frequently. This flexibility is a key tool
for managing the multi-decade challenge of climate
risks holistically.
The Group also manages underwriting risk by purchasing
reinsurance. Reinsurance protection is purchased at an entity
level and is also considered at an overall Group level to mitigate
the effect of catastrophes and unexpected concentrations of
risk. However, the scope and type of reinsurance protection
purchased may change depending on the extent and
competitiveness of cover available in the market.
The estimated liquidity profile to settle the net claims liabilities
is given in note 3.3(e).
The specific insurance risks accepted by the Group fall
broadly into the following main categories: reinsurance
inwards, marine and major asset property, other property
risks, casualty professional indemnity and casualty other
insurance risks. These specific categories are defined for
risk review purposes only, as each contains risks specific to
the nature of the cover provided. They are not exclusively
aligned to any specific reportable segment in the Group’s
operational structure or to the primary internal reports
reviewed by the chief operating decision-maker. The Group
also considers climate change to be a cross-cutting risk
with potential to impact each existing risk type, rather than a
stand-alone risk. By design, the established and embedded
Group risk management framework provides a controlled
and consistent system for the identification, measurement,
mitigation, monitoring and reporting of risks (both current
and emerging) and so is structured in a way that allows us
to continually and consistently manage the various impacts
of climate risk on the risk profile. This is supported by equally
robust processes and policies that address climate-related
underwriting risks, such as the Group-wide ESG exclusions
policy which represents a commitment to reduce steadily,
and eliminate by 2030, both underwriting and investment
exposure to coal-fired power plants and coal mines; Arctic
energy exploration, beginning with the Arctic National
Wildlife Refuge; oil sands; and controversial weapons such
as landmines.
More information on the strategy and governance structures in
place to manage climate-related risks can be found on pages
74 to 88. The following describes the policies and procedures
used to identify and measure the risks associated with each
individual category of business.
Hiscox Ltd Report and Accounts 2024
191
3 Management of risk
3.2 Insurance risk
i) Underwriting risk (continued)
Estimated concentration of insurance risks measured in insurance revenue is as follows:
Estimated concentration of insurance
risk in 2024
Types of insurance risk in the Group
Reinsurance
inwards
Property – marine
and major assets
Property – other
assets
Casualty –
professional
indemnity
Casualty – other
risks
Other*
Total
$m
$m
$m
$m
$m
$m
$m
Total
1,034.6
386.5
938.4
1,091.4
811.8
409.8
4,672.5
Estimated concentration of insurance risk
in 2023
Types of insurance risk in the Group
Reinsurance
inwards
Property – marine
and major assets
Property – other
assets
Casualty –
professional
indemnity
Casualty – other
risks
Other*
Total
$m
$m
$m
$m
$m
$m
$m
Total
976.2
345.0
903.3
1,077.1
789.2
392.4
4,483.2
*Includes a diverse mix of certain specialty lines such as kidnap and ransom, terrorism and other risks which contain a mix of property and casualty exposures.
Reinsurance inwards
The Group’s reinsurance inwards acceptances are primarily
focused on large commercial property, homeowner and marine
and short-tail specialty exposures held by other insurance
companies predominantly in North America and other
developed economies. This business is characterised more by
large claims arising from individual events or catastrophes than
the high-frequency, low-severity attritional losses associated
with certain other business written by the Group. Multiple
insured losses can periodically arise out of a single natural or
man-made occurrence. The main circumstances that result in
claims against the reinsurance inwards book are conventional
catastrophes, such as earthquakes or storms, but also include
other events including fires, explosions and cyber events. The
occurrence and impact of these events are very difficult to
predict over the short term, which complicates attempts to
anticipate claims frequencies on an annual basis. In those
years where there is a low incidence of severe catastrophes,
claims frequencies on the reinsurance inwards book can be
relatively low.
A significant proportion of the reinsurance inwards business
provides cover on an excess of loss basis for individual events.
The Group agrees to reimburse the cedant once their losses
exceed a minimum level. Consequently, the frequency and
severity of reinsurance inwards claims are related not only to
the number of significant insured events that occur, but also to
their individual magnitude. If numerous catastrophes occurred
in any one year, but the cedant’s individual loss on each was
below the minimum stated, then the Group would have no
liability under such contracts. Maximum gross line sizes and
aggregate exposures are set for each type of programme.
The Group writes reinsurance risks for periods of mainly one
year so that contracts can be assessed for pricing and terms
and adjusted to reflect any changes in market conditions and
the evolving impact of climate change.
Property risks – marine and major assets
The Group directly underwrites a diverse range of property
risks. The risk profile of the property covered under marine
and major asset policies is different to that typically contained
in the other classes of property (such as private households
and contents insurance) covered by the Group.
Typical property covered by marine and other major property
contracts includes fixed and moveable assets such as ships
and other vessels, cargo in transit, energy platforms and
installations, pipelines, other subsea assets, satellites,
commercial buildings and industrial plants and machinery.
These assets are typically exposed to a blend of catastrophic
and other large loss events and attritional claims arising from
conventional hazards such as collision, flooding, fire and theft.
Climate change may give rise to more frequent and severe
extreme weather events (for example, windstorms and river
flooding) and it may be expected that their frequency will
increase over time. For this reason, the Group accepts major
property insurance risks for periods of mainly one year so that
each contract can be repriced on renewal to reflect the
continually evolving risk profile. The most significant risks
covered for periods exceeding one year are certain specialist
lines such as marine and offshore construction projects which
can typically have building and assembling periods of between
three and four years. These form a small proportion of the
Group’s overall portfolio.
Marine and major property contracts are normally underwritten
by reference to the commercial replacement value of the
property covered. The cost of repairing or rebuilding assets, of
replacement or indemnity for contents and time taken to restart
or resume operations to original levels for business interruption
losses are the key factors that influence the level of claims
under these policies. The Group’s exposure to commodity
price risk in relation to these types of insurance contracts is
very limited, given the controlled extent of business interruption
cover offered in the areas prone to losses of asset production.
Other property risks
The Group provides building and contents insurance, together
with cover for artwork, antiques, classic cars, jewellery,
collectables and other assets in relation to personal customers
and small business owners. The Group also extends cover to
reimburse certain policyholders when named insureds or
insured assets are seized for kidnap and a ransom demand is
subsequently met. Events which can generate claims on these
contracts include burglary, kidnap, seizure of assets, acts of
vandalism, fires, flooding and storm damage. Losses on most
classes can be predicted with a greater degree of certainty as
there is a rich history of actual loss experience data and the
locations of the assets covered, and the individual levels of
security taken by owners, are relatively static from one year
to the next.
The losses associated with these contracts tend to be of a
higher frequency and lower severity than the marine and other
192
Hiscox Ltd Report and Accounts 2024
3 Management of risk
3.2 Insurance risk
i) Underwriting risk (continued)
major property assets covered above. The Group’s building
and contents insurance contracts are exposed to weather and
climate-related risks such as floods and windstorms and their
consequences. As outlined earlier, the frequency and severity
of these losses do not lend themselves to accurate prediction
over the short term. Contract periods are therefore not
normally more than one year at a time to enable risks to
be regularly repriced.
Contracts are underwritten by reference to the commercial
replacement value of the properties and contents insured.
Claims payment limits are always included to cap the amount
payable on occurrence of the insured event.
Casualty insurance risks
The casualty underwriting strategy attempts to ensure that the
underwritten risks are well diversified in terms of type and
amount of potential hazard, industry and geography. However,
the Group’s exposure is more focused towards professional,
general, technological and marine liability risks. Claims typically
arise from incidents such as errors and omissions attributed to
the insured, professional negligence and general liability losses
which can be property damage or bodily injury in nature. The
provision of insurance to cover allegations made against
individuals acting in the course of fiduciary or managerial
responsibilities, including directors and officers’ insurance,
is one example of a casualty insurance risk.
The Group’s casualty insurance contracts mainly experience
low-severity attritional losses. By nature, some casualty losses
may take longer to settle than other categories of business.
In addition, there is increased potential for accumulation in
casualty risk due to the growing complexity of business,
technological advances, and greater interconnectivity and
interdependency across the world due to globalisation. The
Group’s pricing strategy for casualty insurance policies is
typically based on historical claim frequencies and average
claim severities, adjusted for inflation and extrapolated
forwards to incorporate projected changes in claims patterns.
In determining the price of each policy, an allowance is also
made for acquisition and administration expenses, reinsurance
costs, investment returns and the Group’s cost of capital.
The market for cyber insurance is still a relatively immature one,
complicated by the fast-moving nature of the threat, as the
world becomes even more connected. The risks associated
with cyber insurance are multiplying in both diversity and scale,
with associated financial and reputational consequences of
failing to prepare for them. The Group has focused its cyber
expertise on prevention, in addition to the more traditional
recovery product. Cyber products are sold through our
businesses in the UK, USA, Bermuda and Europe, and the
product is sold both direct to consumers and through a
more traditional broker channel.
ii) Reserving risk
The Group’s procedures for estimating the outstanding costs
of settling insured losses at the end of the reporting period,
including liability of incurred claims, are detailed in note 20.2.
The Group’s provision estimates are subject to rigorous review
by senior management from all areas of the business. The
managed Syndicates and US business receive a review of their
estimates from independent actuaries. The final provision is
approved by the relevant boards on the recommendation of
dedicated reserving committees. Similar to the underwriting
risk detailed above, the Group’s reserve risks are well
diversified. Short-tailed claims are normally notified and settled
within 12 to 24 months of the insured event occurring. Those
claims taking the longest time to develop and settle typically
relate to casualty risks, where legal complexities occasionally
develop regarding the insured’s alleged omissions or
negligence. The length of time required to obtain definitive legal
judgments and make eventual settlements exposes the Group
to a degree of reserving risk in an inflationary environment.
The final quantum for casualty claims may not be established
for many years after the event. A significant proportion of the
casualty insurance amounts reserved on the statement of
financial position may not be expected to settle within 24
months of the end of the reporting period. Consequently,
our approach is not to recognise favourable experience in
the early years of development in the reserving process
when setting the booked reserve.
Certain marine and property insurance contracts, such as
those relating to subsea and other energy assets and the
related business interruption risks, can also take longer than
normal to settle. This is because of the length of time required
for detailed subsea surveys to be carried out and damage
assessments agreed, together with difficulties in predicting
when the assets can be brought back into full production.
For the inwards reinsurance lines, there is often a time lag
between the establishment and re-estimate of case reserves
and reporting to the Group. The Group works closely with the
reinsured to ensure timely reporting and also centrally analyses
industry loss data to verify the reported reserves.
The Group maintains explicit reserve uplifts to allow for the
impact of high inflation in recent years. Loss ratios are also
closely monitored to ensure they include an appropriate
allowance for future inflation.
Losses from Covid-19 continue to settle well within
expectations. As time passes and legal cases are gradually
settled, the outcome becomes more certain and so the level
of risk adjustment above the best estimate can be reduced.
3.3 Financial risk
Overview
The Group is exposed to financial risk through its ownership of
financial instruments including financial liabilities. These items
collectively represent a significant element of the Group’s net
shareholder funds. The Group invests in financial assets in
order to fund obligations arising from its insurance contracts
and financial liabilities.
The key financial risk for the Group is that the proceeds from
its financial assets and investment result generated thereon
are not sufficient to fund the Group’s obligations. The most
important elements and economic variables that could result in
such an outcome relate to the reliability of fair value measures,
equity price risk, interest rate risk, credit risk, liquidity risk and
currency risk. The Group’s policies and procedures for
managing exposure to these specific categories of risk
are detailed below.
Hiscox Ltd Report and Accounts 2024
193
3 Management of risk
3.2 Insurance risk
i) Underwriting risk (continued)
(a) Reliability of fair values
The Group has elected to carry trade and other receivables
at amortised cost and all financial investments at fair
value through profit or loss as they are managed and
evaluated on a fair value basis in accordance with a
documented strategy.
With the exception of any unquoted investments shown in
note 17, all of the financial investments held by the Group
are available to trade in markets and the Group therefore
seeks to determine fair value by reference to published
prices or as derived by pricing vendors using observable
quotations in the most active financial markets in which
the assets trade.
The fair value of financial assets is measured primarily with
reference to their closing market prices at the end of the
reporting period. The ability to obtain quoted market prices
may be reduced in periods of diminished liquidity. In addition,
those quoted prices that may be available may represent an
unrealistic proportion of market holdings or individual trade
sizes that could not be readily available to the Group. In
such instances, fair values may be determined or partially
supplemented using other observable market inputs such
as prices provided by market makers such as dealers and
brokers, and prices achieved in the most recent regular
transaction of identical or closely-related instruments
occurring before the end of the reporting period, but
updated for relevant perceived changes in market conditions.
Valuation of securities will continue to be impacted by
external market factors including interest rates, default rates,
rating agency actions and liquidity. The Group will make
adjustments to the investment portfolio as appropriate as
part of its overall portfolio strategy, but its ability to mitigate
its risk by selling or hedging its exposures may be limited
by the market environment.
The Group’s future results may be impacted, both
positively and negatively, by the valuation adjustments
applied to securities.
Note 17 provides an analysis of the measurement attributes
of the Group’s financial instruments.
(b) Price risk
The Group is exposed to price risk through its holdings of
equities and investment funds. This is limited to a relatively
small and controlled proportion of the overall investment
portfolio and the equities and investment funds involved
are diversified over a number of companies and industries.
The fair value of equities and investment fund assets in the
consolidated statement of financial position at 31 December
2024 was $210.2 million (2023: $205.4 million). A 10%
downward correction in equities and investment fund prices
at 31 December 2024 would have been expected to reduce
Group equity and profit after tax by approximately $18 million
(2023: $18 million). These may be analysed as follows:
Nature of equity and investment
fund holdings
2024
2023
% weighting
% weighting
Directly held equity securities
15
15
Equity funds
34
32
Hedge funds
51
53
Geographic focus
Specific UK mandates
36
39
Global mandates
64
61
The allocation of price risk is not heavily confined to any one
market index so as to reduce the Group’s exposure to
individual sensitivities. We make allocations to diversifying and
less volatile strategies, such as absolute return strategies, so
as to balance our desire to maximise returns with the need
to ensure capital is available to support our underwriting
throughout any downturn in financial markets.
(c) Interest rate risk
Debt and fixed income investments represent a significant
proportion of the Group’s assets and the Board continually
monitors investment strategy to minimise the risk of a fall in the
portfolio’s market value which could affect the amount of
business that the Group is able to underwrite or its ability to
settle claims as they fall due. The fair value of the Group’s
investment portfolio of debt and fixed income holdings and
some private credit funds is normally inversely correlated to
movements in market interest rates. If market interest rates
rise, the fair value of the Group’s debt and fixed income
investments and private credit funds with underlying fixed-rate
debt would tend to fall and vice versa if credit spreads
remained constant. Debt and fixed income assets are
predominantly invested in high-quality corporate, government
and asset-backed bonds. The investments typically have
relatively short durations and terms to maturity. The portfolio
is managed to minimise the impact of interest rate risk on
anticipated Group cash flows. The Group may also, from time
to time, enter into interest rate future contracts in order to
reduce interest rate risk on specific portfolios. The fair value of
debt and fixed income assets in the consolidated statement of
financial position at 31 December 2024 was $6,660.9 million
(2023: $6,278.9 million). These may be analysed below
as follows:
Nature of debt and fixed income
holdings
2024
2023
% weighting
% weighting
Government issued
18
20
Agency and government supported
3
4
Corporate bonds
63
60
Asset-backed securities
7
8
Mortgage-backed instruments
7
6
Lloyd’s deposits and bond funds*
2
2
*Lloyd's deposits and bond funds include $28.3 million exchange-traded funds
which were previously classified as credit funds (2023: $26.5 million).
The fair value of private credit funds with exposures to
interest rate risk at 31 December 2024 was $148.2 million
(2023: $54.7 million) of which more than 99% are floating rate.
194
Hiscox Ltd Report and Accounts 2024
3 Management of risk
3.3 Financial risk (continued)
One method of assessing interest rate sensitivity is through
the examination of duration-convexity factors in the
underlying portfolio. Duration is the weighted average
length of time required for an instrument’s cash flow stream
to be recovered, where the weightings involved are based
on the discounted present values of each cash flow. A
closely related concept, modified duration, measures the
sensitivity of the instrument’s price to a change in its yield
to maturity. Convexity measures the sensitivity of modified
duration to changes in the yield to maturity. Using these
three concepts, scenario modelling derives the below
estimated impact on instruments’ fair values for a 100
basis point change in the term structure of market
interest rates.
The Group has used a duration-convexity-based sensitivity
analysis for the debt and fixed income holdings and private
credit funds, and recalculated the discounting impact for
the reinsurance contract assets and insurance contract
liabilities. If market interest rates had increased or
decreased by 100 basis points at the end of the reporting
period, the Group equity and profit after tax for the year
might have been expected to decrease or increase by the
following amounts:
1% increase/decrease in interest rates
31 December 2024
Equity/profit after tax
$m
Reinsurance contract assets
(32)/32
Insurance contract liabilities
91/(91)
Debt and fixed income holdings
(113)/113
Private credit funds
0/0
1% increase/decrease in interest rates
31 December 2023
Equity/profit after tax
$m
Reinsurance contract assets
(34)/34
Insurance contract liabilities
87/(87)
Debt and fixed income holdings
(90)/90
Private credit funds
0/0
The liability for incurred claims, reinsurance assets for
incurred claims and certain reinsurance assets for
remaining coverage are subject to discounting. Please
refer to note 2.19(a) for further details regarding the
discount rate used.
At 31 December 2024, the Group had borrowings at
nominal value of £525 million (2023: £525 million). The
borrowings comprised £525 million (2023: £525 million)
of long-term debt, which includes two listed instruments of
£275 million and £250 million, as explained in note 14: the first
being fixed-to-floating rate callable subordinated notes where
the floating rate becomes effective from November 2025; the
second being fixed rate notes maturing in September 2027.
The Group also has a revolving credit facility of $650 million
(2023: $600 million), which is $nil drawn (2023: $nil) and,
therefore, is not presenting interest rate risk. The Group has
no other significant borrowings or other assets or liabilities
carrying interest rate risk, other than the facilities and Letters
of Credit (LOCs) outlined in note 27.
(d) Credit risk
The Group has exposure to credit risk, which is the risk that a
counterparty will suffer a deterioration in actual or perceived
financial strength and be unable to pay amounts in full when
due, or that for any other reason they renege on a contract or
alter the terms of an agreement. The concentrations of credit
risk exposures held by insurers may be expected to be greater
than those associated with other industries, due to the specific
nature of reinsurance markets and the extent of investments
held in financial markets. In both markets, the Group interacts
with a number of counterparties who are engaged in similar
activities with similar customer profiles, and often in the same
geographical areas and industry sectors. Consequently, as
many of these counterparties are themselves exposed to
similar economic characteristics, one single localised or
macroeconomic change could severely disrupt the ability of
a significant number of counterparties to meet the Group’s
agreed contractual terms and obligations.
Key areas of exposure to credit risk include:
• reinsurance asset for incurred claims including amounts
due from reinsurers in respect of claims already paid;
• amounts due from insurance contract holders; and
• counterparty risk with respect to investments, derivative
transactions and catastrophe bonds.
The Group’s maximum exposure to credit risk is represented
by the carrying values of financial assets and reinsurance
assets included in the consolidated statement of financial
position at any given point in time. The Group does not use
credit derivatives or other products to mitigate maximum credit
risk exposures on reinsurance assets, but collateral may be
requested to be held against these assets. The Group
structures the levels of credit risk accepted by placing limits
on its exposure to a single counterparty, or groups of
counterparties, and having regard to geographical locations.
Such risks are subject to an annual or more frequent review.
There is no significant concentration of credit risk with respect
to trade and other receivables, as the Group has a large
number of internationally dispersed debtors with unrelated
operations. Reinsurance is used to contain insurance risk. This
does not, however, discharge the Group’s liability as primary
insurer. If a reinsurer fails to pay a claim for any reason, the
Group remains liable for the payment to the policyholder. The
creditworthiness of reinsurers is therefore continually reviewed
throughout the year.
The Group Reinsurance Credit Committee (RCC) assesses
the creditworthiness of all reinsurers by reviewing credit
grades provided by rating agencies and other publicly
available financial information detailing their financial strength
and performance, as well as detailed analysis from the Group’s
analysis team. The financial analysis of reinsurers produces an
assessment categorised by factors including their S&P rating
(or equivalent when not available from S&P).
Despite the rigorous nature of this assessment exercise, and
the resultant restricted range of reinsurance counterparties
with acceptable strength and credit credentials that emerges
therefrom, some degree of credit risk concentration
remains inevitable.
Hiscox Ltd Report and Accounts 2024
195
3 Management of risk
3.3 Financial risk
(c) Interest rate risk (continued)
While the rating agencies provide strong analysis on the financials and governance of a reinsurance security, the RCC also takes
account of qualitative factors. The RCC considers the reputation of its reinsurance partners and also receives details of recent
payment history and the status of any ongoing negotiations between Group companies and these third parties. The final score
that a security receives will determine how much reinsurance credit risk Hiscox is willing to have with that security based on the
exposure guidelines.
This information is used to update the reinsurance purchasing strategy.
Individual operating units maintain records of the payment history for significant brokers and contract holders with whom they
conduct regular business. The exposure to individual counterparties is also managed by other mechanisms, such as the right of
offset, where counterparties are both debtors and creditors of the Group, and obtaining collateral from unrated counterparties.
Management information reports detailed provisions for impairment on trade and other receivables and subsequent write-off.
Exposures to individual intermediaries and groups of intermediaries are collected within the ongoing monitoring of the controls
associated with regulatory solvency.
The Group also mitigates counterparty credit risk by focusing debt and fixed income investments in a portfolio of typically
high-quality corporate and government bonds.
Derivative contracts may be traded on an exchange or over the counter. Many over-the-counter transactions are contracted and
documented under International Swaps and Derivatives Association Master Agreements or their equivalent, which are designed
to provide legally enforceable set-off in the event of default, reducing the Group's exposure to credit risk.
An analysis of the Group’s major exposures to counterparty credit risk, excluding derivative assets, trade and other receivables,
and equities and units in unit trusts, based on S&P or equivalent rating, is presented below:
As at 31 December 2024
AAA
AA
A
BBB
Other/non-rated
Total
Note
$m
$m
$m
$m
$m
$m
Debt and fixed income holdings
14
885.9
1,775.8
1,969.2
1,689.9
340.1
6,660.9
Private credit funds
14
–
–
–
–
148.2
148.2
Reinsurance contract assets
20
370.0
1,118.6
480.7
–
7.5
1,976.8
Total
1,255.9
2,894.4
2,449.9
1,689.9
495.8
8,785.9
As at 31 December 2023
AAA
AA
A
BBB
Other/non-rated
Total
Note
$m
$m
$m
$m
$m
$m
Debt and fixed income holdings
14
847.1
1,751.1
1,721.8
1,608.9
350.0
6,278.9
Private credit funds
14
–
–
–
–
54.7
54.7
Reinsurance contract assets
20
524.9
1,039.4
525.0
–
9.0
2,098.3
Total
1,372.0
2,790.5
2,246.8
1,608.9
413.7
8,431.9
Within the debt and fixed income holdings, which include debt securities, deposits with credit institutions and cash equivalent
assets, there are exposures to a range of government borrowers, on either a direct or guaranteed basis, and banking institutions.
The Group, together with its investment managers, closely manages its geographical exposures across government issued and
supported debt.
The largest aggregated counterparty exposure related to debt and fixed income holdings at 31 December 2024 of $776 million
is to the US Treasury (2023: $994 million).
Within private credit fund holdings, which include commingled vehicles which hold mainly loans, there are exposures to a range
of corporate borrowers. The Group manages its exposure to individual funds and, together with the investment managers of the
funds, closely manages the sector and geographical exposures within the funds.
The Group is exposed to concentrations of risk with individual reinsurers due to the nature of the reinsurance market and the
restricted range of reinsurers that have acceptable credit ratings. The largest counterparty exposure included in reinsurance
assets at 31 December 2024 is to Munich Reinsurance Company (2023: Munich Reinsurance Company). The recoverable
amount from Munich Reinsurance Company represents 23% (2023: Munich Reinsurance Company 17%) of this category
of assets.
For the current period and prior period, the Group did not experience any material defaults on debt securities. The Group’s
AAA rated reinsurance contract assets include fully collateralised positions at 31 December 2024 and 2023.
196
Hiscox Ltd Report and Accounts 2024
3 Management of risk
3.3 Financial risk
(d) Credit risk (continued)
(e) Liquidity risk
The Group is exposed to daily calls on its available cash resources, mainly from claims arising from insurance and reinsurance
contracts. Liquidity risk is the risk that cash may not be available to pay obligations when due at a reasonable cost. The Board
sets limits on the minimum level of cash and maturing funds available to meet such calls and on the minimum level of borrowing
facilities that should be in place to cover unexpected levels of claims and other cash demands.
A significant proportion of the Group’s investments is in highly liquid assets which could be converted to cash in a prompt fashion
and at minimal expense. The Group’s exposure to equities is concentrated on shares and funds that are traded on internationally
recognised stock exchanges.
The main focus of the investment portfolio is on high-quality, short-duration debt and fixed income securities and cash. There are
no significant holdings of investments with specific repricing dates. Notwithstanding the regular interest receipts and also the
Group’s ability to liquidate these securities and the majority of its other financial instrument assets for cash in a prompt and
reasonable manner, the contractual maturity profile of the fair value of these securities at 31 December is as follows.
As at 31 December 2024
Within
one year
Between one
and two years
Between two
and three years
Between three
and four years
Between four
and five years
Over
five years
Total
Note
$m
$m
$m
$m
$m
$m
$m
Debt and fixed
income holdings
14
1,392.3
1,336.0
1,185.7
926.5
836.9
983.5
6,660.9
Cash and cash equivalents
18
1,227.0
–
–
–
–
–
1,227.0
Total
2,619.3
1,336.0
1,185.7
926.5
836.9
983.5
7,887.9
As at 31 December 2023
Within
one year
Between one
and two years
Between two
and three years
Between three
and four years
Between four
and five years
Over
five years
Total
Note
$m
$m
$m
$m
$m
$m
$m
Debt and fixed
income holdings
14
1,541.0
1,587.7
1,489.3
659.9
366.6
634.4
6,278.9
Cash and cash equivalents
18
1,437.0
–
–
–
–
–
1,437.0
Total
2,978.0
1,587.7
1,489.3
659.9
366.6
634.4
7,715.9
The Group’s equities, equity funds, hedge funds and other non-dated instruments have no contractual maturity terms but
predominantly could be liquidated in an orderly manner for cash in a prompt and reasonable time frame within one year of the
end of the reporting period. The Group's private credit funds are not readily realisable and the principal will be returned over the
life of the underlying assets which have a typical contractual maturity of five to seven years.
The available headroom of working capital is monitored through the use of a detailed Group cash flow forecast which is reviewed
by management monthly, or more frequently as required.
Average contractual maturity analysed by denominational currency of investments as at 31 December
2024
2023
In years
In years
US Dollar
5.58
4.03
Sterling
2.48
2.18
Euro
2.92
2.55
Canadian Dollar
2.65
2.59
The following is an analysis by liability type of the estimated timing of net cash flows based on the liability for incurred claims.
The estimated phasing of settlement is based on current estimates and historical trends and the actual timing of future
settlement cash flows may differ materially from the disclosure below.
Hiscox Ltd Report and Accounts 2024
197
3 Management of risk
3.3 Financial risk (continued)
Liquidity requirements to settle estimated profile of net undiscounted liability for incurred claims on statement of financial position:
As at 31 December 2024
Within
one year
Between one
and two years
Between two
and three years
Between three
and four years
Between four
and five years
Over
five years
Total
Note
$m
$m
$m
$m
$m
$m
$m
Total
20
1,813.4
1,043.2
586.5
322.4
197.0
344.8
4,307.3
As at 31 December 2023
Within
one year
Between one
and two years
Between two
and three years
Between three
and four years
Between four
and five years
Over
five years
Total
Note
$m
$m
$m
$m
$m
$m
$m
Total
20
1,821.6
1,042.6
557.3
359.5
202.2
368.5
4,351.7
Details of the payment profile of the Group’s borrowings, derivative instruments and other liabilities are given in notes 14,
16 and 21.
(f) Currency risk
Currency risk is the risk of loss resulting from fluctuations in exchange rates. The Group operates internationally and therefore
is exposed to the financial impact of fluctuations in the exchange rates of various currencies.
The Group’s exposures to foreign exchange risk arise mainly with respect to the US Dollar, Sterling and the Euro. These
exposures may be classified in two main categories:
• operational foreign exchange exposure arises from the conversion of foreign currency transactions resulting from the
activities of entering into insurance, investment, financing and operational contracts in a currency that is different to each
respective entity’s functional currency; and
• structural foreign exchange exposure arises from the translation of the Group’s net investment in foreign operations to the
US Dollar, the Group’s presentation currency.
Operational currency risk
Operational foreign exchange risk is principally managed within the Group’s individual insurance carriers by broadly matching
assets and liabilities by currency and liquidity. Due attention is paid to local regulatory solvency and risk-based capital
requirements. All foreign currency derivative transactions with external parties are managed centrally. The Group also
manages some exchange risk centrally through matching intragroup loans and balances.
Structural currency risk
The Group’s exposure to structural currency risks mainly relates to Sterling and the Euro net investments in businesses operating
in the UK and Europe. The Group does not ordinarily seek to use derivatives to mitigate the structural risk because:
• the currency translation gains and losses are accounted for in the currency translation reserve (a component of equity)
and do not affect the income statement unless the related foreign operation is disposed of;
• the currency translation gains and losses have no cash flow.
In periods of significant volatility that are expected to persist for an extended period of time, the Group may elect to utilise
derivatives to mitigate or reduce the risk in order to preserve capital.
The currency profile of the Group’s assets and liabilities is as follows:
Year ended 31 December 2024
US Dollar
Sterling
Euro
Other
2024
$m
$m
$m
$m
$m
Goodwill and intangible assets
115.3
112.1
81.4
0.0
308.8
Financial assets carried at fair value
5,269.7
932.9
710.0
165.0
7,077.6
Cash and cash equivalents
747.3
316.1
120.8
42.8
1,227.0
Reinsurance contract assets
1,668.6
158.4
139.3
10.5
1,976.8
Other assets
381.4
170.0
50.8
48.4
650.6
Total assets
8,182.3
1,689.5
1,102.3
266.7
11,240.8
Insurance contract liabilities
4,679.5
762.7
865.7
88.4
6,396.3
Other liabilities
101.6
940.0
60.7
52.3
1,154.6
Total liabilities
4,781.1
1,702.7
926.4
140.7
7,550.9
Total equity
3,401.2
(13.2)
175.9
126.0
3,689.9
198
Hiscox Ltd Report and Accounts 2024
3 Management of risk
3.3 Financial risk
(e) Liquidity risk (continued)
Year ended 31 December 2023
US Dollar
Sterling
Euro
Other
2023
$m
$m
$m
$m
$m
Goodwill and intangible assets
126.8
125.8
65.3
6.0
323.9
Financial assets carried at fair value
4,691.8
1,045.2
635.7
201.7
6,574.4
Cash and cash equivalents
819.7
321.2
219.1
77.0
1,437.0
Reinsurance contract assets
1,710.7
203.5
157.9
26.2
2,098.3
Other assets
385.2
146.7
39.6
55.4
626.9
Total assets
7,734.2
1,842.4
1,117.6
366.3
11,060.5
Insurance contract liabilities
4,893.2
764.7
845.4
100.7
6,604.0
Other liabilities
92.4
939.6
96.8
31.0
1,159.8
Total liabilities
4,985.6
1,704.3
942.2
131.7
7,763.8
Total equity
2,748.6
138.1
175.4
234.6
3,296.7
Sensitivity analysis
As at 31 December 2024, the Group used closing rates of exchange of $1: £0.80 and $1: €0.97 (2023: of $1: £0.78 and
$1: €0.91). The Group performs sensitivity analysis based on a 10% strengthening or weakening of the US Dollar against Sterling.
This analysis assumes that all other variables, in particular interest rates, remain constant and that the underlying valuation of
assets and liabilities in their base currency is unchanged. The estimated sensitivities below take account of the retranslation
movements of foreign currency monetary assets and liabilities in Group entities, and for the effect on equity the impact on the
retranslation of entities with non-US Dollar functional currencies. The methodology includes inter-company balances that are
eliminated on consolidation, but still expose the Group to foreign currency risk.
During the year, the Group transacted in a number of over-the-counter forward currency derivative contracts.The contracts
remaining at 31 December 2024 increased the sensitivity of equity after tax and reduced the sensitivity of profit after tax; these
contracts were settled in January 2025. In 2023, the impact of such contracts on the sensitivity analysis was negligible.
As at 31 December
December 2024
effect on equity
after tax
December 2024
effect on profit
after tax
December 2023
effect on equity
after tax
December 2023
effect on profit
after tax
$m
$m
$m
$m
Strengthening of Sterling
48.6
1.5
77.4
13.6
Weakening of Sterling
(51.4)
(4.3)
(77.4)
(13.6)
(g) Limitations of sensitivity analysis
The sensitivity information given in notes 3.3 (a) to (f) demonstrates the estimated impact of a change in a major input
assumption, while other assumptions remain unchanged. In reality, there are normally significant levels of correlation between
the assumptions and other factors. It should also be noted that these sensitivities are non-linear, and larger or smaller impacts
should not be interpolated or extrapolated from these results. The same limitations exist in respect to the retirement benefit
scheme sensitivities presented in note 24 to these financial statements. Furthermore, estimates of sensitivity may become less
reliable in unusual market conditions, such as instances when risk-free interest rates fall towards zero.
The sensitivity analysis does not take into consideration that the Group’s assets and liabilities are actively managed. Additionally,
the financial position of the Group may vary at the time that any actual market movement occurs. For example, the Group’s
financial risk management strategy aims to manage the exposure to market fluctuations. As investment markets move past
various trigger levels, management actions could include selling investments, changing the investment portfolio allocation and
taking other protective action.
3.4 Capital risk management
The Group’s primary objectives when managing its capital position are:
• to safeguard its ability to continue as a going concern, so that it can continue to provide long-term growth and progressive
dividend returns for shareholders;
• to provide an adequate return to the Group’s shareholders by pricing its insurance products and services commensurately
with the level of risk;
• to maintain an efficient cost of capital;
• to comply with all regulatory requirements by an appropriate margin;
• to maintain financial strength ratings of A in each of its insurance entities; and
• to settle policyholders’ claims as they arise.
Hiscox Ltd Report and Accounts 2024
199
3 Management of risk
3.3 Financial risk
(f) Currency risk (continued)
The Group sets the amount of capital required in its funding structure in proportion to risk. The Group then manages the capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying
assets. In order to obtain or maintain an optimal capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares, assume debt, or sell assets to reduce debt.
The Group measures its capital requirements against its available capital. Available capital is defined by the Group as the total
of net tangible asset value and subordinated debt.
The subordinated debt issued by the Group is hybrid in nature, which means it counts towards regulatory and rating agency
capital requirements.
At 31 December 2024, the available capital was $3,725.6 million (2023: $3,323.4 million), comprising net tangible asset value
of $3,381.1 million (2023: $2,972.8 million) and subordinated debt of $344.5 million (2023: $350.6 million).
The Board ensures that the use and allocation of capital are given a primary focus in all significant operational actions. With that
in mind, the Group has developed and embedded capital modelling tools within its business. These join together short-term and
long-term business plans and link divisional aspirations with the Group’s overall strategy.
The model provides the basis of the allocation of capital to different business lines, as well as the regulatory and rating agency
capital processes.
Gearing
The Group currently utilises gearing as an additional source of funds to maximise the opportunities from strong markets and to
reduce the risk profile of the business in weaker markets, particularly with respect to the more volatile business. The Group’s
gearing is obtained from a number of sources, including:
• Letter of Credit (LOC) and revolving credit facility – the Group’s main facility may be drawn in cash up to $650 million
(2023: $600 million) under a revolving credit facility and utilised as LOC up to $266 million (2023: $266 million). The facility
was renewed during 2024, enabling the Group to utilise the LOC as Funds at Lloyd’s to support underwriting on the 2024,
2025 and 2026 years of account. The revolving credit facility is available until the end of 2026. As at 31 December 2024,
$266 million was utilised by way of LOC to support the Funds at Lloyd’s requirement and the revolving credit facility was
undrawn (2023: $266 million and the revolving credit facility was undrawn);
• in 2020, the Group sourced an additional $65 million of funding in the form of a Funds at Lloyd’s facility. Under this facility
assets are pledged with the Corporation of Lloyd’s on the Group’s behalf, providing regulatory Tier 1 capital. As at
31 December 2024 and 2023 the facility was fully drawn;
• £275 million of fixed-to-floating rate subordinated notes that are classified as Tier 2 debt. This was raised in November 2015
and matures in 2045. The debt is rated BBB- by S&P and Fitch;
• £250 million of fixed rate senior notes raised in September 2022 and maturing in September 2027. The debt is rated BBB+
by S&P and Fitch;
• external Names – 27.4% of Syndicate 33’s capacity is capitalised by third parties, who also pay a profit share of
approximately 20%;
• Syndicate 6104 at Lloyd’s – with a capacity of £78.5 million for the 2025 year of account (2024 year of account:
£56.4 million – in 2023, this was £57.0 million). This Syndicate is wholly backed by external members and takes pure year
of account quota share of Syndicate 33’s applicable excess of loss property catastrophe reinsurance, marine, terrorism and
cyber accounts;
• gearing quota shares – historically the Group has used reinsurance capital to fund its capital requirement for short-term
expansions in the volume of business underwritten by the Syndicate and Hiscox Insurance Company (Bermuda)
Limited; and
• qualifying quota shares and legacy portfolio transactions – these are reinsurance arrangements that allow the Group to
increase the amount of premium it writes.
The Group’s LOC and revolving credit facility and Funds at Lloyd's facility include financial covenants that are standard in such
arrangements, including certain metrics relating to the Group's financial position. These are monitored on a regular basis, at least
quarterly, but more frequently where necessary.
200
Hiscox Ltd Report and Accounts 2024
3 Management of risk
3.4 Capital risk management (continued)
Financial strength
The financial strength ratings of the Group’s significant insurance company subsidiaries are outlined below:
A.M. Best
Fitch
S&P
Hiscox Insurance Company Limited
A (Excellent)
A+
A (Strong)
Hiscox Insurance Company (Bermuda) Limited
A (Excellent)
A+
A (Strong)
Hiscox Insurance Company (Guernsey) Limited
A (Excellent)
A+
–
Hiscox Insurance Company Inc.
A (Excellent)
–
–
Hiscox Société Anonyme
–
–
A (Strong)
Syndicate 33 has an A.M. Best rating of A (Excellent). It also benefits from Lloyd’s own ratings of A+ (Superior) from A.M. Best,
AA- (Very Strong) from S&P, AA- (Very Strong) from Fitch and AA- (Very Strong) from Kroll Bond Rating Agency.
Capital performance
The Group’s main capital performance measure is the achieved return on equity (ROE). This marker aligns the aspirations of
employees and shareholders. As variable remuneration relates directly to ROE and it is used as a key performance indicator
within the business planning process, this concept is embedded in the workings and culture of the Group. The Group seeks to
maintain its cost of capital levels and its debt to overall equity ratios in line with others in the non-life insurance industry.
Capital modelling and regulation
The capital requirements of an insurance group are determined by its exposure to risk and the solvency criteria established by
management and statutory regulations.
The Group’s capital requirements are managed both centrally and at a regulated entity level. The assessed capital requirement
for the business placed through Hiscox Insurance Company Limited, Hiscox Insurance Company (Bermuda) Limited, Hiscox
Insurance Company (Guernsey) Limited, Hiscox Insurance Company Inc., Hiscox Société Anonyme and Direct Asia Insurance
(Singapore) Pte Limited is driven by the level of resources necessary to maintain regulatory requirements.
The Group’s regulatory capital is supervised by the Bermuda Monetary Authority (BMA). The Group had sufficient capital at all
times throughout the year to meet the BMA’s requirements. Hiscox Insurance Company Limited and Hiscox Société Anonyme
use the standard formula to calculate their regulatory capital requirements under the Solvency UK regime and Solvency II regime
respectively. Their risk profiles are sufficiently well represented by the standard formula not to warrant going through the internal
model approval process. Hiscox’s Lloyd’s operations use the internal model that has been built to meet the requirements of the
Solvency UK regime. The model is concentrated specifically on the particular product lines, market conditions and risk appetite
of each risk carrier.
For Syndicate 33 and Syndicate 3624, internal model results are uplifted by Lloyd’s to the level of capital required to support its
ratings. Capital models are used more widely across the Group to monitor exposure to key risk types, inform decision-making
and measure ROE across different segments of the business.
The Group is required to publish a financial condition report, as part of its regulatory filing with the BMA. This is a public
document and sets out the financial performance and solvency position of the Group in accordance with the economic balance
sheet return filed with the BMA. It is intended to provide the public with certain information to be able to make informed
assessments about the Group. In the Group’s other geographical territories, including the USA and Asia, its subsidiaries
underwriting insurance business are required to operate within broadly similar risk-based externally imposed capital requirements
when accepting business.
During the year the Group was in compliance with capital requirements imposed by regulators in each jurisdiction where the
Group operates.
Hiscox Ltd Report and Accounts 2024
201
3 Management of risk
3.4 Capital risk management (continued)
3.5 Tax risk
The Group is subject to income taxes levied by the various jurisdictions in which the Group operates, and the division of taxing
rights between these jurisdictions results in the Group tax expense and effective rate of income tax disclosed in these financial
statements. Due to the Group’s operating model, there is an unquantifiable risk that this division of taxing rights could be altered
materially, either by a change to the tax residence, or permanent establishment profile, of Hiscox Ltd or its principal subsidiaries;
or due to the repricing or recharacterisation for tax purposes of transactions between members of the Group, under local transfer
pricing or related tax legislation. The Group seeks to manage this risk by:
• maintaining appropriate internal policies and controls over its operations worldwide;
• monitoring compliance with these policies on an ongoing basis;
• adhering to internationally recognised best practice in determining the appropriate division of profits between
taxing jurisdictions;
• taking additional advice and obtaining legal opinions from local third-party professionals with the necessary experience
in the particular area.
The Group seeks to maintain an open dialogue with the relevant tax authorities and to resolve any issues arising promptly.
Various jurisdictions in which the Group operates have now enacted legislation implementing the principles of the OECD ‘Pillar
Two’ tax rules, intended to apply a global minimum tax to the profits of multinational enterprises such as Hiscox with effect from
1 January 2024. The impact of these legislative changes on the Group is discussed in note 23. Pillar Two legislation represents a
departure from existing corporate income tax principles, introducing new concepts and design features to the corporate income
tax landscape. The model rules issued by the OECD in December 2021 have been designed and implemented at speed, and
continue to be subject to changes and updates through guidance. On 15 January 2025, the OECD issued new guidance on
the treatment of deferred tax assets for the purposes of calculating Pillar Two tax, which, if enacted into local legislation, is
likely to result in additional Pillar Two tax payable over the eight years, from 2027, of up to 80% of the value of the $154.6 million
Bermuda deferred tax asset recognised on the statement of financial position at 31 December 2024. In this context, there is a
risk that the new legislation could prove to have further unintended and/or unforeseen consequences for the Group, which could
also have an impact on the Group’s income tax payable in future periods. The Group relies on expert advice from third-party
professionals, as well as open dialogue with implementing tax authorities, to manage this risk.
In alignment with the adoption of Pillar Two legislation by other jurisdictions, in December 2023 Bermuda enacted a corporate
income tax which will apply to the Group’s Bermudian resident entities with effect from 1 January 2025 at a rate of 15%. It is
anticipated that the introduction of this tax will increase the income tax payable and therefore the effective tax rate to which the
Group is exposed with effect from 1 January 2025.
The Group recognises uncertain tax provisions where there is uncertainty that a tax treatment will be accepted under local law,
including matters which are under discussion with the tax authorities. Based on facts and circumstances at the end of the
reporting period, the range of the total exposure is estimated between $19 million and $43 million. The estimate is subject to
review on an ongoing basis and is susceptible to the progress of the settlement discussions with the tax authorities. Matters
under discussion which could affect the estimate include the Hiscox Group’s policy on the allocation of expenses between
companies within the Group, the allocation of income and expenses between branches of the same company, and the period
subject to re-assessment.
202
Hiscox Ltd Report and Accounts 2024
3 Management of risk (continued)
4 Operating segments
The Group’s operating segment reporting follows the organisational structure and management’s internal reporting systems,
which form the basis for assessing the financial reporting performance of, and allocation of resources to, each business segment.
The Group’s four primary business segments are identified as follows:
• Hiscox Retail brings together the results of the Group’s retail business divisions in the UK, Europe, USA and Asia. Hiscox
UK and Hiscox Europe underwrite personal and commercial lines of business through Hiscox Insurance Company Limited,
Syndicate 3624 and Hiscox Société Anonyme, together with the fine art and non-US household insurance business written
through Syndicate 33. Hiscox USA comprises commercial, property and specialty business written by Hiscox Insurance
Company Inc., Syndicate 33 and Syndicate 3624;
• Hiscox London Market comprises the internationally traded insurance business written by the Group’s London-based
underwriters via Syndicate 33, including lines in property, marine and energy, casualty and other specialty insurance lines;
• Hiscox Re & ILS is the reinsurance division of The Hiscox Group, combining the underwriting platforms in Bermuda and
London. The segment comprises the performance of Hiscox Insurance Company (Bermuda) Limited, excluding the
internal quota share arrangements, with the reinsurance contracts written by Syndicate 33. The segment also includes
the performance and fee income from the Insurance Linked Securities (ILS) funds, along with the gains and losses made
as a result of the Group’s investment in the funds;
• Corporate Centre comprises finance costs and administrative costs associated with Group management activities and
intragroup borrowings, as well as all foreign exchange gains and losses.
All amounts reported on the following pages represent transactions with external parties only. In the normal course of trade,
the Group’s entities enter into various reinsurance arrangements with one another. The related results of these transactions
are eliminated on consolidation and are not included within the results of the segments. This is consistent with the information
used by the chief operating decision-maker when evaluating the results of the Group. Performance is measured based on each
reportable segment’s profit or loss before tax and combined ratio.
Hiscox Ltd Report and Accounts 2024
203
(a) Profit before tax by segment
Year ended 31 December 2024
Hiscox
Retail
Hiscox
London
Market
Hiscox
Re & ILS
Corporate
Centre
Total
$m
$m
$m
$m
$m
Insurance revenue
2,442.9
1,201.4
1,028.2
–
4,672.5
Insurance service expenses
(2,081.7)
(1,004.2)
(245.1)
–
(3,331.0)
Incurred claims and changes to liabilities for incurred claims
(960.6)
(619.5)
(37.8)
–
(1,617.9)
Amortisation of insurance acquisition cash flows*
(688.6)
(262.5)
(124.5)
–
(1,075.6)
Other attributable expenses*
(420.2)
(122.2)
(82.8)
–
(625.2)
Losses on onerous contracts and reversals
(12.3)
–
–
–
(12.3)
Insurance service result before reinsurance contracts held
361.2
197.2
783.1
–
1,341.5
Allocation of reinsurance premiums
(259.2)
(364.9)
(585.3)
–
(1,209.4)
Amount recoverable from reinsurers for incurred claims
144.5
309.0
(32.1)
–
421.4
Net expense from reinsurance contracts held
(114.7)
(55.9)
(617.4)
–
(788.0)
Insurance service result
246.5
141.3
165.7
–
553.5
Investment result
200.1
113.3
70.5
–
383.9
Net finance expense from insurance contracts
(116.4)
(66.1)
(43.0)
–
(225.5)
Net finance income from reinsurance contracts
18.4
25.2
29.8
–
73.4
Net insurance finance expense
(98.0)
(40.9)
(13.2)
–
(152.1)
Net financial result
102.1
72.4
57.3
–
231.8
Other income
19.5
26.3
64.6
3.1
113.5
Other operational expenses*
(68.5)
(24.7)
(18.5)
(37.7)
(149.4)
Net foreign exchange losses
–
–
–
(11.2)
(11.2)
Other finance costs
(1.1)
(0.3)
(1.6)
(50.1)
(53.1)
Share of profits of associates
–
–
–
0.3
0.3
Profit/(loss) before tax
298.5
215.0
267.5
(95.6)
685.4
Ratio analysis
Claims ratio (%)
39.5
40.1
22.8
–
37.4
Acquisition cost ratio (%)
30.7
29.9
25.8
–
29.9
Administrative expense ratio (%)
18.7
13.9
17.1
–
17.4
Combined ratio (%)
88.9
83.9
65.7
–
84.7
*Total marketing expenditure for the year was $101.1 million (2023: $85.0 million).
The claims ratio is calculated as incurred claims and losses on onerous contracts net of reinsurance recoveries, as a proportion of
insurance revenue net of allocation of reinsurance premiums. The acquisition cost ratio is calculated as amortisation of insurance
cash flows, as a proportion of insurance revenue net of allocation of reinsurance premiums. The administrative expense ratio is
calculated as other attributable expenses, as a proportion of insurance revenue net of allocation of reinsurance premiums. The
combined ratio is the total of the claims, acquisition and administrative expense ratios. All ratios are on an own share basis, which
reflects the Group’s share in Syndicate 33, and includes a reclassification of LPT premium from allocation of reinsurance premium
into amounts recoverable from reinsurers as detailed below.
Costs allocated to Corporate Centre, along with other non-attributable expenses, are non-underwriting-related costs and are not
included within the combined ratio.
204
Hiscox Ltd Report and Accounts 2024
4 Operating segments (continued)
As noted above, the claims ratio, expense ratio and combined ratio include a reclassification of LPT premium from allocation of
reinsurance premiums into amounts recoverable from reinsurers for incurred claims. The subsequent impacts of LPTs within
reinsurance expenses and reinsurance income are analysed on a net basis within the net claims to provide a view of the
underlying development on these contracts, against the corresponding development of the gross reserves, consistent with the
focus on net performance when assessing underwriting performance. The impact on profit is neutral, however this reclassification
for the ratios removes any volatility on a year-on-year comparison.
Year ended 31 December 2024
Hiscox
Retail
Hiscox
London
Market
Hiscox
Re & ILS
Corporate
Centre
Total
$m
$m
$m
$m
$m
Insurance revenue
2,442.9
1,201.4
1,028.2
–
4,672.5
Allocation of reinsurance premiums
(259.2)
(364.9)
(585.3)
–
(1,209.4)
LPT premium
57.5
41.6
40.1
–
139.2
Allocation of reinsurance premiums after reclassifying LPT
premium
(201.7)
(323.3)
(545.2)
–
(1,070.2)
Adjusted net insurance revenue
2,241.2
878.1
483.0
–
3,602.3
Incurred claims and changes to liabilities for incurred claims
(960.6)
(619.5)
(37.8)
–
(1,617.9)
Amounts recoverable from reinsurers for incurred claims
144.5
309.0
(32.1)
–
421.4
LPT premium
(57.5)
(41.6)
(40.1)
–
(139.2)
Amounts recoverable from reinsurers for incurred claims after
reclassifying LPT premium
87.0
267.4
(72.2)
–
282.2
Adjusted net incurred claims
(873.6)
(352.1)
(110.0)
–
(1,335.7)
Remove benefit from discounting of claims
(104.9)
(41.1)
(15.9)
–
(161.9)
Undiscounted adjusted net incurred claims
(978.5)
(393.2)
(125.9)
–
(1,497.6)
The following ratios reflect the reclassification of LPT premium and remove the impact of discounting.
Ratio analysis (undiscounted)
Claims ratio (%)
44.2
44.8
26.1
–
41.9
Acquisition cost ratio (%)
30.7
29.9
25.8
–
29.9
Administrative expense ratio (%)
18.7
13.9
17.1
–
17.4
Combined ratio (%)
93.6
88.6
69.0
–
89.2
The impact on profit before tax of a 1% change in each component of the segmental combined ratios is shown in the following
table. Any further ratio change is linear in nature.
Year ended 31 December 2024
Hiscox
Retail
Hiscox
London
Market
Hiscox
Re & ILS
$m
$m
$m
1% change in claims or expense ratio
22.4
8.8
4.8
Hiscox Ltd Report and Accounts 2024
205
4 Operating segments
(a) Profit before tax by segment (continued)
Year ended 31 December 2023
Hiscox
Retail*
Hiscox
London
Market*
Hiscox
Re & ILS
Corporate
Centre
Total
$m
$m
$m
$m
$m
Insurance revenue
2,327.8
1,185.5
969.9
–
4,483.2
Insurance service expenses
(2,060.9)
(867.9)
(260.5)
–
(3,189.3)
Incurred claims and changes to liabilities for incurred claims
(978.0)
(492.1)
(55.6)
–
(1,525.7)
Amortisation of insurance acquisition cash flows
(663.6)
(255.7)
(119.7)
–
(1,039.0)
Other attributable expenses
(406.1)
(120.1)
(85.2)
–
(611.4)
Losses on onerous contracts and reversals
(13.2)
–
–
–
(13.2)
Insurance service result before reinsurance contracts held
266.9
317.6
709.4
–
1,293.9
Allocation of reinsurance premiums
(249.2)
(337.9)
(532.3)
–
(1,119.4)
Amount recoverable from reinsurers for incurred claims
159.7
199.1
(41.0)
–
317.8
Net expense from reinsurance contracts held
(89.5)
(138.8)
(573.3)
–
(801.6)
Insurance service result
177.4
178.8
136.1
–
492.3
Investment result
200.2
113.6
70.6
–
384.4
Net finance expense from insurance contracts
(111.0)
(61.0)
(48.7)
–
(220.7)
Net finance income from reinsurance contracts
22.0
23.2
35.8
–
81.0
Net insurance finance expense
(89.0)
(37.8)
(12.9)
–
(139.7)
Net financial result
111.2
75.8
57.7
–
244.7
Other income
16.1
27.2
41.5
6.3
91.1
Other operational expenses
(47.8)
(18.8)
(12.8)
(46.1)
(125.5)
Net foreign exchange losses
–
–
–
(27.0)
(27.0)
Other finance costs
(0.9)
(0.3)
(1.1)
(47.7)
(50.0)
Share of profits of associates
–
–
–
0.3
0.3
Profit/(loss) before tax
256.0
262.7
221.4
(114.2)
625.9
Ratio analysis
Claims ratio (%)
41.8
35.2
20.5
–
37.4
Acquisition cost ratio (%)
31.0
29.9
27.9
–
30.3
Administrative expense ratio (%)
19.0
14.0
19.9
–
17.8
Combined ratio (%)
91.8
79.1
68.3
–
85.5
*Following a change in management structure at the start of 2024, Hiscox Retail’s kidnap and ransom business written in Syndicate 33 is now reported within the
London Market segment. The comparative period has been reclassified to present on a consistent basis.
206
Hiscox Ltd Report and Accounts 2024
4 Operating segments
(a) Profit before tax by segment (continued)
The impact of the reclassification of LPT premium is shown in the following table.
Year ended 31 December 2023
Hiscox
Retail*
Hiscox
London
Market*
Hiscox
Re & ILS
Corporate
Centre
Total
$m
$m
$m
$m
$m
Insurance revenue
2,327.8
1,185.5
969.9
–
4,483.2
Allocation of reinsurance premiums
(249.2)
(337.9)
(532.3)
–
(1,119.4)
LPT premium
62.4
7.9
(8.6)
–
61.7
Allocation of reinsurance premiums after reclassifying
LPT premium
(186.8)
(330.0)
(540.9)
–
(1,057.7)
Adjusted net insurance revenue
2,141.0
855.5
429.0
–
3,425.5
Incurred claims and changes to liabilities for incurred claims
(978.0)
(492.1)
(55.6)
–
(1,525.7)
Amounts recoverable from reinsurers for incurred claims
159.7
199.1
(41.0)
–
317.8
LPT premium
(62.4)
(7.9)
8.6
–
(61.7)
Amounts recoverable from reinsurers for incurred claims after
reclassifying LPT premium
97.3
191.2
(32.4)
–
256.1
Adjusted net incurred claims
(880.7)
(300.9)
(88.0)
–
(1,269.6)
Remove benefit from discounting of claims
(98.5)
(39.5)
(6.3)
–
(144.3)
Undiscounted adjusted net incurred claims
(979.2)
(340.4)
(94.3)
–
(1,413.9)
Ratio analysis (undiscounted)
Claims ratio (%)
46.4
39.8
22.0
–
41.7
Acquisition cost ratio (%)
31.0
29.9
27.9
–
30.3
Administrative expense ratio (%)
19.0
14.0
19.9
–
17.8
Combined ratio (%)
96.4
83.7
69.8
–
89.8
*Following a change in management structure at the start of 2024, Hiscox Retail’s kidnap and ransom business written in Syndicate 33 is now reported within the
London Market segment. The comparative period has been reclassified to present on a consistent basis.
The impact on profit before tax of a 1% change in each component of the segmental combined ratios is shown in the following
table. Any further ratio change is linear in nature.
Year ended 31 December 2023
Hiscox
Retail*
Hiscox
London
Market*
Hiscox
Re & ILS
$m
$m
$m
1% change in claims or expense ratio
21.4
8.6
4.3
*Following a change in management structure at the start of 2024, Hiscox Retail’s kidnap and ransom business written in Syndicate 33 is now reported within the
London Market segment. The comparative period has been reclassified to present on a consistent basis.
Hiscox Ltd Report and Accounts 2024
207
4 Operating segments
(a) Profit before tax by segment (continued)
(b) Geographical information
The Group’s operational segments underwrite business domestically in Bermuda and from locations in the UK, USA, Guernsey,
France, Germany, Belgium, The Netherlands, Spain, Portugal, Ireland, Singapore and Thailand.
The following table provides an analysis of the Group’s Insurance revenue earned by material geographical location from
external parties:
Year to 31 December 2024
Year to 31 December 2023
Hiscox
Retail
Hiscox
London
Market
Hiscox
Re & ILS
Corporate
Centre
Total
Hiscox
Retail*
Hiscox
London
Market*
Hiscox
Re & ILS
Corporate
Centre
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
UK
778.9
86.5
41.3
–
906.7
729.8
96.2
41.0
–
867.0
Europe
643.5
89.2
77.1
–
809.8
597.4
81.1
62.9
–
741.4
USA
936.9
738.8
598.5
– 2,274.2
922.5
739.5
552.9
– 2,214.9
Rest of world
83.6
286.9
311.3
–
681.8
78.1
268.7
313.1
–
659.9
2,442.9 1,201.4 1,028.2
– 4,672.5 2,327.8 1,185.5
969.9
– 4,483.2
*Following a change in management structure at the start of 2024, Hiscox Retail’s kidnap and ransom business written in Syndicate 33 is now reported within the
London Market segment. The comparative period has been reclassified to present on a consistent basis.
The following table provides an analysis of the Group’s non-current assets by material geographical location excluding financial
instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts:
Non-current assets
2024 total
2023 total
$m
$m
UK
234.9
254.5
Europe
104.8
83.5
USA
94.2
109.0
Rest of world
1.3
8.0
435.2
455.0
208
Hiscox Ltd Report and Accounts 2024
4 Operating segments (continued)
5 Net asset value (NAV) per share and net tangible asset value per share
31 December 2024
31 December 2023
Net asset value
(total equity)
Net asset value
per share
Net asset value
(total equity)
Net asset value
per share
$m
cents
$m
cents
Net asset value
3,689.9
1,086.4
3,296.7
951.1
Net tangible asset value
3,381.1
995.5
2,972.8
857.7
The NAV per share is based on 339,636,268 shares (2023: 346,612,554), being the shares in issue at 31 December 2024, less
those held in treasury and those held by the Group Employee Benefit Trust. Net tangible assets comprise total equity excluding
intangible assets.
6 Return on equity
2024
2023
$m
$m
Profit for the year (all attributable to the owners of the Company)
627.2
712.0
Opening total equity
3,296.7
2,635.0
Adjusted for the time-weighted impact of capital distributions, share buyback and issuance of shares
(136.8)
(54.3)
Adjusted opening total equity
3,159.9
2,580.7
Return on equity (%)
19.8
27.6
The return on equity (ROE) is calculated by using profit or loss for the period divided by the adjusted opening total equity. The
adjusted opening total equity represents the equity on 1 January of the relevant year as adjusted for time-weighted aspects of
capital distributions, share buyback and issuing of shares or treasury share purchases during the period. The time-weighted
positions are calculated on a daily basis with reference to the proportion of time from the transaction to the end of the period.
7 Net investment and insurance finance result
2024
2023
Note
$m
$m
Investment income including interest receivable
316.4
237.0
Net realised gains/(losses) on financial investments at fair value through profit or loss
1.5
(17.6)
Net fair value gains on financial investments at fair value through profit or loss
71.5
170.6
Investment return – financial assets
389.4
390.0
Net fair value gains on derivative financial instruments
16
0.4
1.1
Investment expenses
(5.9)
(6.7)
Total investment result
383.9
384.4
Net finance (expense)/income from insurance contracts:
Interest accreted
(241.6)
(228.5)
Effects of changes in interest rates and other financial assumptions
16.1
7.8
Total net finance (expense)/income from insurance contracts
(225.5)
(220.7)
Net finance income/(expenses) from reinsurance contracts:
Interest accreted
81.4
87.5
Effects of changes in interest rates and other financial assumptions
(8.0)
(6.5)
Total net finance income/(expenses) from reinsurance contracts
73.4
81.0
Net insurance finance (expense)/income
(152.1)
(139.7)
Net financial result
231.8
244.7
Hiscox Ltd Report and Accounts 2024
209
8 Other income and operational expenses
2024
2023
$m
$m
Other income
113.5
91.1
Staff costs
386.6
373.0
Depreciation, amortisation and impairment
60.7
77.1
Other expenses
327.3
286.8
Operational expenses
774.6
736.9
Other income includes management fees and is recognised when the investment management services are rendered to the ILS
funds and commissions paid to the Group-owned Syndicate managing agent by third-party Names.
Operational expenses comprise attributable expenses amounting to $625.2 million (2023: $611.4 million) included within
insurance service expense, and non-attributable expenses amounting to $149.4 million (2023: $125.5 million) included within
other operational expenses.
The Group previously announced its agreement to sell DirectAsia to Ignite Thailand Holdings Limited, subject to customary
conditions and regulatory approvals. Those conditions were not met within the agreed time period and that agreement to sell was
terminated. On 18 December 2024, the Group divested the part of the DirectAsia business which was based in Thailand to Ignite
Thailand Holdings Limited and Roojai Holding (Thailand) Co., Ltd. The $2.1 million loss on disposal is included within other
expenses. The remaining DirectAsia business, which is based in Singapore, continues to be classified as a disposal group held
for sale, as a sale is still considered highly probable within the next 12 months. The disposal group has been valued at its
expected recoverable amount and no impairment charge has been recognised (2023: $18.5 million). The remaining DirectAsia
business is part of the retail operating segment but the assets, liabilities and results of DirectAsia are not material to the segment.
Assets held for sale include reinsurance contract assets and cash, while liabilities held for sale include insurance contract liabilities
and trade and other payables.
9 Finance costs
2024
2023
Note
$m
$m
Interest charge associated with borrowings
14
40.7
39.4
Other interest expenses
12.4
10.6
Other finance costs
53.1
50.0
10 Auditor’s remuneration
Fees payable to the Group’s external auditor, PwC, its member firms and its associates (exclusive of VAT) include the following
amounts recorded in the consolidated income statement:
Group
2024
2023
$m
$m
Amounts receivable by the auditors and its associates in respect of:
The auditing of the accounts of the Group and its subsidiaries
4.9
6.8
All audit-related assurance services
0.7
0.4
All other non-audit services
–
0.1
5.6
7.3
The full audit fee payable for the Syndicate 33 and Syndicate 6104 audit has been included above, although an element of this is
borne by the third-party participants in the Syndicate.
210
Hiscox Ltd Report and Accounts 2024
11 Goodwill and intangible assets
Goodwill
Syndicate
capacity
State
authorisation
licences
Software and
development
costs
Other
Total
$m
$m
$m
$m
$m
$m
At 1 January 2023
Cost
10.2
33.1
8.5
409.8
20.3
481.9
Accumulated amortisation and impairment
(2.4)
–
–
(143.3)
(15.8)
(161.5)
Net book amount
7.8
33.1
8.5
266.5
4.5
320.4
Year ended 31 December 2023
Opening net book amount
7.8
33.1
8.5
266.5
4.5
320.4
Additions
–
–
–
42.6
–
42.6
Disposals
–
–
–
–
–
–
Amortisation charges
–
–
–
(37.0)
(1.9)
(38.9)
Impairment charge*
–
–
–
(6.0)
–
(6.0)
Foreign exchange movements
0.4
–
–
5.1
0.3
5.8
Closing net book amount
8.2
33.1
8.5
271.2
2.9
323.9
At 31 December 2023
Cost
10.8
33.1
8.5
467.3
23.4
543.1
Accumulated amortisation and impairment
(2.6)
–
–
(196.1)
(20.5)
(219.2)
Net book amount
8.2
33.1
8.5
271.2
2.9
323.9
Year ended 31 December 2024
Opening net book amount
8.2
33.1
8.5
271.2
2.9
323.9
Additions
–
–
–
33.0
1.0
34.0
Disposals
–
–
–
–
–
–
Amortisation charges
–
–
–
(41.6)
(2.2)
(43.8)
Impairment charge
–
–
–
–
–
–
Foreign exchange movements
(0.1)
–
–
(5.2)
–
(5.3)
Closing net book amount
8.1
33.1
8.5
257.4
1.7
308.8
At 31 December 2024
Cost
10.7
33.1
8.5
483.7
23.8
559.8
Accumulated amortisation and impairment
(2.6)
–
–
(226.3)
(22.1)
(251.0)
Net book amount
8.1
33.1
8.5
257.4
1.7
308.8
*The impairment charge in prior year relates to DirectAsia business classed as a disposal group held for sale.
Goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the smallest identifiable unit
to which cash flows are generated. $7.3 million (2023: $7.4 million) is allocated to the London Market CGU and $0.8 million
(2023: $0.8 million) is allocated to the CGUs within the Hiscox Retail business segment. Goodwill is considered to have an
indefinite life and as such is tested annually for impairment based on the recoverable amount which is considered to be the
higher of the fair value less cost to sell or value in use. During 2024, there was no impairment charge on goodwill (2023: $nil).
Value in use is considered to be the best indication of the recoverable amount for goodwill. Value in use calculations are
performed using cash flow projections based on financial forecasts. A discount factor, based on a weighted average cost of
capital (WACC) for the Group, of 10.1%, depending on the underlying currency (2023: 10.0% to 10.3%), has been applied to the
cash flow projections to determine the net present value. The outcome of the value in use calculation is measured against the
carrying value of the asset and, where the carrying value is in excess of the value in use, the asset is written down to this amount.
Hiscox Ltd Report and Accounts 2024
211
Impairment assessments
To test the sensitivity of the assessment, management flexed the key assumptions within a reasonably expected range. Within
this range, goodwill and other intangible assets recoveries were stress tested and remain supportable across all cash-generating
units or assets.
Intangible assets
All intangible assets have a finite useful life except for the Syndicate capacity and US state authorisation licences.
(a) Syndicate capacity
The cost of purchasing the Group’s participation in the Lloyd’s insurance syndicates is not amortised, but is tested annually for
impairment and is carried at cost less accumulated impairment losses. Having considered the future prospects of the London
insurance market, the Board believes that the Group’s ownership of Syndicate capacity will provide economic benefits over an
indefinite number of future periods. This assumption is reviewed annually to determine whether the asset continues to have an
indefinite life.
The Group’s intangible asset relating to Syndicate capacity has been allocated, for impairment testing purposes, to the active
Lloyd’s corporate member entity. The asset is tested annually for impairment based on its recoverable amount which is
considered to be the higher of the asset’s fair value less costs to sell or its value in use. The value in use is determined using
cash flow projections based on business plans approved by management and discounted at the applicable WACC rate.
At 31 December 2024, the value in use or the fair value less cost to sell exceeded the carrying value of Syndicate capacity
recognised on the statement of financial position.
(b) US state authorisation licences
In 2007, the Group acquired insurance authorisation licences for 50 US states as part of a business combination. The licences
are allocated for impairment testing to the Group’s North American underwriting business. The carrying value of this asset is
calculated using a projected cash flow based on business plans approved by management and discounted at the same rate
used for goodwill. The asset is tested annually for impairment based on its value in use, and the results show no impairment.
(c) Software and development costs
The Group capitalises acquired software licenses based on the costs incurred. Amortisation is performed through applying the
straight-line method over a period of three to ten years.
Internally developed software is capitalised only if future economic benefits are probable and can be measured reliably.
Amortisation of internally developed computer software begins when the software is available for use and is allocated on
a straight-line basis over the expected useful life of the asset.
The useful life of the asset is reviewed annually and, if different from previous estimates, is revised accordingly with the change
being accounted for as a change in accounting estimates in accordance with IAS 8.
The carrying value of software and development costs is reviewed for impairment on an ongoing basis by reference to the stage
and expectation of a project. Additionally, at the end of each reporting period, the Group reviews the positions for any indication
of impairment and as a result of this no impairment was provided in 2024 (2023: $6 million).
At 31 December 2024 there were $27.6 million of assets under development on which amortisation has yet to be charged
(2023: $34.1 million).
The assets are expected to be recovered or settled more than 12 months after the reporting date and, as such, are considered
to be non-current.
(d) Rights to customer contractual relationships (included in other)
Intangible costs related to securing customer contractual relationships are recognised as an asset where they can be identified
separately and measured reliably and it is probable that they will be recovered by directly related future profits. These costs are
amortised on a straight-line basis over the useful economic life, which is deemed to be ten years, and are carried at cost less
accumulated amortisation and impairment losses.
At the end of each reporting period, the carrying value arrived at using value in use is tested for impairment. Value in use is
calculated using the same method as described above for goodwill and the same discount rate used. The results of this test
led to no impairment charge on intangible rights to customer contractual relationships in 2024 (2023: $nil).
212
Hiscox Ltd Report and Accounts 2024
11 Goodwill and intangible assets (continued)
12 Property, plant and equipment
Land and
buildings
Leasehold
improvements
Furniture
fittings and
equipment
and art
Right-of-use
assets:
property
and other
Total
$m
$m
$m
$m
$m
Year ended 31 December 2023
Opening net book amount
18.3
1.3
43.0
70.5
133.1
Additions
–
–
1.7
13.1
14.8
Disposals
–
–
–
(0.7)
(0.7)
Depreciation charge
(1.1)
(0.6)
(5.1)
(12.9)
(19.7)
Impairment
–
(0.4)
(0.2)
–
(0.6)
Foreign exchange movements
0.9
0.2
2.1
2.6
5.8
Closing net book amount, including assets held for sale
18.1
0.5
41.5
72.6
132.7
At 31 December 2023
Cost
28.1
13.1
85.1
132.4
258.7
Accumulated depreciation
(10.0)
(12.6)
(43.6)
(59.8)
(126.0)
Net book amount, including assets held for sale
18.1
0.5
41.5
72.6
132.7
Less: assets held for sale
–
–
–
(2.4)
(2.4)
Net book amount
18.1
0.5
41.5
70.2
130.3
Year ended 31 December 2024
Opening net book amount, including assets held for sale
18.1
0.5
41.5
72.6
132.7
Additions
–
–
5.2
12.4
17.6
Disposals
–
–
(0.1)
(2.4)
(2.5)
Depreciation charge
(1.2)
(0.5)
(4.7)
(12.8)
(19.2)
Foreign exchange movements
(0.3)
0.1
(0.9)
(1.3)
(2.4)
Closing net book amount, including assets held for sale
16.6
0.1
41.0
68.5
126.2
At 31 December 2024
Cost
27.6
12.6
86.1
105.1
231.4
Accumulated depreciation
(11.0)
(12.5)
(45.1)
(36.6)
(105.2)
Net book amount, including assets held for sale
16.6
0.1
41.0
68.5
126.2
Less: assets held for sale
–
–
–
(0.6)
(0.6)
Net book amount
16.6
0.1
41.0
67.9
125.6
The Group’s land and buildings assets relate to freehold property in the UK. There was no impairment charge on these assets
during the year (2023: $nil).
The assets are expected to be recovered or settled more than 12 months after the reporting date and, as such, are considered
to be non-current.
The income from subleasing right-of-use assets amounted to $0.4 million (2023: $0.4 million).
Hiscox Ltd Report and Accounts 2024
213
13 Subsidiaries, associates and interests in other entities
This note provides details of the Syndicates and Special Purpose Insurers (SPI) managed by the Group, the acquisition and
disposal of subsidiaries and associates during the year and investments in associates.
(a) Subsidiaries
Hiscox Dedicated Corporate Member Limited (HDCM) underwrites as a corporate member of Lloyd’s on the main Syndicates
managed by Hiscox Syndicates Limited (the main managed Syndicates numbered 33 and 3624).
As at 31 December 2024, HDCM owned 72.6% of Syndicate 33 (2023: 72.6%), and 100% of Syndicate 3624 (2023: 100%).
In view of the several but not joint liability of underwriting members at Lloyd’s for the transactions of Syndicates in which they
participate, the Group’s attributable share of the transactions, assets and liabilities of these Syndicates has been included in
the financial statements. The Group manages the underwriting of, but does not participate as a member of, Syndicate 6104
at Lloyd’s which provides reinsurance to Syndicate 33 on a normal commercial basis. Consequently, aside from the receipt
of managing agency fees, defined profit commissions as appropriate and interest arising on effective assets included within
the experience account, the Group has no share in the assets, liabilities or transactions of Syndicate 6104. The position and
performance of that Syndicate is therefore not included in the Group’s financial statements.
(b) SPIs
The Kiskadee Diversified Fund and Kiskadee Select Fund were launched in 2014 to provide investment opportunities
to institutional investors in property catastrophe reinsurance and insurance-linked strategies. The funds are managed by
Hiscox Re Insurance Linked Strategies Limited (formerly known as Kiskadee Investment Managers Limited) which is a wholly
owned subsidiary of the Group.
The Kiskadee Latitude Fund was launched in 2019 to give investors access to a more diverse portfolio of insurance and
reinsurance risks, with less focus on pure property catastrophe risk. The fund is managed by Hiscox Re Insurance Linked
Strategies Limited which is a wholly owned subsidiary of the Group.
The Group determined that it does not control the Kiskadee Diversified Fund, the Kiskadee Select Fund and the Kiskadee
Latitude Fund. Hence they are not consolidated.
The Kiskadee Cadence Fund was launched in December 2019 to achieve attractive risk-adjusted returns by investing primarily in
a worldwide reinsurance and retrocession portfolio and the Kiskadee Select Plus Fund was launched in January 2021 to achieve
attractive risk-adjusted returns that have low correlation to broader financial markets by investing primarily in a diversified,
worldwide property catastrophe reinsurance and retrocession portfolio, including a portion of non-catastrophe reinsurance.
These funds are segregated accounts of Kiskadee ILS Fund SAC Ltd, which is managed by Hiscox Re Insurance Linked
Strategies Limited, a wholly owned subsidiary of the Group. Following an inflow of capital from third-party investors during 2024,
resulting in a dilution of the Group's exposure to variable returns from its involvement in the Kiskadee Cadence Fund, the
Group has determined that this fund no longer meets the criteria for consolidation. The fund has been de-consolidated from
the Group accordingly.
As at 31 December 2024, the Group recognised a financial asset at fair value of $58.3 million (2023: $35.4 million) in relation to
its investment in the unconsolidated funds (note 17). In assessing the maximum exposure to loss from its interest in the funds,
the Group has determined it is no greater than the fair value recognised as at the end of the reporting period. The total size of the
unconsolidated funds was $694.7 million at 31 December 2024 (2023: $505 million). In addition to the return on the financial
asset, the Group also receives fee income through Hiscox Re Insurance Linked Strategies Limited and Hiscox Insurance
Company (Bermuda) Limited, both wholly owned subsidiaries, under normal commercial terms.
The Group is exposed to credit risk associated with reinsurance recoveries on risks fronted for the SPIs. Note 3.3(d) discusses
how the Group manages credit risk associated with reinsurance assets. The operations of the funds and SPIs are financed
through the issuance of preference shares to external investors. The Group does not intend to provide any further financial
support to the funds or SPIs.
214
Hiscox Ltd Report and Accounts 2024
(c) Investments in associates
Year ended 31 December
2024
2023
$m
$m
At beginning of year
0.8
5.6
Disposals during the year
–
(5.2)
Distributions received
(0.3)
(0.3)
Net profit from investments from associates
0.3
0.3
Foreign exchange movements
–
0.4
At end of year
0.8
0.8
The Group’s interests in its principal associates, all of which are unlisted, were as follows:
Assets
Liabilities
Revenues
Profit after tax
% interest held at
31 December
$m
$m
$m
$m
2024
Associates incorporated in the UK
32%
3.0
2.1
5.9
0.1
Associates incorporated in Europe
26%
2.1
1.1
2.0
1.1
Total at the year ended 2024
5.1
3.2
7.9
1.2
2023
Associates incorporated in the UK
32%
2.8
2.1
5.3
0.1
Associates incorporated in Europe
26%
2.6
1.4
2.8
1.1
Total at the year ended 2023
5.4
3.5
8.1
1.2
The equity interests held by the Group in respect of associates do not have quoted market prices and are not traded regularly
in any active recognised market. The associates concerned have no material impact on the results or assets of the Group.
The assets are expected to be recovered or settled more than 12 months after the reporting date and as such are considered
to be non-current.
Hiscox Ltd Report and Accounts 2024
215
13 Subsidiaries, associates and interests in other entities (continued)
14 Financial assets and liabilities
Financial assets designated at fair value through profit or loss are measured at fair values, with all changes from one accounting
period to the next being recorded through the income statement.
2024
2023
Note
$m
$m
Debt and fixed income holdings
17
6,660.9
6,278.9
Equities and investment funds
17
210.2
205.4
Private credit funds
17
148.2
54.7
Total investments
7,019.3
6,539.0
Insurance-linked funds
17
58.3
35.4
Total financial assets carried at fair value
7,077.6
6,574.4
The effective maturity of the debt and fixed income holdings due within and after one year is as follows:
2024
2023
$m
$m
Within one year
1,392.3
1,541.0
After one year
5,268.6
4,737.9
6,660.9
6,278.9
Equities, investment funds, private credit funds and insurance-linked securities do not have any maturity dates. The effective
maturity of all other financial assets is due within one year. An analysis of the credit risk and contractual maturity profiles of the
Group’s financial instruments is given in notes 3.3(d) and 3.3(e).
Financial liabilities of the Group are:
2024
2023
Note
$m
$m
Derivative financial instruments
16
–
0.3
Financial liabilities carried at fair value
–
0.3
Borrowings
656.2
667.0
Accrued interest on borrowings
7.3
7.4
Financial liabilities carried at amortised cost
663.5
674.4
Total financial liabilities
663.5
674.7
All of the financial liabilities carried at fair value are due within one year and all the borrowings are due after one year. Accrued
interest on long-term debt is due within one year.
216
Hiscox Ltd Report and Accounts 2024
On 24 November 2015, the Group issued £275.0 million 6.125% fixed-to-floating rate callable subordinated notes due 2045,
with a first call date of 2025.
The notes bear interest from, and including, 24 November 2015 at a fixed rate of 6.125% per annum annually in arrears starting
24 November 2016 up until the first call date in November 2025, and thereafter at a floating rate of interest equal to the sum of
compounded daily Sterling Overnight Index Average (SONIA), the reference rate adjustment of 0.1193% and a margin of 5.076%
payable quarterly in arrears on each floating interest payment date.
On 25 November 2015, the notes were admitted for trading on the London Stock Exchange’s regulated market. The notes were
rated BBB- by S&P and Fitch.
On 22 September 2022, the Group issued £250.0 million 6% notes due September 2027. The notes will be redeemed on the
maturity date at their principal amount together with accrued interest.
The notes bear interest from, and including, 22 September 2022 at a fixed rate of 6% per annum annually in arrears starting
22 September 2022 until maturity on 22 September 2027. On 22 September 2022, the notes were admitted for trading on the
Luxembourg Stock Exchange’s Euro MTF. The notes were rated BBB+ by S&P and Fitch.
The fair value of the borrowings is estimated at $672.0 million (2023: $681.0 million). The fair value measurement is
classified within Level 1 of the fair value hierarchy. The fair value is estimated by reference to the actively traded value on
the stock exchanges.
The decrease in the carrying value of the borrowings and accrued interest during the year comprises the amortisation of the
difference between the net proceeds received and the redemption amounts of $0.7 million (2023: $0.7 million), the decrease in
accrued interest of $0.7 million (2023: $0.1 million), less exchange movements of $10.9 million (2023: plus exchange movements
of $37.9 million). The Group did not draw down any new borrowings (2023: $nil) or repay any short-term borrowings (2023: $nil)
during the year.
Note 9 includes details of the interest expense for the year included in finance costs.
Investments at 31 December are denominated in the following currencies at their fair value:
2024
2023
$m
$m
Debt and fixed income holdings
US Dollars
4,998.4
4,517.3
Sterling
835.8
960.9
Euro and other currencies
826.7
800.7
6,660.9
6,278.9
Equities and investment funds
US Dollars
95.5
84.5
Sterling
80.6
84.3
Euro and other currencies
34.1
36.6
210.2
205.4
Private credit funds
US Dollars
117.5
54.7
Sterling
16.5
–
Euro and other currencies
14.2
–
148.2
54.7
Total investments
7,019.3
6,539.0
Hiscox Ltd Report and Accounts 2024
217
14 Financial assets and liabilities (continued)
15 Trade and other receivables
2024
2023
$m
$m
Prepayments and accrued income
37.3
31.3
Trade and other receivables:
Accrued interest
68.0
55.5
Other debtors including related party amounts
143.7
119.7
Total trade and other receivables
249.0
206.5
The amount expected to be recovered before and after one year are estimated as follows:
Within one year
233.2
188.2
After one year
15.8
18.3
249.0
206.5
218
Hiscox Ltd Report and Accounts 2024
16 Derivative financial instruments
The Group entered into both exchange-traded and over-the-counter derivative contracts for a number of purposes during 2024.
The Group had the right and intention to settle each contract on a net basis. The assets and liabilities of these contracts at
31 December 2024 all mature within one year of the end of the reporting period and are detailed below:
31 December 2024
Gross contract
notional amount
Fair value
of assets
Fair value
of liabilities
Net balance
sheet position
$m
$m
$m
$m
Derivative financial instruments included on statement of financial position
Foreign exchange forward contracts
200.0
–
–
–
Interest rate futures contracts
–
–
–
–
–
–
–
The foreign exchange forward contracts are represented by gross fair value of assets and liabilities as detailed below:
31 December 2024
Fair value
of assets
Fair value
of liabilities
Net balance
sheet position
$m
$m
$m
Gross fair value of assets
–
3.5
3.5
Gross fair value of liabilities
–
(3.5)
(3.5)
–
–
–
31 December 2023
Gross contract
notional amount
Fair value
of assets
Fair value
of liabilities
Net balance
sheet position
$m
$m
$m
$m
Derivative financial instruments included on statement of financial position
Foreign exchange forward contracts
5.5
–
(0.1)
(0.1)
Interest rate futures contracts
16.9
–
(0.2)
(0.2)
–
(0.3)
(0.3)
The foreign exchange forward contracts are represented by gross fair value of assets and liabilities as detailed below:
31 December 2023
Fair value
of assets
Fair value
of liabilities
Net balance
sheet position
$m
$m
$m
Gross fair value of assets
–
4.7
4.7
Gross fair value of liabilities
–
(4.8)
(4.8)
–
(0.1)
(0.1)
Foreign exchange forward contracts
During the current and prior year, the Group entered into a series of conventional over-the-counter forward contracts in order to
secure translation gains made on Euro, US Dollar and other non-Sterling denominated monetary assets. The contracts require
the Group to forward sell a fixed amount of the relevant currency for Sterling at pre-agreed future exchange rates. The Group
made a gain of $0.5 million on the forward contracts during the year (2023: loss of $0.1 million).
Interest rate futures contracts
To hedge the interest rate risk the Group is exposed to, it sold a number of government bond futures denominated in a range
of currencies. All are exchange traded and the Group made a loss on these futures contracts of $0.1 million (2023: gain of
$1.1 million) as included in the investment result in note 7.
Hiscox Ltd Report and Accounts 2024
219
17 Fair value measurements
In accordance with IFRS 13 Fair Value Measurement, the fair value of financial instruments, based on a three-level fair value
hierarchy that reflects the significance of the inputs used in measuring the fair value, is set out below.
As at 31 December 2024
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
Financial assets
Debt and fixed income holdings
1,127.5
5,523.4
10.0
6,660.9
Equities and investment funds
–
179.3
30.9
210.2
Private credit funds
–
–
148.2
148.2
Insurance-linked funds
–
–
58.3
58.3
Derivative financial instruments
–
–
–
–
Total
1,127.5
5,702.7
247.4
7,077.6
Financial liabilities
Derivative financial instruments
–
–
–
–
Total
–
–
–
–
As at 31 December 2023
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
Financial assets
Debt and fixed income holdings
1,235.2
5,033.5
10.2
6,278.9
Equities and investment funds
–
175.4
30.0
205.4
Private credit funds
–
–
54.7
54.7
Insurance-linked funds
–
–
35.4
35.4
Derivative financial instruments
–
–
–
–
Total
1,235.2
5,208.9
130.3
6,574.4
Financial liabilities
Derivative financial instruments
–
0.3
–
0.3
Total
–
0.3
–
0.3
The levels of the fair value hierarchy are defined by the standard as follows:
• Level 1 – fair values measured using quoted prices (unadjusted) in active markets for identical instruments;
• Level 2 – fair values measured using directly or indirectly observable inputs or other similar valuation techniques for
which all significant inputs are based on market observable data;
• Level 3 – fair values measured using valuation techniques for which significant inputs are not based on market
observable data.
The fair values of the Group’s financial assets are typically based on prices from numerous independent pricing services. The
pricing services used by the investment manager obtain actual transaction prices for securities that have quoted prices in active
markets. For those securities which are not actively traded, the pricing services use common market valuation pricing models.
Observable inputs used in common market valuation pricing models include, but are not limited to, broker quotes, credit ratings,
interest rates and yield curves, prepayment speeds, default rates and other such inputs which are available from market sources.
Investments in mutual funds comprise a portfolio of stock investments in trading entities which are invested in various quoted and
unquoted investments. The fair value of these investment funds is based on the net asset value of the fund as reported by
independent pricing sources or the fund manager.
Included within Level 1 of the fair value hierarchy are certain government bonds, treasury bills, corporate bonds having a quoted
price in active markets, and exchange-traded funds which are measured based on quoted prices in active markets.
The fair value of the borrowings carried at amortised cost is estimated at $672.0 million (2023: $681.0 million) and is considered
as Level 1 in the fair value hierarchy.
220
Hiscox Ltd Report and Accounts 2024
Level 2 of the hierarchy contains certain government bonds, US government agencies, corporate securities, asset-backed
securities, mortgage-backed securities and certain commingled funds. The fair value of these assets is based on the prices
obtained from independent pricing sources, investment managers and investment custodians as discussed above. The Group
records the unadjusted price provided and validates the price through a number of methods including a comparison of the prices
provided by the investment managers with the investment custodians and the valuation used by external parties to derive fair
value. Quoted prices for US government agencies and corporate securities are based on a limited number of transactions for
those securities and as such the Group considers these instruments to have similar characteristics to those instruments classified
as Level 2. Also included within Level 2 are units held in collective investment vehicles investing in traditional and alternative
investment strategies and over-the-counter derivatives.
Level 3 contains investments in limited partnerships, unquoted equity securities, private credit funds and insurance-linked funds
which have limited observable inputs on which to measure fair value. Unquoted equities, including equity instruments in limited
partnerships, are carried at fair value. Fair value is determined to be net asset value for the limited partnerships, and for the equity
holdings it is determined to be the latest available traded price. The effect of changing one or more inputs used in the
measurement of fair value of these instruments to another reasonably possible assumption would not be significant.
Private credit funds comprise holdings in funds which, in turn, hold debt investments in private companies that are not quoted
on an active market. The fair value of the private credit funds is determined based on the net asset values reported by the
investment managers. The underlying loan values, on which the investments are based, are valued by the investment managers
using a discounted cash flow model. The inputs to the valuation are cash flows, risk-free rate and a credit spread. The cash flow
projections are determined by the loan terms and the risk-free rate is the overnight rate for the issuing currency; these are all
observable inputs. The credit spread applied is based on synthetic rating analysis, whereby an equivalent corporate bond rating
is assigned to a private loan based on structural analysis of the issuer's statement of financial position and performance since
investment. This is an unobservable input but is not deemed to be significant. Given the Group’s knowledge of the underlying
investments and the size of the Group’s investment therein, the Group would not anticipate any material variance between the
statements and the final net asset values reported by the investment managers.
At 31 December 2024, the insurance-linked funds of $58.3 million represent the Group’s investment in the unconsolidated
Kiskadee funds (2023: $35.4 million) as described in note 14.
The fair value of the Kiskadee funds is estimated to be the net asset value as at the end of the reporting period. The net asset
value is based on the fair value of the assets and liabilities in the fund. The majority of the assets of the funds are cash and cash
equivalents. Significant inputs and assumptions in calculating the fair value of the assets and liabilities associated with reinsurance
contracts written by the Kiskadee funds include the amount and timing of claims payable in respect of claims incurred and
periods of unexpired risk. The Group has considered changes in the net asset valuation of the Kiskadee funds if reasonably
different inputs and assumptions were used and has found that a 12% change to the fair value of the liabilities would
increase or decrease the fair value of funds by $2.2 million.
In certain cases, the inputs used to measure the fair value of a financial instrument may fall into more than one level within
the fair value hierarchy. In this instance, the fair value of the instrument in its entirety is classified based on the lowest level
of input that is significant to the fair value measurement.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the
relevant reporting period during which the transfers are deemed to have occurred. During the year, investments of $nil
(2023: $26.0 million) were transferred from Level 2 to Level 3 due to insufficient observable data being available, as a
result of reduced trading volumes.
Hiscox Ltd Report and Accounts 2024
221
17 Fair value measurements (continued)
The table below sets forth a reconciliation of opening and closing balances for financial instruments classified under Level 3 of the
fair value hierarchy:
2024
2023
$m
$m
Balance At 1 January
130.3
139.7
Fair value losses through profit or loss
(4.5)
(11.5)
Foreign exchange (losses)/gains
(0.8)
4.8
Purchases
136.6
–
Settlements
(14.2)
(28.7)
Transfers
–
26.0
Closing balance
247.4
130.3
Net unrealised (losses)/gains in the period on securities held at the end of the period
(4.0)
3.5
The closing balance at year end comprised $10.0 million debt and fixed income holdings (2023: $10.2 million), $30.9 million
equities and investment funds (2023: $30.0 million), $148.2 million private credit funds (2023: $54.7 million) and $58.3 million
insurance-linked funds (2023: $35.4 million).
18 Cash and cash equivalents
2024
2023
$m
$m
Cash at bank and in hand
1,141.3
1,411.2
Short-term deposits
85.7
25.8
Total
1,227.0
1,437.0
The Group holds its cash deposits with a well-diversified range of banks and financial institutions. Cash includes overnight deposits.
Short-term deposits include debt securities with an original maturity date of less than three months and money market funds.
19 Share capital
31 December 2024
31 December 2023
Group
Share
capital
Number
of shares
Share
capital
Number of
shares
$m
000
$m
000
Authorised ordinary share capital of 6.5p (2023: 6.5p)
425.8 3,692,308
425.8 3,692,308
Issued ordinary share capital of 6.5p (2023: 6.5p)
38.1
347,503
38.8
355,283
The amounts presented in the equity section of the Group’s consolidated statement of financial position relate to Hiscox Ltd, the
legal parent company.
Changes in Group share capital and contributed surplus
Ordinary share
capital
Share
premium
Contributed
surplus
$000
$000
$000
At At 1 January 2023
38,667
517,657
183,969
Employee share option scheme – proceeds from shares issued
90
9,530
–
Scrip dividends to owners of the Company
10
1,645
–
At 31 December 2023
38,767
528,832
183,969
Employee share option scheme – proceeds from shares issued
159
21,252
–
Scrip dividends to owners of the Company
21
3,821
–
Share buyback
(819)
(148,349)
–
At 31 December 2024
38,128
405,556
183,969
On 5 March 2024, the Group announced a share buyback programme for up to a maximum aggregate consideration of
$150 million to commence on the same day. On 15 August 2024, the Group announced that it had completed the programme.
In total, 9,948,884 shares were purchased with a nominal value of $0.8 million and were subsequently cancelled. The 9,948,884
shares were acquired at an average price of 1,185 pence per share.
222
Hiscox Ltd Report and Accounts 2024
17 Fair value measurements (continued)
Contributed surplus is a distributable reserve and arose on the reverse acquisition of Hiscox plc on 12 December 2006.
The Company relies on dividend streams from its subsidiary companies to provide the cash flow required for distributions to be
made to shareholders. The ability of the subsidiaries to pay dividends is subject to regulatory restrictions within the jurisdiction
from which they operate.
Share repurchase
The Trustees of the Group’s Employee Benefit Trust purchased nil shares (2023: nil shares) to facilitate the settlement of vesting
awards under the Group’s Performance Share Plan. As the Trust is consolidated into the Group financial results, these purchases
are accounted for in the same way as treasury shares and are charged against retained earnings. The shares are held by the
Trustees for the beneficiaries of the Trust.
Equity structure of Hiscox Ltd
Number of
ordinary shares
in issue 2024
Number of
ordinary shares
in issue 2023
Note
000
000
At 1 January
355,283
354,067
Employee share option scheme – ordinary shares issued
1,916
1,094
Scrip Dividends to owners of the Company
26
253
122
Share buyback
(9,949)
–
At 31 December
347,503
355,283
All issued shares are fully paid.
Performance Share Plan awards
Performance Share Plan (PSP) awards are granted to Directors and other senior employees. Awards normally vest after a
three-year period subject to the achievement of performance conditions which can be a mix of financial and non-financial
measures. Awards are generally subject to continued employment; however, awards may vest to leavers in certain scenarios.
Awards granted under the all-employee share ownership scheme (HSX:26) vest in April 2026 subject to continued employment
and satisfactory personal performance between the date of grant and vesting.
In accordance with IFRS 2, the Group recognises an expense for the fair value of shares, share options and PSP award
instruments issued to employees, over their vesting period through the income statement. The amount recognised in the
consolidated income statement during the year was an expense of $49.1 million (2023: $43.2 million). This comprises an expense
of $33.3 million (2023: $28.3 million) in respect of PSP awards, an expense of $3.1 million (2023: $3.3 million) in respect of share
option awards and an expense of $12.7 million (2023: $11.6 million) in respect of employee share awards. The Group has applied
the principles outlined in the Black-Scholes option pricing model when determining the fair value of each share option instrument.
For the fair value pricing of PSPs, the Group uses the share price on the date of grant of the options. For any options contingent
on achieving targets linked to total shareholder returns, the fair value price on date of grant is adjusted to take account of the
probability of achieving the performance targets.
The range of principal Group assumptions applied in determining the fair value of share-based payment instruments granted
during the year under review are:
Assumptions affecting inputs to fair value models
2024
2023
Annual risk-free rates of return and discount rates(%)
3.7-3.97
3.35-4.78
Long-term dividends yield (%)
1.54
1.40
Expected life of options (years)
3.25
3.25
Implied volatility of share price (%)
34.6
38.7
Weighted average share price(p)
1,186.6
1,117.4
The weighted average fair value of each share option granted during the year was 409.5p (2023: 392.1p). The weighted average
fair value of each Performance Share Plan award granted during the year was 1,186.2p (2023: 1,140.1p).
Movements in the number of share options and PSP awards during the year and details of the balances outstanding at
31 December 2024 for the Executive Directors are shown in the annual report on remuneration 2024. The total number of
options and PSP awards outstanding is 10,376,020 (2023: 10,505,901) of which 1,014,399 are exercisable (2023: 706,282).
The total number of SAYE options outstanding is 2,054,494 (2023: 2,195,828) and employee share awards is 4,729,792
(2023: 4,615,061) of which 12,700 are exercisable (2023: nil).
The implied volatility assumption is based on historical data for periods of between five and ten years immediately preceding grant date.
Hiscox Ltd Report and Accounts 2024
223
19 Share capital (continued)
20 Insurance contract liabilities and reinsurance contract assets
2024
2023
$m
$m
Insurance contract liabilities
6,396.3
6,604.0
Reinsurance contract assets
(1,976.8)
(2,098.3)
Net insurance contract liabilities
4,419.5
4,505.7
Detailed reconciliation of changes in insurance contract balances during the year is included below in note 20.1.
The analysis of changes is disclosed at a consolidated level in line with how the Group manages and monitors the statement
of financial position. Further details related to changes in the consolidated income statement by segmental reporting are
disclosed in note 4.
20.1(a) Net insurance contract liabilities
Net insurance contracts – analysis by remaining coverage and incurred claims
Net liabilities for remaining coverage
Net liabilities for incurred claims
Year to 31 December 2024
Excluding
loss component
Loss
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
118.8*
–
(1,696.3)
(520.8)
(2,098.3)
Opening liabilities
346.9
7.5
5,427.8
821.8
6,604.0
Net opening balance
465.7
7.5
3,731.5
301.0
4,505.7
Changes in the consolidated income statement
Insurance revenue, net of allocation of reinsurance premiums†
(3,463.1)
–
–
–
(3,463.1)
Insurance service expenses, net of amounts recoverable from
reinsurers
Incurred claims and other attributable expenses
–
(10.4)
2,089.9
57.6
2,137.1
Amortisation of insurance acquisition cash flows
1,075.6
–
–
–
1,075.6
Adjustments to liabilities for incurred claims relating to past service
–
–
(255.4)
(59.4)
(314.8)
Losses and reversals of losses on onerous contracts
–
12.3
–
–
12.3
Effect of changes in non-performance risk of reinsurers
–
–
(0.6)
–
(0.6)
Total net insurance service expenses
1,075.6
1.9
1,833.9
(1.8)
2,909.6
Insurance service result
(2,387.5)
1.9
1,833.9
(1.8)
(553.5)
Net finance (income)/expenses from insurance contracts
(10.0)
–
162.1
–
152.1
Net foreign exchange losses
(24.1)
–
(44.4)
(5.6)
(74.1)
Total change recognised in comprehensive income
(2,421.6)
1.9
1,951.6
(7.4)
(475.5)
Investment components
36.3
–
(36.3)
–
–
Transfer to other items in statement of financial position
(271.8)
–
(702.1)
(0.7)
(974.6)
Net cash flows
Net premium received
3,440.6
–
–
–
3,440.6
Net claims and other insurance service expenses paid
–
–
(1,243.4)
–
(1,243.4)
Insurance acquisition cash flows
(833.3)
–
–
–
(833.3)
Total cash flows
2,607.3
–
(1,243.4)
–
1,363.9
Closing assets
69.7*
–
(1,726.2)
(320.3)
(1,976.8)
Closing liabilities
346.2
9.4
5,427.5
613.2
6,396.3
Net closing balance
415.9
9.4
3,701.3
292.9
4,419.5
*The net liabilities for remaining coverage, excluding loss component, includes LPT ARC gross of premium payables of $532.3 million at 31 December 2023 and
$407.0 million at 31 December 2024.
†Includes allocation of LPT premium of $139.2 million.
224
Hiscox Ltd Report and Accounts 2024
Net liabilities for remaining coverage
Net liabilities for incurred claims
Year to 31 December 2023
Excluding
loss component
Loss
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
186.8*
(0.6)
(2,282.4)
(421.0)
(2,517.2)
Opening liabilities
287.4
2.5
5,737.1
667.3
6,694.3
Net opening balance
474.2
1.9
3,454.7
246.3
4,177.1
Changes in the consolidated income statement
Insurance revenue, net of allocation of reinsurance premiums†
(3,363.8)
–
–
–
(3,363.8)
Insurance service expenses, net of amounts recoverable from
reinsurers
Incurred claims and other attributable expenses
–
(7.7)
1,962.5
72.4
2,027.2
Amortisation of insurance acquisition cash flows
1,039.0
–
–
–
1,039.0
Adjustments to liabilities for incurred claims relating to past service
–
–
(179.5)
(24.1)
(203.6)
Losses and reversals of losses on onerous contracts
–
13.2
–
–
13.2
Effect of changes in non-performance risk of reinsurers
–
–
(4.3)
–
(4.3)
Total net insurance service expenses
1,039.0
5.5
1,778.7
48.3
2,871.5
Insurance service result
(2,324.8)
5.5
1,778.7
48.3
(492.3)
Net finance (income)/expenses from insurance contracts
(9.1)
–
148.8
–
139.7
Net foreign exchange losses
20.5
0.1
52.3
7.4
80.3
Total change recognised in comprehensive income
(2,313.4)
5.6
1,979.8
55.7
(272.3)
Investment components
31.8
–
(31.8)
–
–
Transfer to other items in statement of financial position
(258.3)
–
(682.7)
(1.0)
(942.0)
Net cash flows
Net premium received
3,337.4
–
–
–
3,337.4
Net claims and other insurance service expenses paid
–
–
(988.5)
–
(988.5)
Insurance acquisition cash flows
(806.0)
–
–
–
(806.0)
Total cash flows
2,531.4
–
(988.5)
–
1,542.9
Closing assets
118.8*
–
(1,696.3)
(520.8)
(2,098.3)
Closing liabilities
346.9
7.5
5,427.8
821.8
6,604.0
Net closing balance
465.7
7.5
3,731.5
301.0
4,505.7
*Includes LPT ARC gross of premium receivable $534.1 million at 31 December 2022 and $532.3 million at 31 December 2023.
†Includes allocation of LPT premium of $61.7 million.
Hiscox Ltd Report and Accounts 2024
225
20 Insurance contract liabilities and reinsurance contract assets
20.1(a) Net insurance contract liabilities
Net insurance contracts – analysis by remaining coverage and incurred claims (continued)
20.1(b) Insurance contract liabilities
Insurance contracts – analysis by remaining coverage and incurred claims
Liabilities for remaining coverage
Liabilities for incurred claims
Year to 31 December 2024
LRC Excluding
loss component
Loss
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
–
–
–
–
–
Opening liabilities
346.9
7.5
5,427.8
821.8
6,604.0
Net opening balance
346.9
7.5
5,427.8
821.8
6,604.0
Changes in the consolidated income statement
Insurance revenue
(4,672.5)
–
–
–
(4,672.5)
Insurance service expenses
Incurred claims and other insurance service expenses
–
(10.4)
2,612.6
136.6
2,738.8
Amortisation of insurance acquisition cash flows
1,075.6
–
–
–
1,075.6
Adjustments for liabilities for incurred claims relating to past
service
–
–
(155.2)
(340.5)
(495.7)
Losses and reversals of losses on onerous contracts
–
12.3
–
–
12.3
Total insurance service expenses
1,075.6
1.9
2,457.4
(203.9)
3,331.0
Insurance service result
(3,596.9)
1.9
2,457.4
(203.9)
(1,341.5)
Net finance expense from insurance contracts
–
–
225.5
–
225.5
Foreign exchange movements
(11.1)
–
(69.2)
(3.5)
(83.8)
Total change in the consolidated income statement
(3,608.0)
1.9
2,613.7
(207.4)
(1,199.8)
Investment components
(0.6)
–
0.6
–
–
Transfer to other items in statement of financial position
(277.1)
–
(709.6)
(1.2)
(987.9)
Cash flows
Premium received
4,718.3
–
–
–
4,718.3
Claims and other insurance service expenses paid
–
–
(1,905.0)
–
(1,905.0)
Insurance acquisition cash flows
(833.3)
–
–
–
(833.3)
Total cash flows
3,885.0
–
(1,905.0)
–
1,980.0
Closing assets
–
–
–
–
–
Closing liabilities
346.2
9.4
5,427.5
613.2
6,396.3
Net closing liabilities
346.2
9.4
5,427.5
613.2
6,396.3
226
Hiscox Ltd Report and Accounts 2024
20 Insurance contract liabilities and reinsurance contract assets (continued)
Liabilities for remaining coverage
Liabilities for incurred claims
Year to 31 December 2023
LRC Excluding
loss component
Loss
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
–
–
–
–
–
Opening liabilities
287.4
2.5
5,737.1
667.3
6,694.3
Net opening balance
287.4
2.5
5,737.1
667.3
6,694.3
Changes in the consolidated income statement
Insurance revenue
(4,483.2)
–
–
–
(4,483.2)
Insurance service expenses
Incurred claims and other insurance service expenses
–
(8.3)
2,369.3
112.8
2,473.8
Amortisation of insurance acquisition cash flows
1,039.0
–
–
–
1,039.0
Adjustments for liabilities for incurred claims relating to past service
–
–
(372.9)
36.2
(336.7)
Losses and reversals of losses on onerous contracts
–
13.2
–
–
13.2
Total insurance service expenses
1,039.0
4.9
1,996.4
149.0
3,189.3
Insurance service result
(3,444.2)
4.9
1,996.4
149.0
(1,293.9)
Net finance expense from insurance contracts
–
–
220.7
–
220.7
Foreign exchange movements
24.9
0.1
73.7
7.1
105.8
Total change in the consolidated income statement
(3,419.3)
5.0
2,290.8
156.1
(967.4)
Investment components
(1.0)
–
1.0
–
–
Transfer to other items in statement of financial position
(258.0)
–
(693.1)
(1.6)
(952.7)
Cash flows
Premium received
4,543.8
–
–
–
4,543.8
Claims and other insurance service expenses paid
–
–
(1,908.0)
–
(1,908.0)
Insurance acquisition cash flows
(806.0)
–
–
–
(806.0)
Total cash flows
3,737.8
–
(1,908.0)
–
1,829.8
Closing assets
–
–
–
–
–
Closing liabilities
346.9
7.5
5,427.8
821.8
6,604.0
Net closing liabilities
346.9
7.5
5,427.8
821.8
6,604.0
Hiscox Ltd Report and Accounts 2024
227
20 Insurance contract liabilities and reinsurance contract assets
20.1(b) Insurance contract liabilities
Insurance contracts – analysis by remaining coverage and incurred claims (continued)
20.1(c) Reinsurance contract assets – analysis by remaining coverage and incurred claims
Assets for remaining coverage
Assets for incurred claims
Year to 31 December 2024
ARC Excluding
loss recovery
component
Loss recovery
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
(118.8)
–
1,696.3
520.8
2,098.3
Opening liabilities
–
–
–
–
–
Net opening balance
(118.8)
–
1,696.3
520.8
2,098.3
Changes in the consolidated income statement
Allocation of reinsurance premiums
(1,209.4)
–
–
–
(1,209.4)
Amounts recoverable from reinsurers
Recoveries of incurred claims and other attributable expenses
–
–
522.7
79.0
601.7
Adjustments to assets for incurred claims relating to past service
–
–
100.2
(281.1)
(180.9)
Effect of changes in non-performance risk of reinsurers
–
–
0.6
–
0.6
Total amounts recoverable from reinsurers
–
–
623.5
(202.1)
421.4
Net expense from reinsurance contracts held
(1,209.4)
–
623.5
(202.1)
(788.0)
Net finance income from reinsurance contracts
10.0
–
63.4
–
73.4
Foreign exchange movements
13.0
–
(24.8)
2.1
(9.7)
Total changes in the consolidated income statement
(1,186.4)
–
662.1
(200.0)
(724.3)
Investment components
(36.9)
–
36.9
–
–
Transfer to other items in the statement of financial position
(5.3)
–
(7.5)
(0.5)
(13.3)
Cash flows
Premium paid
1,277.7
–
–
–
1,277.7
Amounts received
–
–
(661.6)
–
(661.6)
Total cash flows
1,277.7
–
(661.6)
–
616.1
Closing assets
(69.7)
–
1,726.2
320.3
1,976.8
Closing liabilities
–
–
–
–
–
Net closing balance
(69.7)
–
1,726.2
320.3
1,976.8
228
Hiscox Ltd Report and Accounts 2024
20 Insurance contract liabilities and reinsurance contract assets (continued)
Assets for remaining coverage
Assets for incurred claims
Year to 31 December 2023
ARC Excluding
loss recovery
component
Loss recovery
component
Estimates of
present value of
future cash flows
Risk adjustment
for non-financial
risk
Total
$m
$m
$m
$m
$m
Opening assets
(186.8)
0.6
2,282.4
421.0
2,517.2
Opening liabilities
–
–
–
–
–
Net opening balance
(186.8)
0.6
2,282.4
421.0
2,517.2
Changes in the consolidated income statement
Allocation of reinsurance premiums
(1,119.4)
–
–
–
(1,119.4)
Amounts recoverable from reinsurers
Recoveries of incurred claims and other attributable expenses
–
(0.6)
406.8
40.4
446.6
Adjustments to assets for incurred claims relating to past service
–
–
(193.4)
60.3
(133.1)
Effect of changes in non-performance risk of reinsurers
–
–
4.3
–
4.3
Total amounts recoverable from reinsurers
–
(0.6)
217.7
100.7
317.8
Net expense from reinsurance contracts held
(1,119.4)
(0.6)
217.7
100.7
(801.6)
Net finance income from reinsurance contracts
9.1
–
71.9
–
81.0
Foreign exchange movements
4.4
–
21.4
(0.3)
25.5
Total changes in the consolidated income statement
(1,105.9)
(0.6)
311.0
100.4
(695.1)
Investment components
(32.8)
–
32.8
–
–
Transfer to other items in the statement of financial position
0.3
–
(10.4)
(0.6)
(10.7)
Cash flows
Premium paid
1,206.4
–
–
–
1,206.4
Amounts received
–
–
(919.5)
–
(919.5)
Total cash flows
1,206.4
–
(919.5)
–
286.9
Closing assets
(118.8)
–
1,696.3
520.8
2,098.3
Closing liabilities
–
–
–
–
–
Net closing balance
(118.8)
–
1,696.3
520.8
2,098.3
Hiscox Ltd Report and Accounts 2024
229
20 Insurance contract liabilities and reinsurance contract assets
20.1(c) Reinsurance contract assets – analysis by remaining coverage and incurred claims (continued)
The development of insurance contract liabilities provides a measure of the Group’s ability to estimate the ultimate cost of claims.
The Group analyses actual claims development compared with previous estimates on an accident year basis.
The Group provides information on the gross and net claims development for the current reporting period and four years prior
to it. The Group considers that there is no significant uncertainty with regard to claims that were incurred more than four years
before the reporting period.
(a) Insurance contract liability for incurred claims – net of reinsurance
Accident year
2020
2021
2022
2023
2024
Total
$m
$m
$m
$m
$m
$m
Estimate of ultimate claims costs as adjusted for
foreign exchange*
at end of accident year:
1,870.7
1,554.1
1,489.8
1,457.4
1,606.7
7,978.7
one period later
1,858.0
1,460.8
1,501.9
1,408.9
6,229.6
two periods later
1,708.0
1,413.3
1,394.0
4,515.3
three periods later
1,673.6
1,385.4
3,059.0
four periods later
1,644.4
1,644.4
Current estimate of cumulative claims
1,644.4
1,385.4
1,394.0
1,408.9
1,606.7
7,439.4
Cumulative payments to date
(1,202.8)
(973.3)
(885.5)
(666.8)
(353.0)
(4,081.4)
Net cumulative liability for incurred claims – accident
years from 2020–2024
441.6
412.1
508.5
742.1
1,253.7
3,358.0
Net cumulative liability for incurred claims in respect of
accident years before 2020
949.3
Effect of discounting
(313.1)
Total Group liability for incurred claims to external parties included in balance sheet – net
3,994.2
*The foreign exchange adjustment arises from the retranslation of the estimates at each date using the exchange rate ruling at 31 December 2024.
The table above excludes reinsurance recoveries related to the retroactive reinsurance contracts, for example legacy portfolio transfer arrangements where the
financial effect of the underlying claims is still uncertain. These are included in reinsurance contract asset for remaining coverage.
(b) Insurance contract liability for incurred claims – gross
Accident year
2020
2021
2022
2023
2024
Total
$m
$m
$m
$m
$m
$m
Estimate of ultimate claims costs as adjusted for
foreign exchange*
at end of accident year:
3,227.3
2,515.3
2,495.5
1,956.1
2,250.7 12,444.9
one period later
3,196.0
2,405.8
2,491.6
1,895.9
9,989.3
two periods later
3,021.0
2,249.3
2,159.6
7,429.9
three periods later
2,954.0
2,185.0
5,139.0
four periods later
2,948.5
2,948.5
Current estimate of cumulative claims
2,948.5
2,185.0
2,159.6
1,895.9
2,250.7 11,439.7
Cumulative payments to date
(2,176.2)
(1,537.4)
(1,225.6)
(794.3)
(393.9)
(6,127.4)
Gross cumulative liability for incurred claims –
accident years from 2020-2024
772.3
647.6
934.0
1,101.6
1,856.8
5,312.3
Gross cumulative liability for incurred claims in respect
of accident years before 2020
1,169.8
Effect of discounting
(441.4)
Total Group liability for incurred claims to external parties included in balance sheet – gross
6,040.7
*The foreign exchange adjustment arises from the retranslation of the estimates at each date using the exchange rate ruling at 31 December 2024.
230
Hiscox Ltd Report and Accounts 2024
20 Insurance contract liabilities and reinsurance contract assets (continued)
20.2 Claims development tables
21 Trade and other payables
2024
2023
$m
$m
Social security and other taxes payable
13.5
12.6
Lease liabilities
79.5
79.8
Accruals and other creditors
249.9
270.1
Total
342.9
362.5
The amounts expected to be settled before and after one year are estimated as follows:
2024
2023
$m
$m
Within one year
270.8
284.9
After one year
72.1
77.6
Total
342.9
362.5
The carrying amounts disclosed above are reasonably approximate to the fair value at the reporting date.
The Group acts as both lessee and lessor in relation to various offices in the UK and overseas, which are held under
non-cancellable lease agreements. The leases have varying terms, escalation clauses and renewal terms.
Extension and termination options were taken into account on recognition of the lease liability if the Group was reasonably
certain that these options would be exercised in the future. As a general rule, the Group recognises non-lease components,
such as services, separately to lease payments.
Maturity analysis – contractual undiscounted cash flows:
2024
2023
$m
$m
Not later than one year
12.7
16.4
Later than one year and not later than five years
44.0
43.2
Later than five years
29.9
36.4
Total undiscounted lease liabilities
86.6
96.0
Income from subleasing
Hiscox acts as a lessor and sublets excess capacity of its office space to third parties.
The total future aggregate minimum lease rentals receivable by the Group as lessor under non-cancellable operating property
leases are as follows:
2024
2023
$m
$m
Not later than one year
2.2
2.2
Later than one year and not later than five years
1.0
1.0
3.2
3.2
Hiscox Ltd Report and Accounts 2024
231
22 Tax expense/(credit)
The Company and its subsidiaries are subject to enacted tax laws in the jurisdictions in which they are incorporated and
domiciled. The principal subsidiaries of the Company and the country in which they are incorporated are listed in note 29.
The amounts charged in the consolidated income statement comprise the following:
2024
2023
$m
$m
Current tax expense/(credit)
Expense for the year
44.2
10.0
Adjustments in respect of prior years
(9.2)
(1.8)
Total current tax expense
35.0
8.2
Deferred tax expense/(credit)
Expense for the year
33.1
(79.6)
Adjustments in respect of prior years
(9.9)
(13.4)
Effect of rate change
–
(1.3)
Total deferred tax expense/(credit)
23.2
(94.3)
Total tax expense/(credit) to the income statement
58.2
(86.1)
The standard rate of corporation tax in Bermuda is 0% whereas the effective rate of tax for the Group is 8.5% (2023: 13.8%).
A reconciliation of the difference is provided below:
2024
2023
$m
$m
Profit before tax
685.4
625.9
Tax calculated at the standard corporation tax rate applicable in Bermuda: 0% (2023: 0%)
–
–
Effects of Group entities subject to overseas tax at different rates
54.2
52.8
Impact of overseas tax rates on:
Effect of rate change
–
(1.3)
Expenses not deductible for tax purposes
5.7
6.8
Tax losses for which no deferred tax asset is recognised
14.1
21.7
Adjustment to tax charge in respect of prior periods
(19.1)
(15.2)
Other
3.3
(150.9)
Tax charge/(credit) for the year
58.2
(86.1)
Included within the current tax, a provision is recognised for those matters for which the tax determination is uncertain but it is
considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best
estimate of the amount expected to become payable.
The Group companies’ tax filings include transactions which are subject to transfer pricing legislation and the taxation authorities
may challenge the tax treatment of those transactions. The Directors are proactively engaged in discussions with the tax
authorities regarding these tax positions. The Group determines, based on tax and transfer pricing advice provided by external
specialist tax advisors, that: it is probable that the tax authorities will assess additional taxes in respect of these filings, for which
provisions have been made; and the amount recognised at the end of the reporting period represents the best estimate of the
amount expected to be settled, taking into account the range of potential outcomes and the current progression of discussions
with tax authorities.
No provision for current tax has been made in respect of taxes assessable under legislation implementing global minimum tax
rules in line with the OECD two-Pillar reform framework (‘Pillar Two legislation’). The Group has applied the mandatory exception
under IAS12 to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
232
Hiscox Ltd Report and Accounts 2024
23 Deferred tax
2024
2023
$m
$m
Deferred tax assets
179.4
180.7
Deferred tax liabilities
(75.8)
(56.9)
Net deferred tax asset/(liability)
103.6
123.8
2024
2023
$m
$m
Bermuda ETA
154.6
150.0
Trading losses in overseas entities
33.4
37.4
Employee retirement benefit assets
(11.4)
(12.8)
Goodwill and intangible assets
(21.2)
(14.6)
Property, plant and equipment
(1.0)
(9.0)
Financial assets
(1.5)
(0.2)
Insurance contract liabilities
(66.6)
(46.2)
Employee share options
16.5
16.5
Other
0.8
2.7
Net deferred tax asset/(liability)
103.6
123.8
Deferred tax assets and deferred tax liabilities relating to the same tax authority are presented net in the consolidated statement
of financial position.
At 31 December
2023
Income
statement
(charge)
/credit
Recognised
in other
comprehensive
income/equity
Foreign
exchange
2024
$m
$m
$m
$m
$m
Bermuda ETA
150.0
4.6
–
–
154.6
Trading losses in overseas entities
37.4
(3.9)
–
(0.1)
33.4
Employee retirement benefit assets
(12.8)
(0.4)
1.6
0.2
(11.4)
Goodwill and intangible assets
(14.6)
(6.8)
–
0.2
(21.2)
Property, plant and equipment
(9.0)
8.0
–
–
(1.0)
Financial assets
(0.2)
(1.3)
–
–
(1.5)
Insurance contract liabilities
(46.2)
(20.0)
–
(0.4)
(66.6)
Employee share options
16.5
0.6
(0.2)
(0.4)
16.5
Other
4.8
(4.0)
–
–
0.8
Net deferred tax asset/(liability)
125.9
(23.2)
1.4
(0.5)
103.6
Less assets held for sale
(2.1)
2.1
–
–
–
Net deferred tax asset/(liability)
123.8
(21.1)
1.4
(0.5)
103.6
Movements in deferred and current tax relating to tax deductions arising on employee share options are recognised in the
statement of changes in equity to the extent that the movement exceeds the corresponding charge to the income statement.
Movements in deferred tax relating to the employee retirement benefit obligation are recognised in the statement of
comprehensive income to the extent that the movement corresponds to actuarial gains and losses recognised in the statement
of comprehensive income.
Hiscox Ltd Report and Accounts 2024
233
The total income recognised outside the income statement is $4.2 million (2023: expense of $0.4 million), comprising $1.4 million
deferred tax income and $2.8 million current tax income (2023: $1.3 million deferred tax income and $1.7 million current
tax expense).
Deferred tax assets of $33.4 million (2023: $37.4 million), relating to losses arising in overseas entities, which depend on the
availability of future taxable profits, have been recognised. Business projections indicate it is probable that sufficient future
taxable income will be available against which to offset these recognised deferred tax assets within five years. $27.7 million
(2023: $27.7 million) of the tax losses to which these assets relate will expire within ten years; a further $5.9 million
(2023: $9.7 million) will expire after ten years or will be available indefinitely. The Group has not provided for deferred tax
assets totalling $91.6 million (2023: $84.8 million) in relation to losses in overseas companies and unutilised tax credits of
$439.8 million (2023: $415.5 million).
In accordance with IAS 12, all deferred tax assets and liabilities are classified as non-current. The amount of deferred tax asset
expected to be recovered after more than 12 months is $101.8 million (2023: $123.8 million).
Factors affecting tax charges in future years
Over one hundred and thirty countries have agreed to implement a new global minimum tax (GMT) as Pillar Two of the OECD
two-Pillar reform framework. The GMT uses adjusted consolidated accounting data to calculate the effective tax rate (ETR) paid
on profits by a multinational in each jurisdiction in which it operates; and then applies a ‘top-up tax’ on any jurisdictions where the
ETR is below 15%.
The majority of jurisdictions in which the Group operates have substantively enacted such legislation (‘Pillar Two legislation’). The
Hiscox Group is within the scope of these rules, by virtue of the fact that the Group’s consolidated revenue in at least two of the
four years prior to 2024 exceeded €750 million.
This legislation brings into effect the Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-Up Tax (QDMTT) from
2024, and the Undertaxed Profits Rule (UPR) from 2025. The rules in force for 2024 apply top-up taxes in participating
jurisdictions in respect of any profits in subsidiaries for which the ETR is below 15%. The Group expects any top-up tax payable
in 2024 to be immaterial and has therefore not provided for any such current tax.
As a response to the Pillar Two reform, Bermuda has introduced a corporate income tax (Bermuda CIT) which will apply at a rate
of 15% to profits of certain Bermuda resident entities with effect from 1 January 2025. The Group expects to be subject to
Bermuda CIT. The Bermuda CIT will apply at a rate of 15% on the profits of Hiscox’s Bermudian constituent entities. This will
have a consequential effect on the Group’s future tax charge.
A deferred tax asset of $154.6 million in relation to the economic transition adjustment (ETA) required by this legislation is
recognised at the end of the reporting period. On first entering the scope of Bermuda CIT, the ETA requires each in-scope entity
to estimate the fair value of the assets and liabilities held by the Bermudian business at 30 September 2023 and use this in place
of book value for tax purposes, creating temporary differences. The principal driver of this temporary difference is the customer
relationships intangible asset which is subject to significant judgement and estimates, including forecast cash flows, the discount
rate and capital allocation charges.
The impact of these changes on the Group’s ETR in future periods will be dependent on the level of taxable profits in those
periods for the Group’s Bermuda constituent entities. In January 2025, the OECD published new Guidance on the interpretation
of the Pillar Two income tax model rules, which advises that deferred tax assets recognised by Bermuda companies as a result of
the ETA should only be creditable for top-up tax purposes until the end of 2026. Should this Guidance be substantively enacted
into legislation in future periods, the Group expects a corresponding tax liability to arise equivalent to 80% of the value of the ETA,
spread over eight years, from 2027. Under the existing IAS12 exception for disclosing information about deferred tax impacts of
Pillar Two taxes, however, this would not be recognised as deferred tax but would instead increase the Group’s effective tax rate
in future periods.
The proportion of the Group’s profits expected to be otherwise impacted by Pillar Two taxes is between $0 million and $5 million,
currently taxed at 0% to 10%.
234
Hiscox Ltd Report and Accounts 2024
23 Deferred tax (continued)
24 Employee retirement benefit obligations
The Company’s subsidiary Hiscox plc operates a defined benefit pension scheme based on final pensionable salary. The
scheme closed to future accruals with effect from 31 December 2006 and active members were offered membership of
a defined contribution scheme from 1 January 2007. The funds of the defined benefit scheme are controlled by the Trustees
and are held separately from those of the Group. 61% of any scheme surplus or deficit is recharged to Syndicate 33. The full
pension obligation of the Hiscox defined benefit pension scheme is recorded and the recovery from the third-party Names for
their share of the Syndicate 33 recharge is shown as a separate asset.
The gross amount recognised in the consolidated statement of financial position in respect of the defined benefit scheme is
determined as follows:
2024
2023
$m
$m
Present value of scheme obligations
209.1
236.2
Fair value of scheme assets
(249.1)
(280.6)
Net amount recognised as a defined benefit surplus
(40.0)
(44.4)
As the fair value of the scheme assets exceeds the present value of scheme obligations, the scheme reports a surplus
(2023: reports a surplus).
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit actuarial cost method.
A formal full actuarial valuation is performed on a triennial basis, most recently at 31 December 2023, and updated at the end of
each intervening reporting period by the actuaries. The year end present value of the defined benefit obligation under IAS 19 is
determined by discounting the estimated future cash flows, using interest rates of AA rated corporate bonds that have terms to
maturity that approximate to the terms of the related pension liability, and is not impacted directly by the triennial valuation.
The scheme assets are invested in pooled investment vehicles as follows:
At 31 December
2024
2024
2023
(restated)
2023
(restated)
Total
Of which not
quoted on an
active market
Total
Of which not
quoted on an
active market
$m
$m
$m
$m
Invested assets
UK equity*
6.6
6.6
6.8
6.8
US equity*
–
–
7.3
7.3
Diversified growth*
43.3
43.3
41.3
41.3
Bonds†
65.8
65.8
66.0
66.0
Liability driven investments†
100.7
100.7
128.8
128.8
Assets held by insurance company
2.0
2.0
2.8
2.8
Cash†
30.7
30.7
27.6
27.6
249.1
249.1
280.6
280.6
*These were previously aggregated and presented as pooled investment vehicles.
†In 2023, liability driven investments of $128.8 million and cash of $6.5 million were previously presented as part of bonds.
Hiscox Ltd Report and Accounts 2024
235
The amounts recognised in total comprehensive income are as follows:
For the year ended 31 December
2024
2023
$m
$m
Past service cost
–
–
Interest cost on defined benefit obligation
11.0
10.9
Interest income on plan assets
(13.1)
(12.6)
Net interest income
(2.1)
(1.7)
Total income recognised in operational expenses in the income statement
(2.1)
(1.7)
Remeasurements
Effect of changes in actuarial assumptions
(26.5)
6.3
Return on plan assets (excluding interest income)
32.2
(1.3)
Remeasurement of third-party Names’ share of defined benefit obligation
(0.9)
(0.9)
Total remeasurement included in other comprehensive income
4.8
4.1
Total defined benefit charge recognised in comprehensive income
2.7
2.4
The movement in the surplus recognised in the consolidated statement of financial position is as follows:
2024
2023
$m
$m
Group defined benefit surplus at beginning of year
(44.4)
(20.9)
Third-party Names' share at beginning of year
(5.0)
(4.3)
Net defined benefit surplus at beginning of year
(49.4)
(25.2)
Defined benefit income included in the income statement
(2.1)
(1.7)
Contribution by employer
–
(24.8)
Total remeasurements included in other comprehensive income
4.8
4.1
Other movements
1.1
(1.8)
Net defined benefit surplus at end of year
(45.6)
(49.4)
Third-party Names' share at end of year
5.6
5.0
Group defined benefit surplus at end of year
(40.0)
(44.4)
A reconciliation of the fair value of scheme assets is as follows:
2024
2023
$m
$m
Opening fair value of scheme assets
280.6
234.8
Interest income
13.1
12.6
Cash flows
Contribution by the employer
–
24.8
Benefit payments
(7.8)
(7.8)
Remeasurements
Return on plan assets (excluding interest income)
(32.2)
1.3
Foreign exchange movements
(4.6)
14.9
Closing fair value of scheme assets
249.1
280.6
236
Hiscox Ltd Report and Accounts 2024
24 Employee retirement benefit obligations (continued)
A reconciliation of the present value of obligations of the scheme is as follows:
2024
2023
$m
$m
Opening present value of scheme obligations
236.2
213.9
Past service cost
–
–
Interest expense
11.0
10.9
Cash flows
Benefit payments
(7.8)
(7.8)
Remeasurements
Changes in actuarial assumptions
(26.5)
6.3
Foreign exchange movements
(3.8)
12.9
Closing present value of scheme obligations
209.1
236.2
Assumptions regarding future mortality experience are set based on the S4PA (2023: S3PA) light tables. Reductions in future
mortality rates are allowed for by using the CMI 2023 (2023: 2019) projections (core model) with 1.25% per annum long-term
trend for improvements.
The average life expectancy in years of a pensioner retiring at age 60 on the end of the reporting period is as follows:
2024
2023
Male
27.9
29.0
Female
29.8
30.8
The average life expectancy in years of a pensioner retiring at 60, 15 years after the end of the reporting period, is as follows:
2024
2023
Male
28.1
29.4
Female
30.2
31.0
The weighted average duration of the defined benefit obligation at 31 December 2024 was 14.0 years (2023: 16.0 years)
Other principal actuarial assumptions are as follows:
2024
2023
%
%
Discount rate
5.57
4.77
Inflation assumption (RPI)
3.07
2.99
Inflation assumption (CPI)
2.47
2.39
Pension increases
2.89
2.82
The scheme operates under UK Trust law and the Trust is a separate legal entity from the Group. The scheme is governed by a
board of Trustees, comprised of member-nominated and employer-appointed Trustees. The Trustees are required by law to act
in the best interests of scheme members and are responsible for setting certain policies, together with the principal employer.
The scheme is funded by the Group when required. Funding of the scheme is based on a separate actuarial valuation for funding
purposes for which assumptions may differ from the assumptions above. Funding requirements are formally set out in the
statement of funding principles, schedule of contributions and recovery plan agreed between the Trustees and the Group.
A triennial valuation was carried out as at 31 December 2023 and resulted in a surplus position of £3.7 million ($4.7 million)
on a technical provisions basis. The previous recovery plan has therefore now fallen away and no further deficit recovery
contributions are due.
While management believes that the actuarial assumptions are appropriate, any significant changes to those could affect
the statement of financial position and income statement. For example, an additional one year of life expectancy for all
scheme members would increase the scheme obligations by £4.2 million ($5.3 million) at 31 December 2024 (2023: £5.4 million
($6.9 million)), and would increase/reduce the recorded net deficit/surplus on the statement of financial position by the
same amounts.
Hiscox Ltd Report and Accounts 2024
237
24 Employee retirement benefit obligations (continued)
A Court of Appeal legal ruling in July 2024 (Virgin Media Limited v NTL Pension Trustees II Limited) decided that certain pension
scheme amendments were invalid if they were not accompanied by the correct actuarial confirmation. Pensions industry
stakeholders have called on the Department for Work and Pensions to provide clarity and further legal actions are expected in
this area. The Group continues to believe that the pension scheme deed, including relevant amendments remains valid and has
set the IAS19 assumptions accordingly. The Group will monitor any further developments and assess any impact on the Group’s
pension scheme.
The most sensitive and judgemental financial assumptions are the discount rate and inflation. These are considered further below.
CPI revaluation in deferment is used for contracted-out members. Contracted-in members are linked to RPI, as well as for all
pension in payment increases.
The Group has estimated the sensitivity of the present value of unfunded obligations to isolated changes in these assumptions
at 31 December 2024 as follows:
Present value
of unfunded
obligations
before change
in assumption
Present value
of unfunded
obligations
after change
(Increase)
/decrease
in obligation
recognised on
balance sheet
$m
$m
$m
Effect of change in discount rate
Use of discount rate of 5.82%
209.1
202.4
6.7
Use of discount rate of 5.32%
209.1
216.1
(7.0)
Effect of change in discount rate
Use of RPI inflation assumption of 3.32%
209.1
211.3
(2.2)
Use of RPI inflation assumption of 2.82%
209.1
207.1
2.0
25 Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held in
treasury as own shares.
Basic
2024
2023
Profit for the period attributable to owners of the Company ($m)
627.2
712.0
Weighted average number of ordinary shares in issue (thousands)
342,273
345,402
Basic earnings per share (cents per share)
183.2
206.1
Diluted
Diluted earnings per share is calculated by adjusting the assumed conversion of all dilutive potential ordinary shares. The
Company has one category of dilutive potential ordinary shares, share options and awards. For the share options, a calculation is
made to determine the number of shares that could have been acquired at fair value (determined as the average annual market
share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share
options. The number of shares calculated as above is compared with the number of shares that would have been issued
assuming the exercise of the share options.
2024
2023
Profit for the period attributable to owners of the Company ($m)
627.2
712.0
Weighted average number of ordinary shares in issue (thousands)
342,273
345,402
Adjustment for share options (thousands)
9,841
7,981
Weighted average number of ordinary shares for diluted earnings per share (thousands)
352,114
353,383
Diluted earnings per share (cents per share)
178.1
201.5
Diluted earnings per share has been calculated after taking account of 6,263,301 (2023: 5,190,855) PSP awards, 371,118
(2023: 648,208) options under SAYE schemes and 3,206,786 (2023: 2,142,256) employee share awards.
238
Hiscox Ltd Report and Accounts 2024
24 Employee retirement benefit obligations (continued)
26 Dividends paid to owners of the Company
2024
2023
$m
$m
Final dividend for the year ended:
31 December 2023 of 25.0¢ (net) per share
86.0
–
31 December 2022 of 24.0¢ (net) per share
–
82.8
Interim dividend for the year ended
31 December 2024 of 13.2¢ (net) per share
44.8
–
31 December 2023 of 12.5¢ (net) per share
–
43.3
130.8
126.1
The interim and final dividend for 2023 was paid either in cash or issued as a Scrip Dividend at the option of the shareholder.
The interim dividend for the year ended 31 December 2023 was paid in cash of $42.7 million and 43,673 shares for a Scrip
Dividend. The final dividend for the year ended 31 December 2023 of 25.0¢ was paid in cash of $84.4 million and 108,222
shares for the Scrip Dividend.
The interim dividend for 2024 was paid either in cash or issued as a Scrip Dividend at the option of the shareholder. The amounts
were $42.6 million in cash and 144,509 shares for a Scrip Dividend.
The Board recommended a final dividend of 29.9¢ per share to be paid, subject to shareholder approval, on 15 May 2025 to
shareholders registered on 25 April 2025. Dividends will be paid in Sterling unless shareholders elect to be paid in US Dollars.
The foreign exchange rate to convert the dividends declared in US Dollars into Sterling will be based on the average exchange
rate in the five business days prior to the Scrip Dividend price being determined. On this occasion, the period will be between
20 May 2025 and 27 May 2025 inclusive.
A Scrip Dividend alternative will be offered to the owners of the Company.
When determining the level of dividend each year, the Board considers the ability of the Group to generate cash and the
availability of that cash in the Group, while considering constraints such as regulatory capital requirements and the level
required to invest in the business. This is a progressive policy and is expected to be maintained for the foreseeable future.
Hiscox Ltd Report and Accounts 2024
239
27 Contingencies and guarantees
The Group’s parent company and subsidiaries may become involved in legal proceedings, claims and litigation in the normal
course of business. The Group reviews and, in the opinion of the Directors, maintains sufficient provision, capital and reserves
in respect of such claims.
The following guarantees have also been issued:
(a)
Hiscox Dedicated Corporate Member Limited (HDCM) and Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda)
provide assets under a Security and Trust Deed charged to Lloyd’s of London, to meet any liabilities that occur from their
interest in Syndicates 33 and 3624. At 31 December 2024, HDCM held $79.9 million of investments (2023: $69.6 million),
$12.7 million of cash (2023: $12.9 million) and a $106.4 million LOC (2023: $241.0 million) in favour of Lloyd’s of London
under this arrangement. At 31 December 2024, Hiscox Bermuda held $216.1 million of investments (2023: $384.6 million),
$19.9 million of cash (2023: $95.2 million) and a $159.6 million LOC (2023: $25.0 million) in favour of Lloyd’s of London
under this arrangement.
(b)
In 2020, HDCM entered into a $65.0 million Funds at Lloyd’s agreement under which the lending bank provides assets on
HDCM’s behalf under a security and trust deed charged to Lloyd’s of London as part of the Company’s Funds at Lloyd’s
provision. This has been extended annually. At 31 December 2023 and 2024 the full $65.0 million was utilised.
(c)
In June 2024, Hiscox plc renewed its LOC and revolving credit facility with Lloyds Banking Group, as agent for a syndicate
of banks. The facility may be drawn in cash up to $650.0 million (2023: $600.0 million) under a revolving credit facility and
LOC up to $266.0 million (2023: $266.0 million). The terms also provide that the facility may be drawn in USD, GBP or EUR,
or another currency with the agreement of the banks. At 31 December 2024, $266.0 million (2023: $266.0 million) was
utilised by way of LOC to support the Funds at Lloyd’s requirement and $nil cash drawings were outstanding (2023: $nil).
(d)
The Council of Lloyd’s has the discretion to call a contribution of up to 5% of capacity if required from the
managed Syndicates.
(e)
As Hiscox Bermuda is not an admitted insurer or reinsurer in the USA, the terms of certain US insurance and reinsurance
contracts require Hiscox Bermuda to provide LOCs or other terms of collateral to clients. Hiscox Bermuda has in place a
LOC reimbursement and pledge agreement with Citibank for the provision of a committed LOC facility in favour of USA
ceding companies and other jurisdictions, and also committed LOC facility agreements with National Australia Bank and
Commerzbank AG. The agreements combined allow Hiscox Bermuda to request the issuance of up to $395.0 million in
committed LOCs (2023: $470.0 million). LOCs issued under these facilities are collateralised by cash, US government and
corporate securities of Hiscox Bermuda. LOCs under these facilities totalling $205.1 million were issued with an effective
date of 31 December 2024 (2023: $207.0 million) and these were collateralised by US government and corporate securities
with a fair value of $251.2 million (2023: $233.7 million). In addition, Hiscox Bermuda maintained assets in trust accounts to
collateralise obligations under various reinsurance agreements. At 31 December 2024, total cash and marketable securities
with a carrying value of approximately $46.2 million (2023: $36.2 million) were held in external trusts. Cash and marketable
securities with an approximate market value of $521.9 million (2023: $535.2 million) were held in trust in respect of internal
quota share arrangements.
(f)
Hiscox Société Anonyme has arranged bank guarantees with respect to its various office deposits for a total of €0.5 million
(2023: €0.3 million).
(g)
See note 22 for tax-related contingent liabilities.
240
Hiscox Ltd Report and Accounts 2024
28 Capital commitments
Refer to note 21 for lease commitments and income from sub-leasing and note 24 for the Group’s funding contributions to the
defined benefit scheme. The Group’s capital commitments contracted for at the end of the reporting period but not yet incurred
for property, plant, equipment and software development were $0.2 million (2023: $1.6 million).
The Group has given an undertaking to provide up to $296.7 million in private credit funds (2023: $nil). The table below shows
the total commitment and the amount that remains undrawn as at 31 December 2024.
Total commitment in
original currency
Total
commitment
Undrawn
commitment
m
$m
$m
Hiscox Insurance Company (Bermuda) Limited
$115
115.0
65.4
Hiscox Société Anonyme
€45
46.6
32.3
Hiscox Insurance Company Inc.
$85
85.0
48.6
Hiscox Insurance Company Limited
£40
50.1
33.5
Total
296.7
179.8
29 Principal subsidiary companies of Hiscox Ltd at 31 December 2024
Company
Nature of business
Country
Hiscox plc*
Holding company
United Kingdom
Hiscox Insurance Company Limited
General insurance
United Kingdom
Hiscox Insurance Company (Guernsey) Limited*
General insurance
Guernsey
Hiscox Holdings Inc.
Holding company
USA (Delaware)
ALTOHA, Inc.
Insurance holding company
USA (Delaware)
Hiscox Insurance Company Inc.
General insurance
USA (Illinois)
Hiscox Inc.
Insurance intermediary
USA (Delaware)
Hiscox Special Risks Agency (Americas) Inc.
Underwriting agency
USA (Delaware)
Hiscox Insurance Services Inc.
Insurance intermediary
USA (Delaware)
Hiscox Speciality Insurance Company Inc.
General insurance
USA (Illinois)
Hiscox Insurance Company (Bermuda) Limited*
General insurance and reinsurance
Bermuda
Hiscox Dedicated Corporate Member Limited
Lloyd’s corporate Name
United Kingdom
Hiscox Re Insurance Linked Strategies Limited*
Investment manager
Bermuda
Hiscox Agency Limited*
Lloyd’s service company
Bermuda
Hiscox Dollar Holdings Ltd*
Inactive
Bermuda
Hiscox Services Ltd*
Service company
Bermuda
Hiscox Holdings Limited
Insurance holding company
United Kingdom
Hiscox Syndicates Limited
Lloyd’s managing agent
United Kingdom
Hiscox ASM Ltd.
Insurance intermediary
United Kingdom
Hiscox Underwriting Group Services Limited
Service company
United Kingdom
Hiscox Underwriting Ltd
Underwriting agent
United Kingdom
Hiscox Société Anonyme*
General insurance
Luxembourg
Hiscox Insurance Services (Guernsey) Limited
Underwriting agency
Guernsey
Hiscox MGA Limited
Insurance intermediary
United Kingdom
Hiscox Insurance Holdings Limited
Holding company
United Kingdom
Hiscox Connect Limited
Service company
United Kingdom
Hiscox Assure SAS
Insurance intermediary
France
Direct Asia Insurance (Holdings) Pte Ltd
Holding company
Singapore
Direct Asia Insurance (Singapore) Pte Ltd
General insurance
Singapore
Direct Asia Management Services Pte Ltd
Service company
Singapore
*Held directly by Hiscox Ltd.
All principal subsidiaries are wholly owned. The proportion of voting rights of subsidiaries held is the same as the proportion
of equity shares held.
Hiscox Ltd Report and Accounts 2024
241
30 Related-party transactions
Details of the remuneration of the Group’s key personnel, presented in Sterling, are shown in the Directors' remuneration report
2024 on pages 126 to 139. A number of the Group’s key personnel hold insurance contracts with the Group, all of which are on
normal commercial terms and are not material in nature.
The following transactions were conducted with related parties during the year.
(a) Syndicate 33 at Lloyd’s
Related-party balances between Group companies and Syndicate 33 reflect the 27.4% interest (2023: 27.4%) that the Group
does not own, and are as follows.
Transactions in
the income statement
for the year ended
Balances
outstanding
receivable/(payable) at
31 December
2024
31 December
2023
31 December
2024
31 December
2023
$m
$m
$m
$m
Hiscox Syndicates Limited
21.5
24.2
32.4
23.3
Hiscox Group Insurance carriers
38.0
20.7
(55.0)
(75.1)
Hiscox Group Insurance intermediaries
7.1
7.4
(2.9)
(4.2)
Other Hiscox Group companies
53.8
47.6
(1.4)
(0.3)
120.4
99.9
(26.9)
(56.3)
(b) Transactions with associates
Certain companies within the Group conduct insurance and other business with associates. These transactions arise in the
normal course of obtaining insurance business through brokerages, and are based on arm’s length arrangements.
2024
2023
$m
$m
Insurance revenue achieved through associates
8.5
10.9
Commission expense charged by associates
2.2
2.9
There were no material outstanding balances with associates.
Details of the Group’s associates are given in note 13.
(c) Internal reinsurance arrangements
During the current and prior year, there were a number of reinsurance arrangements entered into in the normal course of trade
between various Group companies. The related results of these transactions have been eliminated on consolidation.
31 Events after the reporting period
There are no material events that have occurred after the reporting date.
242
Hiscox Ltd Report and Accounts 2024
The Group uses, throughout its financial publications,
alternative performance measures (APMs) in addition to the
figures that are prepared in accordance with UK-adopted
international accounting standards. The Group believes that
these measures provide useful information to enhance the
understanding of its financial performance. The APMs are:
combined, claims and expense ratios, return on equity, net
asset value per share and net tangible asset value per share,
insurance contract written premium, net insurance contract
written premium and prior-year developments. These are
common measures used across the industry, and allow the
reader of the report to compare across peer companies. The
APMs should be viewed as complementary to, rather than a
substitute for, the figures prepared in accordance with
accounting standards.
– Combined, claims and expense ratios
The combined ratio is calculated as the sum of the claims
ratio and the expense ratio. Claims are discounted under
IFRS 17 which can introduce volatility to the ratios if interest
rates move significantly during a period, therefore ratios are
also presented on an undiscounted basis. The combined,
claims and expense ratios are common measures enabling
comparability across the insurance industry, and are used
by the Group to measure the relative underwriting
profitability of the business by reference to its costs as a
proportion of the insurance revenue net of allocation of
reinsurance premiums. The calculation is discussed further
in note 4, operating segments.
• Return on equity
The ROE is shown in note 6, along with an explanation
of the calculation. Use of ROE is common within the
financial services industry, and the Group uses ROE as
one of its key performance indicators. While the measure
enables the Group to compare itself against other peer
companies in the insurance industry, it is also a key
measure internally where it is used to compare the
profitability of business segments, and underpins the
performance-related pay and pre-2018 share-based
payment structures.
– Net asset value (NAV) per share and net tangible asset
value per share
NAV per share and net tangible asset value per share are
shown in note 5, along with an explanation of the
calculation. Net tangible asset value comprises total
equity excluding intangible assets. The Group uses
NAV per share as one of its key performance indicators,
including using the movement of NAV per share in the
calculation of the options vesting of awards granted
under PSPs from 2018 onwards. This is a widely used
key measure for management and also for users of the
financial statements to provide comparability across
peers in the market.
• Insurance contract written premium (ICWP) and net
insurance contract written premium
ICWP is the Group’s top-line key performance indicator,
comprising premiums on business incepting in the
financial year, adjusted for estimates of premiums written
in prior accounting periods, reinstatement premium and
non-claim dependent commissions.
The tables below reconcile the ICWP back to insurance
revenue and net insurance contract written premium back
to net insurance revenue.
Writing insurance policies is the Group's primary function
and this measure allows a written premium measure
alongside the earned premium basis adopted by the
Group under the premium allocation approach for
insurance revenue under IFRS 17.
2024
2023
$m
$m
Insurance contract written
premium
4,766.9
4,598.2
Change in unearned premium
included in the liability for
remaining coverage
(94.4)
(115.0)
Insurance revenue
4,672.5
4,483.2
2024
2023
$m
$m
Net insurance contract written
premium
3,675.6
3,555.8
Change in unearned premium
included in the liability for
remaining coverage
(94.4)
(115.0)
Change in reinsurance provision
for unearned premium included
in asset for remaining coverage
(118.1)
(77.0)
Net insurance revenue
(Insurance revenue less
allocation of reinsurance
premiums)
3,463.1
3,363.8
Alternative performance measures
Hiscox Ltd Report and Accounts 2024
243
– Prior-year developments
Prior-year developments are a measure of favourable
or adverse development on claims reserves, net of
reinsurance, that existed at the end of the prior year.
The prior-year development is calculated as the positive
or negative movement in ultimate losses on prior accident
years during the year on an undiscounted basis adjusted
for LPT premium.
Prior-year developments are a useful measure as they
enables users of the financial statements to compare and
contrast the Group's performance relative to peer
companies and to understand the consistency of the
Group's conservative approach to reserving.
The LPT premium reclass captures the LPT reinsurance
recoveries due to changes in ultimate losses related to
the covered business which is recognised in the
reinsurance asset held for remaining coverage.
Prior-year development recognised for the year amounts
to $145.5 million (2023: $122.8 million) and comprises:
2024
2023
$m
$m
Adjustment to liabilities for
incurred claims relating to past
service, net of reinsurance
recoveries (on a present value
basis)
314.8
203.6
Adjustment for discounting
impact
(30.1)
(19.1)
Adjustment for LPT premium
and experience adjustment
(139.2)
(61.7)
145.5
122.8
244
Hiscox Ltd Report and Accounts 2024
2024
2023
2022
2021
2020
$m
$m
$m
$m
$m
Results
Profit/(loss) before tax
685.4
625.9*
275.6
190.8†
(268.5)†
Insurance revenue
4,672.5
4,483.2*
4,273.3
–
–
Profit/(loss) for the year after tax
627.2
712.0
253.9
189.5†
(293.7)†
Assets employed
Goodwill and intangible assets
308.8
323.9
320.4
313.1
298.9
Financial assets carried at fair value
7,077.6
6,574.4
5,812.1
6,041.3
6,116.8
Cash and cash equivalents
1,227.0
1,437.0
1,350.9
1,300.7
1,577.2
Insurance contract liabilities and reinsurance contract assets
(4,419.5)
(4,505.7)
(4,177.1) (4,690.4)†
(5,468.8)†
Other net liabilities
(504.0)
(532.9)
(671.3)
(155.4)
(170.2)
Net assets
3,689.9
3,296.7
2,635.0
2,539.3
2,353.9
Net assets value per share (cents)
1,086.4
951.1
764.5
739.8
689.0
Key statistics
Basic earnings/(loss) per share (¢)
183.2
2.1
73.8
55.3†
(91.6)†
Diluted earnings/(loss) per share (¢)
178.1
2.0
72.7
54.7†
(90.6)†
Combined ratio (%)
84.7‡
85.5‡
88.7‡
93.2†
114.5†
Return on equity (%)
19.8
27.6
10.1
8.1†
(11.8)†
Dividends per share (¢)
43.1
37.5
36.0
34.5
–
Share price – high (p)§
1,281.0
1,193.0
1,106.5
1,004.0
1,431.0
Share price – low (p)§
998.0
938.0
827.2
770.0
666.4
*These numbers were previously transposed and have now been corrected.
†Represent balances reported under IFRS 4 and IAS 39.
‡Represents combined ratio on a discounted basis.
§Closing mid-market prices.
The five-year summary is unaudited.
Five-year summary
Hiscox Ltd Report and Accounts 2024
245
ABI stands for Association of
British Insurers.
ABIR stands for Association of
Bermuda Insurers and Reinsurers.
ACA stands for Associate
Chartered Accountant.
AGM stands for Annual General Meeting.
ARC stands for assets for
remaining coverage.
BIBA stands for British Insurance
Brokers’ Association.
Big-ticket stands for large and
complex (re)insurance business written
through Hiscox London Market and
Hiscox Re & ILS.
BMA stands for Bermuda
Monetary Authority.
BSCR stands for Bermuda Solvency
Capital Requirement.
CBES stands for Climate Biennial
Exploratory Scenario.
CGU stands for cash-generating unit.
CIAB stands for Council of Insurance
Agents and Brokers.
CIT stands for corporate income tax.
COR stands for combined ratio.
CSRD stands for Corporate
Sustainability Reporting Directive.
CVaR stands for Climate Value-at-Risk.
DEI stands for diversity, equity
and inclusion.
D&O stands for directors and
officers’ insurance.
DPD stands for direct and
partnership division.
DTA stands for deferred tax asset.
EAD stands for exposure at default.
ECL stands for expected credit loss.
EPS stands for earnings per share.
ESG stands for environmental, social
and governance.
ETR stands for effective tax rate.
FCA stands for Financial
Conduct Authority.
FRC stands for Financial
Reporting Council.
FVOCI stands for fair value through
other comprehensive income.
FVPL stands for fair value through
profit or loss.
GBP stands for Great British
Pounds (Sterling).
GEC stands for Group Executive
Committee.
GHG stands for greenhouse gas.
GIST stands for general insurance
stress test.
GMM stands for General
Measurement Model.
GRCC stands for Group Risk
and Capital Committee.
GRI stands for Global
Reporting Initiative.
GSSA stands for Group Solvency
Self Assessment.
GUR stands for Group
Underwriting Review.
H1 stands for first half of the year.
H2 stands for second half of the year.
IAS stands for International
Accounting Standards.
IBNR stands for incurred but
not reported.
ICWP stands for insurance contract
written premium.
IFRS stands for the International
Financial Reporting Standards.
ILS stands for insurance-linked
securities.
IPCC stands for Intergovernmental
Panel on Climate Change.
ISSB stands for International
Sustainability Standards Board.
ITR stands for implied temperature loss.
KPI stands for key
performance indicator.
LGD stands for loss given default.
LIC stands for liability for incurred claims.
LOC stands for Letter of Credit.
LMA stands for Lloyd’s
Market Association.
LPT stands for legacy
portfolio transaction.
LRC stands for liability for
remaining coverage.
LTIP stands for long-term incentive plan.
MSCI stands for Morgan Stanley
Capital International.
NAV stands for net asset value.
NAVPS stands for net asset value
per share.
OCI stands for other
comprehensive income.
OECD stands for Organisation
for Economic Co-operation
and Development.
ORSA stands for own risk and
solvency assessment.
PAA stands for premium
allocation approach.
PBT stands for profit before tax.
PD stands for probability of default.
PRA stands for Prudential
Regulation Authority.
PSP stands for performance share plan.
Re stands for reinsurance.
ROE stands for return on equity.
RIMS stands for Risk and Insurance
Management Society.
SME stands for small- and medium-
sized enterprises.
SPPI stands for solely payments of
principal and interest.
USD stands for United States Dollars.
WACC stands for weighted average
cost of capital.
Glossary of terms
246
Hiscox Ltd Report and Accounts 2024
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Disclaimer
This document contains
forward‑looking statements regarding
plans, goals and expectations
relating to the Group’s future financial
condition, performance, results,
strategy or objectives, which by
their very nature involve risk and
uncertainty. Statements that are
not historical facts are based on
Hiscox’s beliefs and expectations.
These include but are not limited to
statements containing the words
‘may’, ‘will’, ‘should’, ‘continue’,
‘aims’, ‘estimates’, ‘projects’,
‘believes’, ‘intends’, ‘expects’,
‘plans’, ‘seeks’ and words of similar
meaning. These statements are
based on current plans, estimates
and projections as at the time they are
made and therefore undue reliance
should not be placed on them.
A number of factors could cause
Hiscox’s actual future financial
condition, performance or other
key performance indicators to differ
materially from those discussed in any
forward-looking statement. These
factors include but are not limited to
future market conditions; the policies
and actions of regulatory authorities;
the impact of competition, economic
growth, inflation, and deflation; the
impact and other uncertainties of
future acquisitions or combinations
within the insurance sector; the
impact of changes in capital, solvency
standards or accounting standards
or relevant regulatory frameworks,
and tax and other legislation and
regulations in the jurisdictions in which
Hiscox operates; and the impact of
legal actions and disputes. These and
other important factors could result
in changes to assumptions used for
determining Hiscox results and other
key performance indicators.
Hiscox therefore expressly
disclaims any obligation to update
any forward-looking statements
contained in this document, except
as required pursuant to the Bermuda
Companies Act, the UK Listing
Rules, the UK Disclosure Guidance
and Transparency Rules or other
applicable laws and regulations.
Hiscox Ltd
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
T +1 441 278 8300
E enquiry@hiscox.com
www.hiscoxgroup.com
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
Writing our next chapter
A closer look
Governance
Remuneration
Financial summary
Subject to already holding a relevant Hiscox policy, and subject to policy eligibility, terms and conditions.