Hiscox 1H Premiums Up; Profits Down; Plans Bermuda Move

September 12, 2006

U.K.-based specialty and Lloyd’s insurer Hiscox plc posted a mixed first half performance. According to its recently published statement gross premiums written rose 43 percent to £625.1 million ($1.167 billion) compared to £437.2 million ($816.65 million) in the first half of 2005. Pre-tax profits, however, fell by more than 30 percent to £61.3 million ($114.5 million) during the period from £88.1 million ($164.6 million) in 1H 2005.

Hiscox combined ratio rose to 93.2 percent for the first six months of 2006 from 83.5 percent in the same period of 2005.

Other highlights in the report were:
— Profit before tax excluding currency exchange movements £64.7 million (2005: £51.2m)
— Group combined ratio adjusted for currency exchange on unearned premiums and deferred acquisition costs 89.5% (2005: 89.6%)
— Strong start for Hiscox Bermuda and Hiscox USA
— Global Markets achieving high rates for catastrophe exposed risks
— Increase in demand for UK household and commercial insurance following additional advertising spend
— Planned re-domicile to Bermuda anticipated to yield long-term benefits.

Concerning the last point, Hiscox has increasingly branched out from the London market, including Lloyd’s, to establish offshore operations in Bermuda and the U.S. (See IJ Website July 19 and Nov. 11, 2005, Sept. 5, 2006). Chairman Robert Hiscox has indicated on numerous occasions that in his opinion Bermuda operations are more flexible and offer greater business opportunities than the London market. There is also precedent for such a move. Catlin moved its domicile from the U.K. to Bermuda in 1995.

Commenting on the results, Robert Hiscox noted: “”It was a good first half with strong growth fuelled by high rates for all business exposed to catastrophes, helped by steady growth from our retail non-catastrophe business. The successful start of our new ventures in Bermuda and the USA have strengthened our strategy of international spread, and balance between high-risk and low-risk specialist insurance.”

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