Hiscox Prepares Move to Bermuda Holding Company

October 25, 2006

London’s Hiscox plc, announced progress in its reorganization plan to establish a Bermuda-based holding company. Hiscox announced that a circular setting out full details of the corporate reorganization together with a prospectus in relation to the admission of Hiscox Ltd. (the name of the holding company) to listing and trading on the London Stock Exchange’s main market for listed securities have been sent to shareholders

The bulletin outlined the key features of the corporate reorganization plan as follows:
— A new Bermudan domiciled holding company for the Group, Hiscox Ltd., has been established.
— Shareholders of Hiscox will receive one share in Hiscox Ltd. for each share held in Hiscox.
— Application will be made for Hiscox Ltd. to be listed on the London Stock Exchange and it is expected to replace Hiscox as a member of the FTSE 250 Index.
— Shares in Hiscox Ltd. will be tradable in CREST through depository interests.
— It is not expected that Hiscox’s existing dividend policy will be affected and shareholders will have the right to elect to receive UK sourced dividends.
— The corporate reorganization is expected to be neutral in tax terms for UK resident shareholders.
— Hiscox Ltd. will report consolidated results under IFRS in sterling.

The bulletin went on to explain the rationale behind the corporate reorganization. “Hiscox’s strategy is to build the Hiscox group of companies (‘Group’) on the complementary foundations of internationally traded insurance and reinsurance business, balanced by local retail insurance business. In 2005, Hiscox formed Hiscox Bermuda as a reinsurer in the Bermudan market and also established Hiscox USA in New York as the base through which the Group underwrites and distributes specialist products in the USA.

“These developments were in response to a recognition that Hiscox needed to have operations on the ground in the US where the non-life markets are considered to be the largest in the world and in Bermuda which had become one of the major reinsurance centers.

“In addition, a significant proportion of the business that is written in Hiscox Global Markets, the Group’s international market business unit substantially based in Lloyd’s, emanates from the USA. US business accounted for 36.3 per cent of the Group’s gross earned premiums in 2005. With the formation of Hiscox Bermuda and Hiscox USA and the strong growth of these divisions anticipated by the directors, the amount of US and Bermudan originated business is expected to increase significantly.”

The bulletin also noted that its Board “has now decided that it is appropriate to move the domicile of the Group to Bermuda for the following reasons:
— as the major issues and risks are expected increasingly to arise in Hiscox’s Bermudan and US businesses, the Board believes that the center for decision making needs to be in close proximity to the originating markets for those risks;
— it is anticipated that such a move will demonstrate Hiscox’s commitment to the Bermudan and US markets and consequently lead to an increased flow of business from insurance brokers active in those markets. Indeed, since the opening of Hiscox Bermuda and Hiscox USA a number of new brokers have begun to show new business to the Group; and
— many of the Group’s principal competitors already enjoy the substantial potential tax benefits that would become available to Hiscox Ltd. and that this scheme should improve the prospects for the Group’s share price.”

Hiscox transition from a U.K. to a Bermuda Company is subject to the approval of the U.K.’s Financial Services Authority.

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