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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hiscox Ltd | LSE:HSX | London | Ordinary Share | BMG4593F1389 | ORD 6.5P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -13.00 | -1.07% | 1,202.00 | 1,198.00 | 1,200.00 | 1,218.00 | 1,186.00 | 1,186.00 | 1,635,321 | 16:35:04 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Ins Agents,brokers & Service | 967.8M | 712M | 2.0481 | 5.85 | 4.17B |
From Apr 2019 to Apr 2024
TIDMHSX
RNS Number : 4485Z
Hiscox Ltd
14 March 2017
Hiscox Ltd
(the 'Company')
2016 Annual Report
Hamilton, Bermuda - in accordance with Listing Rule 9.6.1 a copy of the Company's Annual Report and Accounts for the year ended 31 December 2016 has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.Hemscott.com/nsm.do
A copy can also be viewed on the Company's web site: www.hiscoxgroup.com/investors
Information required under Disclosure and Transparency Rule 6.3.5- Extracts from the 2016 Annual Report
This announcement should be read in conjunction with the Company's preliminary results announcement issued on 27 February 2017. Together, these announcements constitute the material required by DTR 6.3.5 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the Company's 2016 Annual Report.
Directors' responsibilities statement
The Board is responsible for ensuring the maintenance of proper accounting records which disclose with reasonable accuracy the financial position of the Company. 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:
- the financial statements, prepared in accordance with the applicable set of accounting standards, present fairly, in all material respects, the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
- the 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 Chairman, Robert Childs, and the Chief Financial Officer, Hamayou Akbar Hussain. The statements were approved for issue on 27 February 2017.
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 and performance, business model and strategy.
Principal risks and uncertainties
Hot Features
Premium
Strategic risk
The risk associated with implementation of strategic
decisions and objectives, including uncertainties
and opportunities in the internal and external environments.
----------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
---------------------- ----------------------- ---------------------------------------
Strategy evolution Setting the A key pillar of the Group's
and execution right course, strategy is to balance underwriting
Our continuing particularly high-margin, volatile, complex
success depends in such a hazardous global risks by also selling
on how well industry as stable, local specialist
we understand insurance, retail products.
our clients, is essential
markets and for our long-term The Group invests in growth
the various success. areas that offer a good potential
external factors return on investment. The
affecting New risks could business plan is aligned
our business. arise which to the Group risk appetite
Having the may transform set by the Board, to ensure
wrong strategy the industry. individual and aggregate
or badly executing exposure remains within set
the right parameters.
strategy could
have widespread The Group's emerging risk
repercussions forum assesses risks and
on our Group's opportunities with potential
profitability, to impact the business. This
capital, market includes considering geopolitical
share, growth changes like Brexit and US
and reputation. trading and taxation relationships.
Stress testing and scenario
analysis help identify unanticipated
dependencies and correlations
between risks, which could
impact the Group's strategy.
Hiscox's Own Risk and Solvency
Assessment (ORSA) process
focuses on the changes, opportunities
and threats that may affect
the business in the future.
---------------------- ----------------------- ---------------------------------------
Insurance risk - underwriting
The risk related to our core business of providing
insurance products and services to clients, and to
the management of our net exposure to losses.
----------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
---------------------- ----------------------- ---------------------------------------
Insurance We operate Our desire to write certain
cycle and in open, aggressively lines of business changes
pricing Hiscox competitive according to market conditions
competes against markets in and the Group's overall risk
major international which barriers appetite. We reject business
insurance to entry for unlikely to generate underwriting
and reinsurance new players profits, and regularly monitor
groups. At are low. Competitors pricing levels, producing
times, competitors may choose detailed monthly reports
may choose to differentiate on how pricing and exposures
to underwrite themselves are developing, so we quickly
risk at prices by undercutting identify and control any
below the their rivals. problems created by deteriorating
breakeven As a result, market conditions. We frequently
technical capacity levels act as the lead insurer in
price. Prolonged in these markets the
periods when rise and fall, co-insurance programmes
premium levels causing prices needed to cover high-value
are low or to go up assets, so we have some ability
when competition and down, creating to set market rates.
is intense volatile market
are likely cycles. Hiscox rewards its staff
to have a for producing profit not
negative impact revenue, which helps to maintain
on the Group's underwriting discipline in
financial soft markets.
performance.
Accepting
risks below
their technical
price is detrimental
to the industry.
It can drive
market rates
down to a
point where
underwriting
losses mount,
insurers'
capital is
reduced, and
some businesses
fail. Customers
may receive
poor service
and the industry
could suffer
negative publicity.
---------------------- ----------------------- ---------------------------------------
Insurance risk - underwriting
The risk related to our core business of providing
insurance products and services to clients, and to
the management of our net exposure to losses.
-------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
--------------------- ----------------------- -------------------------------------
Catastrophic Underwriting We underwrite catastrophe
and systemic large, volatile risk in a carefully managed,
insurance and complex controlled manner. Hiscox's
losses risks can be strategy of creating and
We insure potentially maintaining a well-diversified
individual costly, but portfolio, both by product
customers, can also earn and geography, helps limit
businesses good margins its catastrophe exposure.
and other over the medium
insurers for to long term. We have a clearly-defined
damage caused appetite for underwriting
by a range risk, which dictates the
of catastrophes, Group's business plan, and
both natural we closely monitor the Group's
(e.g. hurricanes, risk exposure to maximise
earthquakes) the expected risk return
and man-made profile on our whole portfolio
(i.e. terrorism), and offset the potential
which can losses on more volatile accounts.
cause heavy
underwriting Underwriters are incentivised
losses with to make sound decisions that
material impacts are aligned with the Group's
on the Group's overall strategic objectives
earnings and and risk appetite. Clear
financial limits are placed on their
condition. underwriting authority. Policy
wordings are regularly reviewed
in light of legal developments
to ensure exposure is maintained,
as much as possible, to those
risks identified in the policy
at the time of issue.
We tailor modeling resources
to support insurance and
reinsurance plans and ensure
exposure matches expectations.
Risk aggregation and modeling
resources are shared across
the Group.
Stress and scenario testing
is performed by the Group
and individual insurance
carriers to assess our potential
exposure to certain catastrophes.
We buy reinsurance to mitigate
the effect of catastrophes
and reduce our risk.
--------------------- ----------------------- -------------------------------------
Inadequate We buy reinsurance We have a clear outwards
reinsurance protection reinsurance strategy and
If our reinsurance to manage catastrophe a centralised reinsurance
protection risk and reduce programme to minimise gaps
is proven the volatility in coverage across the business
to be inadequate that major and to get the right deal
or inappropriate, losses could by leveraging our size.
it could have on our
significantly financial position.
affect the Decisions about the type
Group's financial The scope and and amount of reinsurance
condition. type of protection we buy are supervised by
we buy may a dedicated reinsurance purchasing
The Group change from team using modeling techniques.
might not year to year
be able to depending on
purchase the the extent
right level and competitiveness
or type of of cover available
reinsurance in the market
due to market
conditions.
This could
result in
reduced protection
against losses,
which could
affect our
financial
condition
and cash flows.
--------------------- ----------------------- -------------------------------------
Insurance risk - underwriting
The risk related to our core business of providing
insurance products and services to clients, and to
the management of our net exposure to losses.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Binding authorities Binding or Authorities we grant are
Hiscox generates delegated authorities closely controlled through
considerable give the Group strict underwriting guidelines,
premium income access to a contractual restrictions
through third greater volume and obligations. We have
parties authorised of business. a Group-wide delegated authority
to underwrite They can contribute policy which sets out the
insurance significantly standards and principles
policies on to the Group's in managing external third
our behalf. profitability parties to whom authority
Third parties and increase is delegated. Contractual
may accept market share. arrangements usually grant
risk outside limited rights to bind us
of agreed to risks, new or renewal.
parameters We vet all third parties
or normal prior to appointment and
guidelines, monitor and audit them regularly
exposing us to ensure they meet our standards.
to financial
and operational
risks.
----------------------- ------------------------- -----------------------------------------
Insurance risk - reserve
The risk of managing the volatility of claim provision
reserves set aside to pay for existing and future
claims.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Reserve risk When underwriting The provisions we make to
We make financial risks, we estimate pay claims reflect our own
provisions the likelihood experience and the industry's
for unpaid of them occurring view of similar business;
claims, defence and their cost. historical trends in reserving
costs and Our actual patterns; loss payments and
related expenses claims experience pending levels of unpaid
to cover our could exceed claims; and awards as well
ultimate liability our loss reserves, as potential change in historic
both from or we may need rates arising from market
reported claims to increase or economic conditions. Provisions
and from 'incurred levels of loss are set above the actuarial
but not reported' reserves. mid-point to reduce the risk
(IBNR) claims. that actual claims may exceed
There is the the amount we have set aside.
possibility
that we do Our provision estimates are
not put enough subject to rigorous review
money aside by senior management from
for our exposures, all areas of the business,
which could as well as from independent
affect the actuaries. The relevant boards
Group's earnings, will approve the amount of
capital and the final provision, on the
future. recommendation of dedicated
reserving committees.
Details of the actuarial
and statistical methods and
assumptions used to calculate
reserves are set out in note
26 to the consolidated financial
statements.
----------------------- ------------------------- -----------------------------------------
Market risk - investment
The risk of financial loss resulting from adverse
movements in market prices, exposure from trading
and global operations.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Asset value Our investment Our objective is to maximise
We invest portfolio is our investment result in
the cash we exposed to the prevailing financial,
receive from a number of economic and market conditions
our clients risks related without undue risk which
in premiums to changes could affect the Group's
and the capital in interest capacity to underwrite. Funds
on our balance rates, credit held for reserves are invested
sheet until spreads, and primarily in high-quality
it might be equity prices, bonds and cash and as far
needed to among others. as possible, are maintained
pay claims. in the currency of the original
These funds premiums for which they are
are inevitably set aside, to reduce foreign
exposed to exchange risk. As many of
market investment our insurance and reinsurance
risk. liabilities have short time
spans, we do not aim to match
Investment exactly the duration of our
risk also assets and liabilities.
encompasses
the risk of Our fixed-income fund managers
default of operate within guidelines
counterparties, as to the type and nature
which is primarily of bonds in which to invest,
with issuers which reflect the rate at
of bonds in which we expect to pay claims,
which we invest, while providing them some
and investment flexibility to enhance returns.
managers.
A proportion of funds is
allocated to riskier assets,
principally equities. We
take a long-term view on
these assets so we can achieve
the best risk-adjusted returns.
We make an allocation to
less volatile, absolute return
strategies within our risk
assets, 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.
----------------------- ------------------------- -----------------------------------------
Market risk - investment
The risk of financial loss resulting from adverse
movements in market prices, exposure from trading
and global operations.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Liquidity If a catastrophe Our investment policy recognises
The risk we occurs, the demands created by our
are unable we may be faced underwriting strategy, so
to meet cash with large, that some investments may
requirements unplanned cash need to be sold before maturity
from available demands, which or at short notice. A high
resources could be exacerbated proportion of our investments
to pay liabilities if we have are in liquid assets, which
to customers to fund a large reduces the risk that they
or other creditors portion of may make losses if they have
when they claims pending to be sold quickly. Funds
fall due. recovery from held for reserves are invested
our reinsurers. primarily in high-quality,
Also, the short duration bonds and
risk we incur Although our cash so the Group can meet
excessive investment its aim of paying valid claims
costs by selling policies stress quickly.
assets or conserving
raising money principal and Our cash requirements can
quickly to liquidity, normally be met through regular
meet our obligations. our investments income streams: premiums,
are subject investment income, existing
The failure to market-wide cash balances or by realising
of our liquidity risks and fluctuations. investments that have reached
strategy could maturity. Our primary source
have a material of inflows is insurance premiums
adverse effect while our outflows are largely
on the Group's expenses and payments to
financial policyholders through claims.
condition We forecast our cash flow
and cash flows. for the week, month, quarter,
or up to two years ahead,
depending on the source.
We run tests to estimate
the impact of a major catastrophe
on our cash position to identify
potential issues. We also
run scenario analysis that
considers the impact on our
liquidity should a number
of adverse events occur simultaneously,
such as an economic downturn
and declining investment
returns combined with unusually
high insurance losses.
We maintain extensive borrowing
facilities. These arrangements
have been made with a range
of major international banks
to minimise the risk of one
or more institutions being
unable to honour commitments
to us.
----------------------- ------------------------- -----------------------------------------
Credit risk
The risk of loss or adverse financial impact due
to counterparty default or failure to meet obligations
with agreed terms.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Credit risk We cover clients We buy reinsurance only from
- reinsurance against a range companies that we believe
We buy reinsurance of catastrophes to be strong. A dedicated
to protect and protect Group credit committee must
us, but if ourselves through approve every reinsurer we
our reinsurers reinsurance. use, based on an assessment
are unable We face credit of their financial strength,
to meet their risk where trading record, payment history,
obligations we seek to outlook, organisational structure
to us it would recover sums and external credit ratings.
put a strain from other
on our earnings reinsurers. Our credit exposures to these
and capital, companies are closely monitored,
and could as are the companies themselves,
harm our financial so we can quickly identify
condition any potential problems. We
and cash flows. consider public information,
our experience of the companies,
their behaviour in the marketplace
and consultants' and rating
agencies' analysis.
----------------------- ------------------------- -----------------------------------------
Credit risk The vast majority We follow the same careful
- brokers of our business process for selecting and
We may lose is written monitoring the brokers we
money if the through brokers. work with as for our reinsurers.
broker fails We face credit We also minimise the risk
to pass the risk where further by dealing with only
premium to we transfer the most credit-worthy brokers,
us, or if money to, and taking into account market
the broker receive money data and our experience.
fails to pass from,
the claims brokers for In some instances for large
payment to premiums or losses, we pay policyholders
the policyholder. claims. directly to reduce broker
credit risk on material transactions.
----------------------- ------------------------- -----------------------------------------
Operational risk
The risk from derivative exposures involving people,
processes, systems and external events resulting
from running a uniquely diversified insurance business.
---------------------------------------------------------------------------------------------
What is the Why do we have How is it managed?
risk? it?
----------------------- ------------------------- -----------------------------------------
Regulatory Insurance is The Group supports sound
change a regulated prudential regulation as
The insurance industry. There a key element in the stability
industry is may be times and sustainability of the
exposed to where the regulatory insurance and wider financial
continuous landscape undergoes markets in which we operate.
regulatory a significant We continuously monitor new
change, which shift which regulation and review our
may impact directly impacts internal processes to facilitate
the capital our business. compliance. Our approach
we are required is to combine local expertise
to hold. We with a globally consistent
are also exposed framework to manage regulatory
to new and change and provide effective
emerging risks, compliance with the varied
including and evolving requirements.
through
legal or political
decisions
or legislative
changes.
----------------------- ------------------------- -----------------------------------------
Information We operate Information security risk
security (including in a world is managed as a business
cyber security) where the volume risk, not an IT responsibility.
Information of sensitive We employ an information
security risk data and the security policy and cyber
relates to number of connected security risk strategy.
not protecting devices and
information applications We have dedicated IT security
which could have increased resources which provide advice
compromise exponentially. on information security design
the confidentiality, Also, cyber-attacks and standards. We also have
availability are increasingly an information security group,
or integrity frequent and including experts from around
of our data. sophisticated. our business to assess and
Our business manage these threats. Our
Cyber security depends on cyber strategy combines industry
risk is the the integrity standard perimeter security
threat from and timeliness with data-centric protection
globally connected of the information for specific highly confidential
networks such and data we information.
as the internet. maintain, own
It differs and use. We constantly deploy and
from the exposure evolve systems, policies
posed by underwriting and procedures to mitigate
cyber risks, internal and external threats
which is considered to the IT infrastructure.
an insurance In 2016 we rolled out Group-wide
risk. mandatory training on information
and cyber security which
Information is also mandatory for all
security risk third parties and contractors.
can result
in loss of Our stress testing and scenario
profit, and analysis considers the impact
legal, regulatory and likelihood of information
and reputational security exposures to assess
consequences. their effect on our business,
as well as management actions,
including response plans.
----------------------- ------------------------- -----------------------------------------
Information Our information We have dedicated IT resources
technology technology which support the Group's
and systems and systems technology needs and oversee
failure are critical our critical systems and
The risk from to conducting applications.
major IT, business and
systems or providing continuity Our stress testing and scenario
service failure of service analysis considers the impact
which can to our clients, and likelihood of an IT or
significantly including supporting systems failure, to assess
impact our underwriting the effect on the business
business. and claims and discuss what management
processes. actions could be taken to
mitigate the risk.
A formal disaster recovery
plan is in place to deal
with workspace recovery and
the retrieval of communications,
IT systems and data should
a major incident occur. These
procedures would enable us
to move the affected operations
to alternative facilities
quickly. The plan is tested
regularly and includes simulation
tests.
----------------------- ------------------------- -----------------------------------------
Jeremy Pinchin
Company Secretary
Hiscox Ltd
+ 1 441 278 8300
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSEALDLFEXXEFF
(END) Dow Jones Newswires
March 14, 2017 10:27 ET (14:27 GMT)
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