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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -61.00 | -5.19% | 1,114.00 | 1,118.00 | 1,120.00 | 1,175.00 | 1,115.00 | 1,174.00 | 902,573 | 16:35:14 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Ins Agents,brokers & Service | 967.8M | 712M | 2.0481 | 5.46 | 3.89B |
From May 2019 to May 2024
TIDMHSX
RNS Number : 6060H
Hiscox Ltd
13 March 2018
Hiscox Ltd
(the 'Company')
2017 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 2017 has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.Hemscott.com/nsm.do
A copy can 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 2017 Annual Report
This announcement should be read in conjunction with the Company's preliminary results announcement on 26 February 2018. Together, these announcements constitute the information required by DTR 6.3.5 to be communicated to the media in full unedited text through a Regulatory Information Service. This information is not a substitute for reading the Company's 2017 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 26 February 2018.
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 risks associated with strategic decisions
and objectives taken or not taken by the Group,
including uncertainties and opportunities in
the internal and external environments.
-----------------------------------------------------------------------------------------
What is the Risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Strategy evolution Setting the right A key pillar of
and execution course, particularly the Group's strategy
The Group's continuing in a sector as is to balance
success depends hazardous as insurance, the underwriting
on how well we is essential for of high-margin,
understand our our volatile, complex
clients, markets long-term success. global risks by
and the various New risks could also selling stable,
external factors arise, which might local specialist
affecting our transform the retail products.
business. industry. The Group invests
Having an ineffective in growth areas
strategy could that offer the
have widespread potential of a
repercussions good return on
on profitability, investment. To
capital, market ensure individual
share, growth and aggregate
and reputation. exposure remains
within set parameters,
the business plan
is aligned to
the Group risk
appetite set by
the Board.
The Group's emerging
risk forum assesses
risks and opportunities
that could potentially
affect the business,
including geopolitical
changes such as
Brexit or US trading
and taxation relationships.
Stress testing
and scenario analysis
help identify
unanticipated
dependencies and
correlations between
risks, which could
impact upon the
Group's strategy.
Hiscox's ORSA
process focuses
on the changes,
opportunities
and threats that
may affect the
business in the
future.
-------------------------- ----------------------------- ------------------------------
Insurance risk - underwriting
The risks 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 risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Pricing We operate in We adapt our desire
Hiscox competes open, aggressively to write certain
against major competitive markets lines of business
international in which barriers according to market
insurance and to entry for new conditions and
reinsurance groups. players are relatively the Group's overall
At times, competitors low. Competitors risk appetite.
may choose to may choose to We reject business
underwrite risk differentiate unlikely to generate
at prices below themselves by underwriting profits
the break-even undercutting their and regularly
technical price. rivals. As a result, monitor pricing
Prolonged periods capacity levels levels, producing
in which premium in these markets detailed monthly
levels are low rise and fall, reports on how
or competition causing prices pricing and exposures
is intense are to go up and down, are developing.
likely to have creating volatile This allows us
a negative impact market cycles. to quickly identify
on the Group's Underwriting large, and control any
financial performance. volatile and complex problems created
Accepting risks risks can be potentially by deteriorating
below their technical costly, but can market conditions.
price is detrimental also create strong Hiscox frequently
to the industry. returns over the acts as the lead
It can drive market medium to long insurer in the
rates down to term. co-insurance programmes
a point where The scope and needed to cover
underwriting losses type of protection high-value assets,
mount, insurers' we buy may change so we have some
capital is reduced from year to year ability
and some businesses depending on the to set market
fail. Customers extent and competitiveness rates.
could receive of cover available The Group rewards
poor service and in the market. its staff for
the industry could Binding or delegated producing profit
suffer negative authorities give not revenue. This
publicity. the Group access helps to maintain
Underwriting exposure to a greater volume underwriting discipline
management of business and in soft markets.
Hiscox insures can contribute The Group underwrites
individual customers, significantly catastrophe risk
businesses and to our profitability in a carefully
other insurers and market share. managed, controlled
for damage caused manner. Our strategy
by a range of of creating and
catastrophes, maintaining a
both natural (for diversified portfolio,
example, hurricanes both by product
or earthquakes) and geography,
and man-made (for helps limit our
example, terrorism), overall catastrophe
which can cause exposure.
heavy underwriting The Group's business
losses that materially plan is underpinned
impact upon the by a clearly-defined
Group's earnings appetite for underwriting
and financial risk. We closely
condition if the monitor our risk
insured event exposure to maximise
materialises. the expected risk-return
The Group buys profile of our
reinsurance protection entire portfolio
to manage catastrophe and offset any
risk and reduce potential losses
the volatility from more volatile
that major losses accounts.
could have on Underwriters are
our financial incentivised to
position. If the make sound decisions
Group's reinsurance that are aligned
protection were with the Group's
proven to be inadequate strategic objectives
or inappropriate, and risk appetite
it could significantly and clear limits
affect our financial are placed on
condition. their underwriting
Binding authorities authority. In
Hiscox generates response to legal
considerable premium developments,
income through policy wordings
third parties are regularly
authorised to reviewed to ensure
underwrite insurance that, as far as
policies on the possible, exposure
Group's behalf. to those risks
Third parties identified in
may accept risk the policy at
outside of agreed the time of issue
parameters or is maintained.
normal guidelines, Our modeling resources
exposing us to are tailored to
financial and support insurance
operational risks. and reinsurance
plans and ensure
that exposure
matches expectations.
Risk aggregation
and modeling resources
are shared across
the Group.
Stress and scenario
testing is performed
by the Group and
by individual
insurance carriers
to assess our
potential exposure
to certain catastrophes.
We buy reinsurance
to reduce our
risk exposure
and mitigate the
impact of catastrophes
based upon a clear
outwards reinsurance
strategy and centralised
reinsurance programme
that enables us
to minimise gaps
in coverage across
the business and
get the right
deal by leveraging
our size.
Decisions about
the type and amount
of reinsurance
we buy are supervised
by a dedicated
reinsurance purchasing
team using modeling
techniques.
Authorities granted
by Hiscox are
closely controlled
through strict
underwriting guidelines,
contractual restrictions
and obligations.
A Group-wide delegated
authority policy
sets out clear
standards and
principles for
managing the delegation
of authority to
external third
parties. We vet
all third parties
prior to appointment
and monitor and
audit them regularly
to ensure they
meet our standards.
-------------------------- ----------------------------- ------------------------------
Insurance risk - reserve
The risks of managing the adequacy and volatility
of claim provision reserves set aside to pay
for existing and future claims.
-----------------------------------------------------------------------------------------
What is the risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Reserve risk When underwriting The provisions
The Group makes risks, we estimate we make to pay
financial provisions both the likelihood claims reflect
for unpaid claims, of them occurring our own experience
defence costs and their cost. and the industry's
and related expenses Our actual claims view of similar
to cover liabilities experience could business. They
both from reported exceed our expectations, are also influenced
claims and from requiring us to by loss payments,
'incurred but increase our levels pending levels
not reported' of reserves held. of unpaid claims,
(IBNR) claims. historic trends
If insufficient in reserving patterns
reserves were and potential
put aside to cover changes in rates
our exposures, arising from market
this could affect or economic conditions.
the Group's future Provisions
earnings and capital are set above
the actuarial
mid-point to reduce
the risk that
actual claims
may exceed the
amount we have
set aside.
Our provision
estimates are
subject to rigorous
review by all
areas of the business,
as well as by
independent actuaries
on the managed
Syndicates. The
relevant boards
approve the amount
of the final provision,
on the recommendation
of dedicated reserving
committees.
Details of the
actuarial and
statistical methods
and assumptions
used to calculate
reserves are set
out in note 25
to the consolidated
financial statements.
-------------------------- ----------------------------- ------------------------------
Market risk - investment
The risk of financial loss or adverse movements
in the value of Hiscox's assets resulting from
adverse movements in market prices and our exposure
from trading and/or the risk of exposure to inappropriate
assets/asset classes.
-----------------------------------------------------------------------------------------
What is the risk? Why do we have How is it managed?
it
-------------------------- ----------------------------- ------------------------------
Asset value The investment Our objective
Money received of Hiscox's assets is to maximise
from our clients generates an investment investment returns
in premiums and return. Our investment in the prevailing
the capital on portfolio is exposed financial, economic
our balance sheet to a number of and market conditions,
is invested until risks related without creating
it is needed to to changes in undue risk to
pay claims. These interest rates, the Group's capacity
funds are inevitably credit spreads to underwrite.
exposed to investment and equity prices, Funds held for
risk. among others. reserves are invested
Investment risk If a catastrophe primarily in high-quality
also encompasses occurs, the Group bonds and cash.
the risk of default may be faced with To reduce foreign
of investment large, unplanned exchange risk,
counterparties, cash demands. these are usually
who are primarily This could be maintained in
the issuers of exacerbated by the currency of
bonds in which having to fund the original premiums
we invest. a large number for which they
Liquidity of claims pending were set aside.
A failure of our recovery from As many of our
liquidity strategy our reinsurers. insurance and
could leave us Although our investment reinsurance liabilities
unable to meet policies stress have short timespans,
cash requirements the conservation we do not aim
to pay liabilities of principal and to match exactly
to customers or liquidity, the duration of
other creditors our investments our assets and
when they fall are subject to liabilities.
due. market-wide risks The Group's fixed-income
We might also and fluctuations. fund managers
incur high costs operate within
in selling assets clear guidelines
or raising money as to the type
quickly in order and nature of
to meet our obligations. bonds in which
Such a failure they can invest.
could have a material These prioritise
adverse effect the need to pay
on the Group's claims while providing
financial condition sufficient flexibility
and cash flows to enhance returns.
A proportion of
funds is allocated
to riskier assets,
principally equities.
By taking a long-term
view on these
assets, we seek
to achieve the
best possible
risk-adjusted
returns. Within
our risk assets,
we make an allocation
to less volatile,
absolute return
strategies, which
balance our desire
to maximise returns
with the need
to ensure capital
is available to
support our underwriting
throughout any
downturn in financial
markets.
The Group's investment
policy recognises
the demands created
by our underwriting
strategy, so that
some investments
may need to be
sold before maturity
or at short notice.
A high proportion
of our investments
are in liquid
assets, which
reduces the risk
of losses being
incurred if a
quick sale is
needed. Funds
held for reserves
are invested primarily
in high-quality,
short duration
bonds and cash
so the Group can
meet its aim of
paying valid claims
quickly.
The Group's cash
requirements can
normally be met
through regular
income streams:
premiums, investment
income, existing
cash balances
or by realising
investments that
have reached maturity.
Our primary source
of inflows is
insurance premiums,
while our outflows
are largely expenses
and payments to
policyholders
through claims.
We forecast our
cash flow for
the week, month,
quarter, or up
to three years
ahead, depending
on the source.
To identify potential
issues, we run
stress tests to
estimate the impact
of a major catastrophe
on our cash position.
We also consider
the impact on
our liquidity
of other adverse
events occurring,
such as an economic
downturn and declining
investment returns.
The Group maintains
extensive borrowing
facilities with
a range of major
international
banks. This minimises
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 risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Credit risk - We cover clients We buy reinsurance
reinsurance against a range only from companies
The Group buys of catastrophes we believe to
reinsurance to and protect ourselves be strong. A dedicated
protect us, but through reinsurance. Group Credit Committee
if our reinsurers We face credit must approve the
were unable to risk when we seek use of every reinsurer,
meet their obligations to recover sums based on an assessment
to us it could from our reinsurers. of their financial
put The vast majority strength, trading
a strain on our of our business record, payment
earnings and capital, is written through history, outlook,
and harm our financial brokers. We face organisational
condition and credit risk when structure and
cash flows. money is transferred external credit
Credit risk - to and from brokers ratings.
brokers for premiums or Our credit exposures
If a broker fails claims. to these companies
to pass premiums are closely monitored,
to us or fails as are the companies
to pass the claims themselves, so
payment we can quickly
on to a policyholder, identify any potential
this can result problems. We consider
in us losing money. public information,
our experience
of the companies,
their behaviour
in the marketplace
and consultants'
and rating agencies'
analysis.
We monitor our
exposure to brokers
on an on-going
basis and have
a continuing dialogue
with our core
brokers to quickly
identify and resolve
any credit issues
that arise. Such
monitoring takes
into account a
number of factors,
which can include
credit rating,
financial position,
financial performance,
payment history
and market factors.
In the case of
some large losses,
we pay policyholders
directly to reduce
broker credit
risk on material
transactions.
-------------------------- ----------------------------- ------------------------------
Operational risk
The risks of direct or indirect losses involving
people, processes, systems and external events,
resulting from the running of the business.
-----------------------------------------------------------------------------------------
What is the risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Information security Our business is Information security
(including cyber based on trust risk is managed
security) from customers as a business
A failure to properly and partners, risk, not an IT
protect information and that trust responsibility.
could compromise depends on our We employ an information
the confidentiality, ability to keep security policy
availability or their information and a cyber security
integrity of our secure. risk strategy.
data. We operate in The Group employs
Cyber security a world in which information security
risk is the threat the volume of resources, which
to the Group from sensitive data provide advice
globally connected and the number on information
networks such of connected devices security design
as the internet. and applications and standards.
It differs from have increased We also have an
the exposure posed exponentially, information security
by underwriting while cyber attacks group, including
cyber risks, which are increasingly experts from around
is considered frequent and sophisticated. the business who
an insurance risk. Our business depends assess and manage
As well as causing on the integrity these threats
financial losses, and timeliness in line with risk
information security of the information appetite. Our
risk can have and data we maintain, cyber strategy
legal, regulatory own and use. combines industry
and reputational Our information standard perimeter
consequences. technology and security with
Information technology systems are critical protection for
and systems failure to conducting specific, highly
A major IT systems, business and providing confidential information.
or service failure continuity of The Group constantly
would have a significant service to our deploys and evolves
impact on our clients, including systems, policies
business. supporting underwriting and procedures
Project risk and and claims processes. to mitigate internal
change management We operate in and external threats
The risks that an ever- changing to our IT infrastructure.
projects and/ environment, with We conduct Group-wide
or change initiatives technological mandatory training
are not delivered advancements, on information
to plan, budget customer behaviour and cyber security,
or specification, and external expectations which is also
or that the risks evolving rapidly mandatory for
inherent in projects in recent years. all third parties
are not appropriately To remain relevant and contractors.
managed. we must continue Our stress testing
Where this occurs, to evolve how and scenario analysis
there may be not we conduct our considers the
only direct financial business. impact and likelihood
losses but also of information
indirect losses security exposures
through distraction and assesses management
risks actions, including
and inefficiencies response plans.
We have dedicated
IT resources that
support the Group's
technology needs
and oversee critical
systems and applications.
Our stress testing
and scenario analysis
considers the
impact and likelihood
of an IT or systems
failure and assesses
how management
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 quickly move
the affected
operations to
alternative facilities.
The plan is tested
regularly and
includes simulation
tests.
All major programmes
have dedicated
project governance
structures to
oversee the delivery
of the programme,
including risk
management aspects.
Programme sponsors
also provide updates
to the Board and
Risk Committee
as appropriate
The newly-formed
Programme Assurance
Office provides
oversight across
all major programmes.
It provides senior
management with
an independent
view of the progress,
risks and issues
within the programmes
as well as the
linkages between
them.
Specialist resource
is used to augment
project resources,
either in a contractor
or advisory capacity,
as needed.
-------------------------- ----------------------------- ------------------------------
Regulatory and legal risk
The risk of financial loss, regulatory censure,
reputational damage and/or other adverse impact
as a result of non-compliance with all relevant
regulations and/or legislation in all relevant
jurisdictions.
-----------------------------------------------------------------------------------------
What is the risk? Why do we have How is it managed?
it?
-------------------------- ----------------------------- ------------------------------
Regulatory change Insurance is a The Group understands
The insurance highly regulated that sound, prudent
industry is exposed industry. There regulation is
to continuous may be key to the stability
regulatory change, times when the and sustainability
which may affect regulatory landscape of the insurance
the level of capital undergoes a significant and wider financial
we are required shift that directly markets. We continuously
to hold or require impacts our business. monitor new regulation
changes to how and review
we are set up our internal processes
operationally to facilitate
from time to time. compliance. Our
approach is to
combine local
expertise with
a globally consistent
framework to manage
regulatory change
and provide effective
compliance with
the varied and
evolving requirements.
-------------------------- ----------------------------- ------------------------------
Mark Wetherhill
Company Secretary
Hiscox Ltd
13 March 2018
+1 441 278 8300
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSGGUPWWUPRGAW
(END) Dow Jones Newswires
March 13, 2018 11:36 ET (15:36 GMT)
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