Full Year Results

Hiscox Ltd full year results

For the year ended 31 December 2024

"Record profits, building momentum in Retail, and step-up in capital return."

Highlights

• Insurance contract written premium (ICWP) grew by 3.7% or $168.7 million to $4,766.9 million (2023: $4,598.2 million), driven by Retail premium growth of $147.3 million.

• Disciplined underwriting in an active loss environment resulted in an undiscounted combined ratio of 89.2% (2023: 89.8%).

• Solid investment result of $383.9 million (2023: $384.4 million).

• Record profit before tax of $685.4 million, up 9.5% year-on-year, and ROE of 19.8% (2023: 21.8%2).

• Step-up in final dividend per share of 19.6%, with a full year increase of 14.9% in dividend per share, as well as a new special capital return of $175 million in the form of a buyback.

• Hiscox to hold a capital markets day on 22 May 2025.

Aki Hussain, Group Chief Executive Officer, Hiscox Ltd, commented:

"The Group has delivered another set of excellent results and a second consecutive year of record profits. Our Retail business continues to build broad-based growth and earnings momentum, and our big-ticket portfolio has again delivered an outstanding performance, leading to a strong return on equity in an active loss year. This earnings momentum underpins substantial capital generation, creating the flexibility to pursue multiple growth opportunities and return 10%[4] of equity to shareholders through a combination of a 20% step-up in the final dividend per share and a $175 million share buyback. This demonstrates both the power of - and confidence in - the outlook for our diversified business. I would like to thank all of my Hiscox colleagues for their dedication in delivering another strong year."

ENDS

A conference call for investors and analysts will be held at 10:30 GMT on Thursday, 27 February 2025.

Participant dial-in numbers:

United Kingdom (Local): +44 20 3936 2999

All other locations: +44 800 358 1035Participant access code: 786473

For further information

Investors and analysts

Yana O'Sullivan, Director of Investor Relations, London +44 (0)20 3321 5598

Marc Wetherhill, Group Company Secretary, Bermuda +1 441 278 8300

Media

Eleanor Orebi Gann, Group Director of Communications, London +44 (0)20 7081 4815

Simone Selzer, Brunswick +44 (0)20 7404 5959

Tom Burns, Brunswick +44 (0)20 7404 5959

Notes to editors

About The Hiscox Group

Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle. 

The Hiscox Group employs over 3,000 people in 13 countries, and has customers worldwide. Through the retail businesses in the USA, UK, Europe and Asia, we offer a range of specialist insurance products in commercial and personal lines. Internationally-traded, bigger-ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re & ILS.

Our values define our business, with a focus on people, courage, ownership and integrity. We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit www.hiscoxgroup.com.

Chief Executive's report

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 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 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 Retail[5]

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 US. 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.

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 USA5

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 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 Market5

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 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 claims[6], $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)[7]. 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 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 million[8] (2023: $272.9 million8).

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 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%[9], 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 leverage[10] 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 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

Hiscox Ltd full year results

Condensed consolidated income statement

For the year ended 31 December 2024

The notes to the condensed consolidated financial statements are an integral part of this document.

Condensed consolidated statement of comprehensive income

For the year ended 31 December 2024

The notes to the condensed consolidated financial statements are an integral part of this document.

Condensed consolidated statement of financial position

As at 31 December 2024

The notes to the condensed consolidated financial statements are an integral part of this document.

Condensed consolidated statement of changes in equity

For the year ended 31 December 2024

*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 to the condensed consolidated financial statements are an integral part of this document.

Condensed consolidated statement of changes in equity (continued)

For the year ended 31 December 2023 

The notes to the condensed consolidated financial statements are an integral part of this document.

Condensed consolidated statement of cash flows

For the year ended 31 December 2024

The notes to the condensed consolidated financial statements are an integral part of this document.

Notes to the condensed consolidated financial statements

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 condensed 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).

The basis of preparation and summary of accounting policies applicable to the Group's condensed consolidated financial statements can be found in note 2 to the 2024 Annual Report and Accounts.

The Group's consolidated financial statements from which the condensed financial statements are extracted have been audited. The auditor's report on the consolidated financial statements is unqualified and does not contain an emphasis-of-matter paragraph.

The condensed 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.

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 condensed 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 condensed consolidated financial statements are presented in US Dollars millions ($m) and rounded to the nearest hundred thousand Dollars, unless otherwise stated.

These condensed consolidated financial statements were approved on behalf of the Board of Directors by the Group Chief Executive Officer, Aki Hussain and the Group Chief Financial Officer, Paul Cooper. Accordingly, the financial statements were approved for issue on 26 February 2025.

3. Use of significant accounting judgements, estimates and assumptions

In preparing these condensed consolidated financial statements, management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Estimates and assumptions are continually evaluated and are based on management's knowledge of current facts and circumstances, and their expectations of future events.

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..

• Insurance contracts: determining the assumptions to arrive at the estimated ultimate cost of claims and the risk adjustment being the compensation that the Group requires for bearing the uncertainty about the amount and timing of the cash flows of groups of insurance contracts.

Significant accounting estimates

The following describes items considered particularly susceptible to changes in estimates and assumptions.

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 of 2024 Annual Report and Accounts.

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.

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.

Deferred tax asset

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. 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. Please refer to note 12 for details on the deferred tax assets including the impact of BCIT.

4. 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 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.

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. Please refer to the 2024 Annual Report and Accounts for more information on risk management.

5. Related-party transactions

Transactions with related parties during the period are disclosed in note 30 of the Group's 2024 Annual Report and Accounts.

6. 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.

6. Operating segments (continued)

\* 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.

6. 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.

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.

6. Operating segments (continued)

*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.

6. Operating segments (continued)

The impact of the reclassification of LPT premium is shown in the following table.

*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.

*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.

7. Net asset value (NAV) per share and net tangible asset value per share

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.

8. Return on equity (ROE)

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.

9. Net investment and insurance finance result

10. Other income and operational expenses

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.

11. Other finance costs

12. Tax (credit)/expense

The Company and its subsidiaries are subject to enacted tax laws in the jurisdictions in which they are incorporated and domiciled.

The amounts charged in the consolidated income statement comprise the following:

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.

13. Insurance contract liabilities and reinsurance contract assets

13.1 Net insurance contract liabilities

Net insurance contracts - analysis by remaining coverage and incurred claims

\* 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.

13. Insurance contract liabilities and reinsurance contract assets (continued)

13.1 Net insurance contract liabilities (continued)

Net insurance contracts - analysis by remaining coverage and incurred claims (continued)

*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.

13. Insurance contract liabilities and reinsurance contract assets (continued)

13.2 Claims development tables

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.

Insurance contract liability for incurred claims - net of reinsurance

\* 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.

14. 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.

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.