Hiscox LtdPreliminary resultsFor the six months ended 30 June 2016

June2016

Excluding FXJune2016

Premium growth 17.5% (2015: 12.0%)

13.0%(2015: 7.2%)

Profit before tax £206.0m(2015: £135.1m)

£118.7m(2015: £150.8m)

Combined ratio 80.7%(2015: 82.5%)

88.4%(2015: 80.3%)

A good first half flattered by FX

1

• Higher catastrophe losses £19.0m (2015: £nil) and continued rate pressure

• Investment income up

• Interim dividend of 8.5p (2015: 8.0p)

Financial performance

A good performance

3

• Reflects FX volatility

• 8.6% increase since year end

• Annualised return on equity excluding FX 15.8% (2015: 22.1%)

June2016

£m

June2015†

£m

Dec2015

£m

Gross premiums written 1,288.5 1,096.3 1,944.2

Net premiums written 889.1 860.1 1,571.8

Investment return on financial assetsForeign exchange gains/(losses)

42.087.3

27.9(15.7)

33.715.2

Profit before taxProfit after tax

206.0197.6

135.1129.4

216.1209.9

Basic earnings per share (p)Interim/final equivalent dividend (p)Additional return (p)Net asset value

£mp per share

70.48.5‒

1,667.7591.7

43.78.0

–

1,414.7505.5

72.824.016.0

1,528.8545.0

Return on equity after tax* 28.3% 19.9% 16.0%

†Includes consolidation of Kiskadee.*Annualised.

30 June 2016 30 June 2015*

HiscoxRetail

£m

HiscoxLondon Market

£m

Hiscox Re£m

CorporateCentre

£mTotal

£m

HiscoxRetail

£m

HiscoxLondon Market

£m

Hiscox Re£m

CorporateCentre

£mTotal

£m

Gross premiums written 581.1 342.7 364.7 ‒ 1,288.5 510.5 298.1 287.8 ‒ 1,096.3

Net premiums written 528.2 216.2 144.7 ‒ 889.1 481.8 207.8 170.5 ‒ 860.1

Net premiums earned 470.4 198.1 99.0 ‒ 767.5 433.8 169.8 106.2 ‒ 709.8

Investment result –Financial assets 15.2 10.6 9.4 6.8 42.0 11.4 5.3 5.1 6.1 27.9

Foreign exchange gains/(losses) 24.0 17.2 12.8 33.3 87.3 (11.9) (3.7) 0.2 (0.3) (15.7)

Profit/(loss) before tax 92.3 37.1 54.6 22.0 206.0 61.6 21.2 59.6 (7.3) 135.1

Combined ratio 84.1% 85.3% 56.0% ‒ 80.7% 88.7% 90.6% 45.5% ‒ 82.5%

Combined ratioexcluding monetary FX 89.4% 94.8% 69.8% ‒ 88.4% 85.9% 88.4% 45.2% ‒ 80.3%

Segmental analysis

4*Restated to bring global kidnap and ransom business in to Hiscox Retail (Hiscox Special Risks).Business segments described in appendices.

30 June 2016 30 June 2015

Asset allocation

%

Annualisedreturn

%Return

£000

Asset allocation

%

Annualisedreturn

%Return

£000

Bonds £ 14.4 3.9 15.4 0.9

US$ 52.3 3.2 53.2 1.6

Other 8.8 2.2 9.1 0.4

Bonds total 75.5 3.2 43,581 77.7 1.3 15,038

Equities 6.9 (2.0) (2,737) 8.7 9.3 11,910

Deposits/cash/bonds <3 months 17.6 0.3 1,114 13.6 0.4 909

Actual return 2.3 41,958 1.8 27,857

Group invested assets £3,946m £3,032m

Solid investment performance

5Before fees, derivative positions and investments in insurance linked funds.

69.3

18.5

10.7

1.5

USDGBPEURCAD

Portfolio – asset mixHigh-quality, conservative portfolio

6

Investment portfolio £3,946m as at 30 June 2016 • AUM increased as a result of Sterling weakness

• Cash reduced following investment of bond proceeds in Q2

• Risk assets at 6.9%

• High credit quality maintained

• Yield to maturity of bond portfolio at 1.0%

• Average bond duration 22.2 months26.8

16.2

18.5

20.8

16.2

1.5

Gvt.AAAAAABBBBB and below

75.5

17.6

6.9

BondsCashRisk assets

Asset allocation Bond credit quality Bond currency split

A.M. Best(catastrophe

stressed)

Standard & Poor's Fitch ratings Group capitalmodel (economic)

Group capitalmodel (regulatory)

Bermuda solvencycapital requirement

Capital requirements

7

£1.94bn available capital

£1.92bn available capital (post interim dividend)

Rating agency assessments shown are internal Hiscox projections of the agency capital requirements on the basis of projected 2016 year end results. Hiscox uses the internally developed Group capital model to assess its own capital needs on both a trading (economic) and purely regulatory basis. All capital requirements have been normalised with respect to variations in the allowable capital in each assessment for comparison to a consistent available capital figure. The available capital figure comprises shareholders’ equity and subordinated debt as at 30 June 2016.

Economic Regulatory

Financial facts

• Reserve releases of £96m (2015: £123m)

• Net catastrophe and market loss claims impact for Hiscox Ltd – Catastrophe: £19.0m (2015: £nil) – includes Alberta

wildfires, Houston floods, Japan and Ecuador earthquakes, UK and European storms

– Market losses: £25.2m (2015: £25.8m) – includes Jubilee oil field, Prestige, Pemex, Brussels and Istanbul terrorist attacks

• Hiscox UK reinsured out employers’ liability exposure for £13m

8

Underwriting

Rates under pressure

10

• Rates weighted by premium

• Continued reductions in core London Market lines– Marine and energy– Aviation– Big ticket property

• Slowing decline in catastrophe reinsurance

• Retail more stable

• Growing where rates are improving and margins healthy

Core London Market (excluding White Oak) All Retail Catastrophe reinsurance

12 month rolling period ending

Rat

e on

line

inde

xed

to J

anua

ry 2

010

0 -

20

40

60

80

100

120

An actively managed business

11

Reinsurance Local casualty andcommercial

Specialty Art and private client Property Marine and energy Global casualty

Period-on-period in local currency2016 GWP

Non-marine

Marine

Aviation

Casualty

Specialty

Professional liabilities

Errors and omissions

Private directors and

officers’ liability

Cyber

Commercial small package

Small technology and media

Healthcare related

Media and entertainment

Kidnap and ransom

Contingency

Terrorism

Product recall

Personal accident

Political risks

Aerospace

Contractors’ equipment FTC

Extended warranty

Home and contents

Fine art

Classic car

Luxury motor

Asian motor

Commercial property

Onshore energyUSA homeowners Managing general

agentsInternational

property

CargoMarine hull

Energy liabilityOffshore energyMarine liability

Public D&O, PIHealthcare

General liability

+16.1%£400m +21.6%

£372m

+8.1%£242m

+0.1%£152m

+6.1%£147m

-8.6%£75m +58.2%

£53m

Total Group controlled premium 30 June 2016: £1,441m

Hiscox Re Managing net catastrophe exposure

• Gross catastrophe premium increased to facilitate growth in Kiskadee

• Net catastrophe premium has reduced as rates have reduced

• Growing in diversifying specialty and casualty lines which have higher combined ratios

Excludes Kiskadee.Other: specialty, casualty, aviation, healthcare. 12

0

100

200

300

400

500

600

700

Gross Net Gross Net Gross Net

H1 2014 H1 2015 H1 2016

GW

P/N

WP

(US

$)

Hiscox Re GWP and NWP (US$ Group controlled)

Gross catastrophe Net catastropheGross other Net other

Business performance

BrexitStructural not strategic

• FX impact translational: no impact on economic capital requirements

• Impacts £260m of business – Hiscox Europe, overseas holiday homes, pan-European risks, political risks

• Preparing for Brexit Lite and Brexit Heavy

• Expect to create a new EU-based carrier

• Well-established network of European offices

• Opportunities to support smaller MGAs

14

Six months to 30 June 2016 Local currency

GWP£m

NWP£m

GWP change%

NWP change%

GWP change%

NWP change%

Hiscox Retail

Hiscox UK and Europe

Hiscox UK 244.4 211.7 9.3 (0.9) 8.7 (1.7)

Hiscox Europe 101.2 98.0 9.2 9.8 7.5 7.7

Hiscox International

Hiscox Special Risks 44.9 38.8 (16.4) (19.8) (21.8) (24.8)

Hiscox USA 183.4 174.8 40.0 39.8 32.8 31.6

DirectAsia* 6.2 4.4 (11.7) 8.0 (16.7) 14.6

Hiscox London Market 342.7 216.2 15.0 4.0 9.7 0.2

Hiscox Re** 364.7 144.7 26.8 19.2 20.6 12.1

Total 1,287.5 888.6 17.7 9.8 13.3 5.9

Managing the business

15*Excludes Hong Kong for both periods.**Excludes consolidation of Kiskadee for H1 2015.

Hiscox London Market and Hiscox ReDisciplined in tough markets

16

Hiscox London Market

• Growth of 9.7% in local currency ‒ Core London Market 1.2%‒ New classes of business 5.3%‒ Alternative distribution 3.2%

• Reducing in auto physical damage, marine and energy, terrorism

• Hiscox MGA establishing presence in key Mediterranean yacht market

• Net claims impact: catastrophe losses £9.1m, large losses £16.1m

Hiscox Re

• Good growth in casualty and specialty

• Careful risk selection mitigating industry losses

• Less aggressive rate reductions at the 1 June and 1 July renewals

• Kiskadee Investment Managers’ AUM now over US$1bn

• Net claims impact: catastrophe losses £5.4m, large losses £7.0m

Hiscox Special Risks and DirectAsiaNavigating challenging markets

17

Hiscox Special Risks

• Good profit despite ongoing intense competition

• Contraction in oil and mining, and consolidation in other markets affecting premiums

• Exploring new markets, products and ways to distribute our valuable expertise

DirectAsia

• Sale of Hong Kong awaiting regulatory approval

• Focus on brand-building in Thailand is driving growth

• Marketing efforts helping to differentiate us in the competitive Singapore market

Hiscox UK and Hiscox EuropeDelivering good growth and profit

18

Hiscox UK and Ireland

• Combined ratio 80.8%

• Finding efficiencies through updated IT infrastructure

• New home renovation and extension product for APCand broker e-trading solution (Hiscox Trader)

• Accessing new customers using Flood Re

• Reinsured out some employers’ liability exposures

Hiscox Europe

• Combined ratio 92.8% in local currency

• Storm Elvira €5m impact

• New focus on classic cars, and new bespoke online shops and IT freelancer products launched in Germany

• Growth across all lines in Spain, particularly PI and D&O

• Stéphane Flaquet promoted to MD of Hiscox Europe

0

100

200

300

400

500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 HY2015

HY2016

Broker Direct and partnerships

Hiscox USAAchieving scale and profitable

19

• Customer numbers– Direct over 110,000 – Broker over 40,000

• Compound growth over five years of 26.0%

• Attractive loss ratios

• Seven offices in operation:– Atlanta– Chicago– Dallas– Los Angeles– New York City– San Francisco– White Plains

• Over 300 dedicated staff

$US

GW

P

Hiscox USAProduct – a focused approach

20Group controlled income.

Specialist products that resonate

• Deep expertise in a limited number of niche lines

• Focus on thought leadership and value-added services

• Value proposition segmented by industry and size

Total GWP 30 June 2016: $270m

Professions

Media and entertainment

Property

Direct and partnerships

Executive risks

54%

13%

8%

8%

17%

Hiscox USADistribution – a focused approach

21

• Online in 49 states

• Other insurers with complementary appetites and large sales forces

• Affinity groups and other non-insurance partners with captive distribution

Traditional brokers

• First and second tier wholesalers

• Major retailers with specialist centres of excellence

• Niche specialist retailers

• MGAs and program administrators

Direct and partnerships

Efficient distribution that scales

Hiscox USAAn appetite to keep investing

22

PeopleAttracting the talented and ambitious

• Working to become an employer of choice in the US market

• Stable, growing business is attractive to employees

• Broadening talent pool: Military Veterans

• Relationships with key universities in each region

• Hired over 150 people in the last 24 months

Systems and infrastructureFuture proofing the business

• Selection of new IT infrastructure underway‒ Digitalised and scalable business‒ Implementation to begin 2017

• Slowly expanding office network

• Support functions in Atlanta

• Service centre in Virginia

• Other support tools (CRM, training, infrastructure etc.)

Brand The gift that keeps on giving

• Already spending $25m per yearand this will continue to climb

• Journey from a functional message to an emotional connection

• Nearly ubiquitous web presence

• Brand recognition on the rise

Summary and outlook

Summary and outlookStrategy of balance working

• Hiscox Retail biggest contributor to profit and continues to grow

• More pressure ahead for Hiscox London Market and Hiscox Re

• Kiskadee assets under management now over $1bn

• Economic capital requirements unchanged by FX volatility

24

Appendices

• Geographical reach

• Strategic focus

• A symbiotic relationship

• Long-term growth

• An actively managed business

• Hiscox Ltd results

• Boxplot and whisker diagram of Hiscox Ltd

• Realistic disaster scenarios

• Casualty extreme loss scenarios

• GWP geographical and currency split

• Group reinsurance security

• Reinsurance

• Portfolios – USD bond portfolios

• Portfolios – GBP, EUR and CAD bond portfolios

• Business segments

• Glossary of terms25

Geographical reach

26

USAAtlantaChicagoDallasLos AngelesNew York CitySan FranciscoWhite Plains

GuernseySt Peter Port

Latin American gatewayMiami

BermudaHamilton

EuropeAmsterdamBordeauxBrusselsCologneDublinHamburgLisbonLyonMadridMunichParis

UKBirminghamColchesterGlasgowLeedsLondonMaidenheadManchesterYork

AsiaBangkok Hong KongSingapore

Strategic focus

27

A symbiotic relationship

28

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

Long-term growth

29

Hiscox Reinsurance Hiscox London Market - Retail

Gro

ss w

ritte

n pr

emiu

ms

(£m

)

Hiscox London Market - Volatile Hiscox UKHiscox EuropeHiscox Guernsey

Hiscox USA

Local specialty lines

Internationally traded lines

DirectAsia

An actively managed business

30

Reinsurance Local casualty andcommercial

Specialty Art and private client Property Marine and energy Global casualty

Period-on-period in local currency2016 GWP

Non-marine

Marine

Aviation

Casualty

Specialty

Professional liabilities

Errors and omissions

Private directors and

officers’ liability

Cyber

Commercial small package

Small technology and media

Healthcare related

Media and entertainment

Kidnap and ransom

Contingency

Terrorism

Product recall

Personal accident

Political risks

Aerospace

Contractors’ equipment FTC

Extended warranty

Home and contents

Fine art

Classic car

Luxury motor

Asian motor

Commercial property

Onshore energyUSA homeowners Managing general

agentsInternational

property

CargoMarine hull

Energy liabilityOffshore energyMarine liability

Public D&O, PIHealthcare

General liability

+16.1%£400m +21.6%

£372m

+8.1%£242m

+0.1%£152m

+6.1%£147m

-8.6%£75m +58.2%

£53m

Total Group controlled premium 30 June 2016: £1,441m

£m 2015 2014 2013 2012 2011 2010

Gross premiums written 1,944.2 1,756.3 1,699.5 1,565.8 1,449.2 1,432.7

Net premiums written 1,571.8 1,343.4 1,371.1 1,268.1 1,174.0 1,131.6

Net premiums earned 1,435.0 1,316.3 1,283.3 1,198.6 1,145.0 1,131.2

Investment return† 33.7 56.4 58.9 92.7 25.9 98.8

Profit before tax 216.1 231.1 244.5 217.5 17.3 211.4

Profit after tax 209.9 216.2 237.8 208.0 21.3 178.8

Basic earnings per share 72.8p 67.4p 66.3p 53.1p 5.5p 47.2p

Dividend 24.0p 22.5p 21.0p 18.0p 17.0p 16.5p

Invested assets (incl. cash)† 3,609.4 3,244.9 3,129.5 3,055.8 2,873.4 2,779.7

Net asset value

£m 1,528.8 1,454.2 1,409.5 1,365.4 1,255.9 1,266.1

p per share 545.0 462.5 402.2 346.4 323.5 332.7

Combined ratio 85.0% 83.9% 83.0% 85.5% 99.5% 89.3%

Return on equity after tax* 16.0% 17.1% 19.3% 17.1% 1.7% 16.5%

Hiscox Ltd results

31†Excluding derivatives, insurance linked funds and third-party assets managed by Kiskadee Investment Managers.*Annualised post tax, based on adjusted opening shareholders’ funds.

Boxplot and whisker diagram of modeledHiscox Ltd net loss ($m) April 2016

32

5-10 year 10-25 year 25-50 year 50-100 year 100-250 year

02 02 06 22 06 07 10 43 17 18 15 76 26 35 20 113 36 62 27 163Mean industry loss $bn

Industry loss returnperiod and peril

JP EQ – Japanese earthquakeUS EQ – United States earthquakeEU WS – European windstormUS WS – United States windstorm

His

cox

Ltd

loss

($m

)Lower 5%- upper 95% rangeModelled mean loss

-

100

200

300

400

500

600

700

800

JPEQ

USEQ

EUWS

USWS

JPEQ

USEQ

EUWS

USWS

JPEQ

USEQ

EUWS

USWS

JPEQ

USEQ

EUWS

USWS

JPEQ

USEQ

EUWS

USWS

5-10yr

5-10yr

5-10yr

5-10yr

10-25yr

10-25yr

10-25yr

10-25yr

25-50yr

25-50yr

25-50yr

25-50yr

50-100yr

50-100yr

50-100yr

50-100yr

100-250yr

100-250yr

100-250yr

100-250y

Hur

rican

e K

atrin

a $5

0bn

mar

ket l

oss

21 y

ear r

etur

n pe

riod

Hur

rican

e A

ndre

w $

56bn

mar

ket l

oss

25 y

ear r

etur

n pe

riod

Nor

thrid

ge Q

uake

$24

bn m

arke

t los

s 40

yea

r ret

urn

perio

d

Sup

erst

orm

San

dy -

$20b

n m

arke

t lo

ss, 7

yea

r ret

urn

perio

d

1987

J $

10bn

mar

ket l

oss

15 y

ear r

etur

n pe

riod

Lom

a P

rieta

Qua

ke $

6bn

mar

ket l

oss

15 y

ear r

etur

n pe

riod

2011

Toh

oku

Qua

ke $

25bn

mar

ket

loss

, 45

year

retu

rn p

erio

d

Realistic disaster scenarios

33

Hiscox Group – losses shown as percentage of 2015 gross and net written premium

Estimates calculated in accordance with Lloyd’s guidelines using models provided by Risk Management Solutions, Inc and AIR Worldwide Corporation. Industry return periods estimated using Lloyd’s guideline industry loss figures.

36%

17%

30%

46%

28%

7%

4%

8%

9%

5%

San Fransisco earthquake

European windstorm

Florida windstorm

Gulf of Mexico windstorm

Japanese earthquake

Industry loss return period

$50bn 1 in 240 year

$107bn 1 in 80 year

$125bn 1 in 100 year

$30bn 1 in 200 year

$50bn 1 in 110 year

Gross lossNet loss

Casualty extreme loss scenariosChanging portfolios, changing risk

• As our casualty businesses continue to grow, we develop extreme loss scenarios to better understand and manage the associated risks

• Losses in the region of £75m-£300m could be suffered in the following extreme scenarios:

34

Event Est. loss

Pandemic Global Spanish flu type event (high infection, low mortality)45% infection rate, 20% medical treatment, 0.3% case fatality rate £75m

Cyber Very large cloud service provider (e.g. Amazon Web Services) goes offline for 12 days. Insurance industry loss of c.£30bn £125m

Multi-year loss ratio deterioration 5% deterioration on three years casualty premiums of c.£2bn £100m

Economic collapse US GDP drop of 10% to 15%, approximately three times the 2007-08 financial crisis £275m

Casualty reserve deterioration

35% deterioration on existing casualty reserves of c.£850mEst. 1 in 200 year event £300m

Property catastrophe 1 in 200 year catastrophe event from £160bn US windstorm £300m

GWP geographical and currency split

35

2016 geographical split – controlled income 2016 currency split – controlled income

42.2%

10.3%9.5%

23.3%

14.7%

North AmericaOtherWesterm Europe (excl. UK)WorldwideUK

24.7%

58.2%

5.0%

12.1%

GBPUSDCAD and otherEUR

Group reinsurance security

36

Receivables at 30/06/16 of £793.6m

51.1%

19.7%

24.7%

4.5%

AAAAAA and collateralisedOther

67%

25%

8%

AAAAAA

*Reinsurance placements in force at 21 July 2016.

2016 reinsurance protections*First loss exposure by S&P rating

13.4

18.7

21.7

19.4 21

.0

19.0

19.0

19.3

23.5

19.2 21

.5

31.0

0

5

10

15

20

25

30

35

Reinsurance

37

Ceded as a percentage of GWP Reinsurance receivables as a percentage of total assets

10.0

7.7

13.4

11.0 11.6

11.7 12.3

10.3

10.6

10.2 11

.3 12.7

0

5

10

15

20

25

Portfolio – USD bond portfoliosas at 30 June 2016

38*Includes agency debt, Canadian provincial debt and government guaranteed bonds.

• Liquid portfolio

• Short duration

• Short dated corporates still favoured

Portfolios: $2.7bnAAA

%AA%

A %

BBB%

BB and below

%Total

%Durationmonths

Government issued 27.6 27.6 18.0

Government supported* 0.8 6.9 0.1 0.2 8.0 17.6

Asset backed 8.4 0.2 0.1 8.7 10.1

Mortgage backed agency 7.2 7.2 28.5

Non agency 0.8 0.3 1.7 2.8 11.2

Commercial MBS 1.7 0.3 2.0 17.2

Corporates 0.8 5.1 20.0 17.1 0.2 43.2 22.3

Cash 0.5 0.5 0.0

Total 12.5 47.6 20.7 17.1 2.1 100.0 19.6

Portfolio – GBP, EUR and CAD bond portfoliosas at 30 June 2016

39*Includes supranational and government guaranteed bonds.

• Governments favoured for duration management

• Corporates for yield

• No exposure to Greece, Ireland , Italy, Portugal or Spain Sovereign debt

• GBP corporates and duration increased following investment of bond proceeds

GBP portfolios: £561m AAA

%AA%

A%

BBB%

BB and below

%Total

%Durationmonths

Government issued 27.0 27.0 18.2

Government supported* 15.7 1.8 0.1 17.6 17.3

Asset backed 3.3 0.9 4.2 11.8

Corporates 6.1 6.6 17.9 18.0 48.6 41.5

Cash 2.6 2.6 0.0

Total 25.1 35.4 20.5 19.0 0.0 100.0 28.6

EUR and CAD portfolios: £366m AAA

%AA%

A%

BBB%

BB and below

%Total

%Durationmonths

Government issued 27.5 0.5 28.0 47.2

Government supported* 19.0 8.3 0.6 0.1 28.0 18.6

Asset backed 1.6 0.1 1.7 10.7

Corporates 6.5 10.7 16.4 7.0 0.4 41.0 21.1

Cash 1.3 1.3 0.0

Total 54.6 19.5 18.4 7.1 0.4 100.0 27.3

Business segments

Hiscox RetailHiscox Retail brings together the results of the UK and Europe, and Hiscox International being the US, Special Risks and Asia retail business divisions. Hiscox UK and Europe underwrite European personal and commercial linesbusiness through Hiscox Insurance Company Limited,

together with the fine art and non-US household insurance business written through Syndicate 33. In addition, Hiscox UK includes elements of specialty and international employees and officers’ insurance written by Syndicate 3624, and Hiscox Europe excludes the kidnap and ransom business written by Hiscox Insurance Company Limited. Hiscox International comprises the specialty and fine art lines written through Hiscox Insurance Company (Guernsey) Limited, and the motor business written via DirectAsia, together with US commercial, property and specialty business written by Syndicate 3624 and Hiscox Insurance Company Inc. via the Hiscox USA business division. It also includes the European kidnap and ransom business written by Hiscox Insurance Company Limited and Syndicate 33.

Hiscox London Market 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, excluding the kidnap and ransom business. In addition the segment includes elements of business written by Syndicate 3624 being auto physical damage, auto extended warranty and aviation business.

Hiscox ReHiscox Re is the reinsurance division of the Group, combining the underwriting platforms in Bermuda, London and Paris. 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. In addition, the healthcare and casualty reinsurance contracts written in the Bermuda hub on Syndicate capacity are also included. The segment also captures the performance and fee income of Kiskadee, further details of which can be found in note 2.3 of the Group’s Report and Accounts for the year ended 31 December 2015.

Corporate CentreCorporate Centre comprises the investment return, finance costs and administrative costs associated with Group management activities. Corporate Centre also includes the majority of foreign currency items on economic hedges and intragroup borrowings, further details of which can be found at note 13 of the Group’s Report and Accounts for the year ended 31 December 2015. Corporate Centre forms a reportable segment due to its investment activities which earn significant external returns.

40

Glossary of terms

Binding authorityAn agreement between a Lloyd’s managing agent and a coverholder under which the managing agent delegates its authority to enter into contracts of insurance to be underwritten by the members of a syndicate.

Claims ratioNet claims incurred, including IBNR, as a percentage of net earned premiums.

Combined ratioThe total of the claims, expenses and impact of foreign exchange ratios.

Expense ratioExpenses as a percentage of net earned premiums.

Funds at Lloyd’sThe amount of assets, which can be cash, investments or letters of credit, that a syndicate member has to deposit with Lloyd’s to support his share of the capacity on a syndicate. The minimum amount is 40% of the capacity owned by the member.

Gross written premiumPremiums contracted for before any deductions.

Group controlled The total gross written premium controlled by the Group including the 27.5% of the Syndicate capacity not owned by Hiscox in 2016 (27.5% in 2015).

IBNRIncurred but not reported. An estimate made at the end of each accounting period to cover the expected cost of losses that have occurred but have not yet been reported to the insurer or reinsurer.

ILSInsurance-linked Securities. Financial instruments whose value is affected by an insured loss event. Examples include catastrophe bonds and other forms of risk-linked securitization.Incurred loss ratio Paid and outstanding losses as a percentage of premiums. Gross incurred loss ratio is before deducting any reinsurance and net is after deducting reinsurance.

Long-tailA term used to describe an insurance risk that has the potential for claims development or new claims to be reported a number of years after expiry of the term of the policy.

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Glossary of terms

MGAManaging General Agency. An individual or business entity appointed by an insurer to solicit applications from agents for insurance contracts or to negotiate insurance contracts on behalf of an insurer.

Member or NameThe companies or individuals who own the capacity of a syndicate and who belong to the membership of the Society of Lloyd’s.

Net premiums earnedPremiums received after the cost of reinsurance and adjustment for unearned premium. Unearned premium covers the future period of risk of an insurance policy.

Net premiums writtenPremiums contracted for after deduction of reinsurance.

Open year A year of account of a syndicate which has not been closed by Reinsurance To Close (RITC). RITC usually occurs at the end of the third year. A year of account can be left open beyond the third year if the extent of the future liability cannot be accurately quantified.

Qualifying quota shareThese are quota share reinsurance policies, which Lloyd’s allow in certain circumstances, that enable a syndicate to write gross premium in excess of its capacity.

Reinsurance to close – RITCThe reinsurance to close comprises a premium payable by the closing year to the members on the next open year of account and a contract which transfers the liability for all claims in respect of the closing year to the next open year.

Run-off accountAt Lloyd’s, a year of account which is kept open after the date on which it would normally have been closed.

Stamp capacityThe volume of business measured in gross written premiums net of acquisition costs underwritten by the group through its managed syndicates at Lloyd’s of London.

SubrogationThe right of the underwriter to ‘stand in the shoes of the insured’ and take over the Insured's rights, following payment of a claim, to recover the payment of an incurred loss from a third party responsible for the loss. It is limited to the amount of loss paid by the insurance policy.

Syndicate capacityAlso referred to as the ‘stamp’. The maximum amount of business that a syndicate in Lloyd’s can write per year, aggregated from all its members.

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