Hiscox Ltd full year resultsFor the year ended 31 December 2015“A good year”Gross premiums writtenNet premiums earnedProfit before taxEarnings per shareTotal ordinary dividend per share for yearSpecial dividendNet asset value per shareGroup combined ratioReturn on equityInvestment returnReserve releases20152014 1,944.2m 1,435.0m 216.1m72.8p24.0p16.0p545.0p85.0%16.0%1.0% 205.9m 1,756.3m 1,316.3m 231.1m67.4p22.5p45.0p462.5p83.9%17.1%1.8% 172.2mHighlights Strong premium growth of 10.7% from across the Group, with retail businesses now generating 50% ofincome. Each division delivered good profits through careful risk selection, growth in profitable niches and anabsence of natural catastrophes. Investment in the Hiscox brand continues to deliver, with retail customers now exceeding 600,000. Hiscox London Market continues to grow profitably, benefiting from new teams in complementary specialtylines. Hiscox Re performing well with Kiskadee Investment Managers’ AUM on track to reach US 1 billion in2016 after its second year of operation. A second interim dividend of 32.0p per share comprised of a special dividend of 16.0p and a final dividendequivalent of 16.0p, bringing the year’s total distribution to 40.0p. Going forward the Group will retain agreater proportion of earnings to fund the growth opportunities we see.Bronek Masojada, Chief Executive of Hiscox Ltd, commented:“Our strategy continues to deliver good growth with our retail businesses contributing 50% of income. We haveestablished profitable operations in everything from direct-to-consumer small business insurance to ILS fundmanagement. This diversity sets us apart and gives us options.”1

For further informationHiscox LtdJeremy Pinchin, Group Company Secretary 1 441 278 8300Kylie O’Connor, Head of Group Communications, London 44 (0)20 7448 6656BrunswickTom Burns 44 (0)20 7404 5959Simone Selzer 44 (0)20 7404 5959Notes to editorsAbout HiscoxHiscox, the international specialist insurer, is headquartered in Bermuda and listed on the London Stock Exchange(LSE:HSX). There are three main underwriting divisions in the Group - Hiscox Retail (which includesHiscox UK and Europe, Hiscox Guernsey, Hiscox USA and subsidiary brand, DirectAsia), Hiscox London Marketand Hiscox Re. Through its retail businesses in the UK, Europe and the US Hiscox offers a range of specialistinsurance for professionals and business customers, as well as homeowners. Hiscox underwrites internationallytraded, bigger ticket business and reinsurance through Hiscox London Market and Hiscox Re.For further information, visit

Chairman’s statementThe Hiscox Group delivered a very healthy profit of 216.1 million (2014: 231.1 million) in 2015 with some helpfrom a benevolent Mother Nature.Our industry has enjoyed a long period of reduced catastrophic activity. The effect has been to attract more capital,and thus competition resulting in reduced prices. This is more keenly felt on accounts that attract larger premiums.We are prepared for this; we have a proven strategy of balancing the bigger-ticket with the smaller retail business.Our diverse product range sold across a wide geographic area means we are well placed to thrive in thisenvironment.Our retail operations have grown profitably and now account for half the Group’s income, reaping the rewards ofour long-term investment in the Hiscox brand. Our London Market business has also had a strong year, exercisingprudence and adding new teams in complementary specialty lines. Here we have benefited from the fallout fromthe recent M&A activity. Hiscox Re, with its focus on product development combined with technical strength andgood underwriting, has done well, again delivering good profits. And Kiskadee, our Insurance Linked Securities(ILS) business, is on track to reach US 1 billion of funds in 2016.ResultsThe result for the year ending 31 December 2015 was a very good profit before tax of 216.1 million (2014: 231.1million). Gross written premium increased by 10.7% to 1,944.2 million (2014: 1,756.3 million). The combinedratio was 85.0% (2014: 83.9%). Earnings per share increased to 72.8p (2014: 67.4p) and the net asset value pershare increased by 17.8% to 545.0p (2014: 462.5p). Return on equity was 16.0% (2014: 17.1%).Dividend and capitalThe Board has declared a second interim dividend of 32.0p per share (to be paid on 7 April 2016 to shareholderson the register at 11 March 2016), which comprises a final dividend equivalent of 16.0p per share (2014: 15.0p),taking the total ordinary dividend per share for the year to 24.0p, an increase of 1.5p (2014: 22.5p) and; anadditional return of capital of 16.0p per share (2014: 45.0p). On this occasion the Directors have decided not tooffer a scrip alternative.This is the fourth successive year we have been able to return additional capital to shareholders. As previouslycommunicated to the market however, returning capital to shareholders is not a long-term strategy and goingforward the focus will be on pursuing opportunities for profitable growth. The Group continues to maintain aprogressive core dividend policy.In 2015 we raised 275 million via a subordinated debt issue. As Tier 2 capital it will support our ratings and alsogive us capital flexibility underpinning our 2016 business plans and beyond. As an inaugural issue it wascompetitively priced and the support was flattering.InvestmentsAfter another challenging year for both bond and equity investment, characterised by low yields and volatility inmany asset classes, we view our investment return of 33.7 million (2014: 56.4 million) to be satisfactory. Thisequates to a return of 1.0% (2014: 1.8%) of total assets under management.It has never been our style to take excessive risk with our investment portfolio, particularly given the uncertaintyand lack of liquidity which prevails in many investment markets. Our priority remains that of capital preservationover appreciation and whilst our portfolio of predominantly short-term bonds offers only modest upside, it reflectsthe nature of our liabilities and should limit the volatility of our portfolio overall. We have always been prepared totake some risk in the portfolio and we maintain an allocation to equity and hedge funds which we think isappropriate over the longer term despite more frequent outbreaks of short-term turbulence. The outlook for 2016seems no clearer and we are planning for another year of similar returns.Cyber opportunityCyber attack is mainly about theft of data or malicious damage by electronic means. This can lead to a wholeseries of consequences from reputational damage to manufacturing plants breaking down, and worse. As such it isdefinitely the province of insurers, and shouldn’t be left up to governments (as has been suggested). We have theunderwriting expertise to address the issues and for over 15 years we have worked hard to provide our customerswith responsive cover. Cuthbert Heath, the great twentieth century innovator of our industry, would have relishedthe challenge and so do we.Market stress testWe are actively seeking a consensus amongst peers as well as our regulators to ensure an effective response to adisaster hitting the London market. Post-World Trade Centre, we responded to clients’ needs, paying valid claimsand writing more profitable business post-loss. We think it is necessary to organise a market stress test "dry run” in3

2016 to test the decision making processes and speed of response of all relevant parties. This is essential ifLondon is to maintain its pre-eminence in global specialty insurance.The BoardDuring 2015 a number of the original Hiscox Ltd Board retired; namely Dr James King, Andrea Rosen and DanHealy having each completed nine years’ service (the point at which the UK Corporate Governance Code deemsthem not independent). Richard Gillingwater, who joined the Board in 2010, stood down due to his newcommitments at Scottish and Southern Energy as well as Henderson Global Investors. They have served thebusiness well and I would like to thank them all for their wisdom and guidance.Two new members of the Board bring a wealth of retail financial services and marketing experience; Lynn Carterand Anne MacDonald support our focus on retail growth and brand building. In November we announced theappointment of our new Senior Independent Director and Chairman of the Remuneration Committee, Colin Keogh,who has had a long career in the financial services sector.In August we said farewell to Stuart Bridges who left after 16 years as our Chief Financial Officer. Stuart made asignificant contribution to the Group. He joined in 1999 when our gross written premium was 241 million andshareholder funds were 134 million. By the time he left our market cap had risen to 2.5 billion, and we delivereda total shareholder return of 16.1% per annum. Stuart played an important role in our growth, guiding our financialstrategy through the challenges of overseas expansion, testing investment markets and increasing regulation. Iwould like to thank him for all he has achieved for Hiscox.PeopleDuring the year we were very happy to celebrate twenty years of operating in France and Germany, as well as tenyears in Spain, USA and Bermuda. Our European business has matured into a profitable and growing part of thecompany against a backdrop of economic difficulty. The US and Bermudian businesses are profitable and havegrown substantially. When I am travelling to any of these locations I am struck by the enthusiasm of our people andtheir desire to do a great job. Across the Group, we work hard to maintain our culture and also encourageemployee ownership. I am proud and grateful for the talent and dedication our brand attracts.OutlookAlthough the result was in some part due to clement weather internationally, our strategy has once again proveditself in challenging conditions. For the best part of three decades we have sought to strike a balance between bigticket wholesale exposures and smaller, less volatile retail risks; creating diversity in product, distribution andgeography in order to grow despite market conditions. The Hiscox Group is now the only specialist insurer withestablished operations in all forms of insurance markets – from a direct-to-consumer offering, to a significant ILSfund management business and everything in between.Treacherous currents and difficult headwinds will increasingly prevail in the years ahead and our experience tellsus that catastrophes can occur at any time. As the operating environment gets tougher however, we believe ourstrategy will continue to give us profitable opportunities as we continue on our independent path with focus anddiscipline.Robert Childs29 February 20164

Chief Executive’s reportIt is pleasing to report a profit before tax of 216.1 million (2014: 231.1 million), a return on equity of 16.0% (2014:17.1%) and premium growth of 10.7% to 1,944.2 million (2014: 1,756.3 million). Our good results are allowing usto pay a second interim dividend of 32.0p per share, which comprises a final dividend equivalent of 16.0p and aspecial dividend of 16.0p, bringing the year’s total distribution to 40.0p. We do not expect the capital washingaround our industry to go away in 2016, but we feel confident that the differentiated products in our retailbusinesses around the world will allow us to grow where margins are attractive, and we will use our retainedearnings to fund the solvency capital this expansion requires.Our US business, entering its tenth year of operation in 2016, contributed significantly to the Group’s growth in2015, increasing premiums by 21.5% and delivering a healthy profit. Hiscox London Market demonstrated itsadaptability with growth of 14.6% and good profits. Hiscox Re continued to evolve whilst making a material profitcontribution, with Kiskadee, our Insurance Linked Securities business, expected to manage US 1 billion by the endof 2016. Hiscox UK, Hiscox Europe and Hiscox Guernsey have all had a good year, with good progress shown inDirectAsia.It was not a loss-free year for our industry, or Hiscox. We, like others, have benefited from the absence of majornatural catastrophes. Our attritional claims were broadly in line with past years, and our skilled underwriting teamsavoided material impact from some of the larger industry losses such as the explosions in Tianjin in China, tornadoand freeze-related claims in the US, floods in the UK and mining related collapses in South America. In total thesecost us a modest 25.1 million.Hiscox RetailOur specialist retail operations differentiate us from others in our sector who have grown out of London andBermuda. The current competitive pressures have prompted many of them to try to replicate what we haveachieved, but we have the considerable advantage of having begun this journey in 1989, with an initial focus onhigh net worth homes. Since then we have launched new lines of personal and commercial insurance, enteredother countries, built great teams and invested heavily in our brand. Hiscox Retail now comprises half of theGroup’s gross written premium: 975.6 million in total (2014: 891.1 million). We began investing in commercialinsurances for small and medium sized businesses in 1994; at 580.7 million it is now the single biggest segmentin the Group.In aggregate our retail businesses generated substantial profits: 73.3 million in 2015, slightly down on 2014’s 78.1 million. This is due partly to our increased marketing expenditure which rose by 12.7 million to 44.5 million(2014: 31.8 million). These costs are taken to this year’s profit and loss account, but their benefit accrues overmany years; supporting not just our retail businesses, but the Group as a whole.Hiscox Retail comprises Hiscox UK and Europe, and Hiscox International. I review them in turn below.Hiscox UK and EuropeThis division provides personal and commercial lines cover. Personal lines include high-value households, fine artand collectibles and luxury motor. Commercial insurance is focused on small and medium sized businesses,typically operating in white-collar industries. These products are distributed both via brokers, through a growingnetwork of partnerships, and direct to the consumer.Our retail businesses in the UK and Europe made profits of 64.9 million (2014: 73.3 million). Claims within theUK and European businesses were benign for the majority of the year which encouraged us to boost our marketingexpenditure by 4 million above plan. This looked like a sensible decision until December when storms Desmond,Eva and Frank hit the UK. The impact of these events on our business is estimated at 10 million. Europe enjoyeda record year in Euro terms thanks to strong underlying performance, augmented by a single significant prior yearrelease. Exchange rate movements mean that this performance is not reflected in our Sterling result.Hiscox UK and IrelandHiscox UK and Ireland grew gross written premiums 1.9% to 443.3 million (2014: 435.0 million). Good growthacross most lines offset a reduction of 23 million in income from commercial partnerships as we rebalanced theportfolio towards more profitable lines.Brokers are our most important distribution channel, accounting for just under 80% of our UK business. We supportthem with disciplined, but creative, underwriting solutions and a focus on delivering good service via our network ofoffices in Birmingham, Colchester, Dublin, Glasgow, Leeds, London, Maidenhead, Manchester and York. Thebroker channel achieved good retention of 87% and grew by 7.6%.5

During the year, we saw a six-fold increase in demand for our cyber and data insurance product for smallbusinesses. We also acquired RH Classics, a leading classic car insurance specialist, which broadens ourcapabilities and gives us access to a new group of customers.Our marketing reach means we receive many enquiries from customers whose needs are outside of ourunderwriting appetite. In 2016, we are creating a managing general agent to underwrite these risks on behalf ofother insurers, providing them with a flow of business and us with fees and profit commission.At the end of the year we celebrated the opening of our new office in York, on time and on budget. Housing over250 employees, with room for further expansion, this is the hub of our direct-to-consumer operations andrepresents our high ambitions for this business. This office was off to a strong start on day one, as the team beattheir sales targets and served our customers brilliantly; a testament to our motivated and talented people. However,we did have a heart-stopping moment in December when swathes of York flooded and water crept towards ouroffice. Thanks to our dedicated staff, all of whom were able to get to the office on the worst affected day, and acannily built overflow tank, we were able to provide uninterrupted service to all of our flood-affected customers.We have for several years been progressively in-sourcing all of our direct customer sales and service functions andmoving our direct business to a new IT platform. These projects are all now complete, and after such a sustainedperiod of investing in infrastructure, the UK direct business will now focus on profitable growth, increasing scaleand improving its expense ratio.Hiscox EuropeHiscox Europe grew gross written premiums by 7.8% to 205.6 million (2014: 190.8 million) and achieved acombined ratio of 92.2% (2014: 94.1%), with a good performance in all product lines and from Spain, Germany andBenelux in particular.During the year, Hiscox Specialty Commercial was launched in France and Germany. This suite of productsbroadens our liability and property offering to small businesses. We hope to replicate the success we haveexperienced in the UK and early signs have been very positive. Our cyber product in Germany and the Netherlandshas also done particularly well, as demand grows and customer preparedness to buy increases. Alternativedistribution, via broker schemes, and partnerships with other organisations is growing in importance. In Spain,participation in a number of contingency and personal accident managing general agencies is generating goodgrowth.Not everything went to plan. One of our priorities was to accelerate the growth of our Franco German directcommercial business through a significant marketing investment. We achieved growth of over 20% to 5 million,but the returns were not commensurate with the cost. We have decided that the pan-European experiment did notwork and will be pursuing a less ambitious path in 2016. A key part of this is transforming the direct business to onewhich can also support the broker and partnership channels, and is managed and led at a local level.Our European Service Centre in Lisbon is operating well. It now performs up to 90% of transactions, representing akey step to reducing our European expense base.Our European business offers opportunities for steady growth despite the Eurozone’s travails. In 2016, we willexplore opportunities in the classic car market, look to grow the commercial and partnership business, andcontinue to use segmentation to drive productivity and efficiency.Hiscox InternationalThis division comprises Hiscox USA, Hiscox Guernsey and DirectAsia. Its revenues grew by 26.4% to 380.5million (2014: 301.1 million) and it achieved a combined ratio of 97.9% (2014: 100.1%). Hiscox USA was thebiggest contributor to the division’s growth and profit improvement.Hiscox USAHiscox USA primarily underwrites small-to-middle market commercial risks through brokers, other insurers anddirectly to businesses (either online or over the telephone). It delivered another stellar performance in 2015, withgross written premiums increasing by 21.5% in local currency to US 446.6 million (2014: US 367.6 million), and astrong profit. This result was helped by a stable claims environment, discipline on commissions and good expensemanagement.Our core professional liability and small commercial products continue to drive growth. During the year the teamhoned its underwriting strategy in order to grow its footprint and retain its competitive edge in the directors andofficers’, technology errors and omissions (E&O) and general liability product lines. We also made good progress in6

entertainment, enhancing Hiscox One, the first integrated E&O, property and workers compensation offering forentertainment professionals.The cyber market in the US is experiencing rapid growth with many new market entrants. We believe themarketplace will ultimately favour those carriers that possess the most experience in servicing these risks. We havebeen underwriting US cyber for 15 years but will not rest on our laurels. In 2016 we will launch an updated,comprehensive but simply-designed cyber product that reinforces our market position as a leading specialistinsurer.Our direct-to-consumer operations continue to grow apace, with policies in force now numbering over 120,000.Direct and partnership small business insurance is now our single biggest US line of business, and marketing hasbeen an important component of its success. We are developing our brand around the strapline ’EncourageCourage’. To promote this we have sponsored the Tough Mudder fitness challenge across the US and created theCourageous Leaders web series. We hope that, in time, our US brand presence will match that of our UK business.In 2016 we celebrate ten years of Hiscox USA. It has achieved critical mass, now provides the Group with a robustand sustainable profit stream, and has delivered 18% compound organic growth in the last five years. We haveestablished teams of experts in key states, including an exploratory team in Dallas in 2015, and a growing brand.We will not stop there; we see real opportunities despite competitive markets, and will continue investing in newtalent, IT and our brand in 2016.Hiscox GuernseyHiscox Guernsey comprises our Guernsey-based kidnap and ransom, private fine art and executive securityunderwriting operations with sales offices in London and Miami.Across the globe, market conditions remain very competitive. Premiums decreased slightly by 1.9% to US 103.6million (2014: US 105.6 million). A new team in Miami is driving growth, offsetting reductions elsewhere. Aninvestment in IT is also paying off. Our business partners are increasingly looking for e-trading solutions, and ournew platform delivers a more efficient process between producers, brokers and underwriters.We have combined the different teams from across the Group that focus on special risks, including kidnap andransom, private client fine art and executive security, into a single structure which is now branded Hiscox SpecialRisks. Led from Guernsey, the division will include teams in London, Munich, Paris, New York, Los Angeles andMiami. We believe that will allow us to provide better service and up-to-date products to corporate and personalcustomers in the increasingly volatile world in which we live.DirectAsiaIn early 2014 Hiscox acquired DirectAsia, a direct-to-consumer business with operations in Singapore, Hong Kongand Thailand that sells predominantly motor insurance. The business is developing as expected.Singapore performed solidly in a competitive pricing environment. Hong Kong made good progress too, despite thechallenges of a small motor insurance market and low average premiums. We continue to make particularly goodprogress in Thailand, where we see strong growth potential and where our brand-building work has been wellreceived. Investment in a new TV campaign, supported by print and social media marketing, has moved brandawareness to 37%, driving 500% growth in premium income.DirectAsia has clear priorities, a strong plan, and a growing customer base. As anticipated, Hiscox’s disciplinedapproach to underwriting and focus on brand-building has complemented the existing expertise within the team.Hiscox London MarketOur London Market business delivered a strong profit of 59.9 million (2014: 62.6 million), and increased grosswritten premiums by 14.6% to 585.2 million (2014: 510.8 million). Much of this increase reflects exchange ratefluctuations, with premium growth being 8.5% on a constant currency basis. The business achieved a combinedratio of 85.7% (2014: 84.2%) a good result despite the impact of price reductions. Its biggest source of growthcame through our partner White Oak, a specialist automotive and equipment underwriter. It contributed 5.0% ofgrowth, while new products and teams delivered 4.2% and core London Market lines reduced by 0.7%.The London Market remains competitive. Customers are getting used to lower prices and brokers are fighting toincrease their declining margin. Our response is to continue improving our relationship with brokers, supportingfacilities and quota-share agreements where we have the right degree of underwriting control and we see margin.7

Hiscox London Market has also benefited from market dislocation resulting from M&A activity, as leadingunderwriting talent joins our ranks. This has allowed us to strengthen our existing cargo team and establish newteams in product recall, and US general liability in London, and property in Miami.Looking at each division in turn:PropertyOur property division includes US and international commercial property, power and mining risks, and UScatastrophe exposed personal lines traded in the London Market.This area had another excellent year due to careful risk selection and a general lack of catastrophes. We focusedon retaining small-ticket commercial and household business, written through binding authorities with long-standingUS partners. Continuing pressure on big-ticket traded business meant the team needed to remain extremelydisciplined as it dealt with market challenges and looked for new opportunities. The launch of flood cover for thenewly deregulated US market is one example of such an opportunity. The private sector can offer wider terms andcoverage than the government-backed National Flood Insurance Program, giving consumers a more accuratelypriced and responsive product. It is ironic that London Market firms have an appetite for flood exposure, whilst inthe UK the Government has pushed the domestic industry to create a mutualised and distorted approach totackling this risk.Marine and EnergyChallenging trading conditions continue to depress the marine and energy market and our business in this sectorshrank by 12.2%. Upstream energy was already under pressure but the substantial drop in the price of oil hasfurther affected this account as pressure grows on clients’ budgets. The team has actively reduced exposure wherethe margins are unreasonable. Our marine and energy liability business did well to maintain its position in 2015,mainly due to our increased appetite as market conditions held up. However given overall conditions, we expectexisting marine and energy lines to reduce in future, except for cargo business which has been reinvigorated withsome new hires.CasualtyThis business grew by over 39% as a result of our investment in new talent and new lines of business over anumber of years. During the year, the team launched a new cyber product that covers medium-to-large sizedbusinesses for extortion threats and cyber breaches. The directors and officers’ team won ‘Underwriting Team ofthe Year’ at the 2015 Insurance Day awards. A new team was also brought on board to focus on US generalliability.Aerospace and SpecialtyThis division includes our aviation, space, contingency, terrorism, kidnap and ransom, political risks and personalaccident business.Despite a series of aviation losses in recent years, including the Germanwings and Metrojet disasters in 2015, thismarket is under extreme pricing pressure. The team is navigating their way through turbulent conditions withopportunities seized in the more profitable manufacturers and airports business. Our political risks business hasbeen hit by falling oil prices and political unrest in Ukraine, where we reserved claims for net 16 million at year end.Our terrorism business has felt the impact of facilities in the market where brokers are bundling risks together tomake them easier to place. We participated where we saw margin and opportunity.The personal accident team recruited last year is making a strong impact, delivering profitable growth in a specialistline we are keen to lead. Similarly, our new product recall team has made a good start. Other lines includingcontingency and kidnap and ransom are holding steady and delivering strong profits driven by good risk selection.Alternative DistributionAdapting to changes in distribution is key in the current environment. The role of the alternative distribution divisionis to facilitate innovation in the use of technology and specialist data to serve different markets. Its biggest businessis the underwriting of specialist automotive and equipment, including extended warranty through White Oak. Thisbusiness now represents 28% of our London Market income. Given its importance we increased our equity stake inWhite Oak from 10% to 30% in 2015, and continue to have representation on its Board.Hiscox MGAEarly in 2015, we acquired R&Q Marine Services, the mega-yacht and general marine leisure managing generalagent. This furthers our capabilities to meet the needs of high net worth customers and acts as a vehicle throughwhich we can act for Hiscox and other London-based carriers where the client’s requirements exceed our riskappetite. We have re-branded the business Hiscox MGA and included within it our Miami-based terrorism and fineart teams. Our Miami offering has expanded to include property underwritten for Hiscox and others, and in 2016 wewill include Middle East terrorism and a south of France-based yacht underwriter.8

Our London Market business remains a cornerstone of expertise, energy and profit wit

Each division delivered good profits through careful risk selection, growth in profitable niches and an absence of natural catastrophes. Investment in the Hiscox brand continues to deliver, with retail customers now exceeding 600,000. .