2. Welcome
14.30 - 15.15 Introduction Robert Hiscox
Hiscox Global Markets Richard Watson
Hiscox Bermuda Rob Childs
Questions
15.15 - 15.45 Coffee
15.45 - 17.00 Hiscox USA Ed Donnelly
Hiscox Europe Marc van der Veer
Hiscox UK Steve Langan
Conclusion Bronek Masojada
Questions
17.00 Drinks and canapés
3. Hiscox 2002
Hiscox plc
Hiscox
Global Markets
One location
- Reinsurance
- Property
- Marine and
Energy
- Specialty
- Space
- Technology
and Media PI
Hiscox
Guernsey
One location
- Art and
Private Client
- Kidnap and
Ransom
Hiscox International
Hiscox
UK
Hiscox
Europe
Four locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Technology
and Media PI
- Direct
Hiscox UK and Hiscox Europe
2002 gross written premium £677 million
Three locations
- Art and Private
Client
- PI and
Specialty
Commercial
4. Hiscox 2007
Hiscox Ltd
Hiscox
Global Markets
Hiscox
Bermuda
Hiscox
Guernsey
Hiscox
USA
One location
- Reinsurance
- Group
Capital
Support
One location
- Art and
Private Client
- Kidnap and
Ransom
Three locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
Hiscox International
Hiscox
UK
Hiscox
Europe
Ten locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
Nine locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
- Direct
Hiscox UK and Hiscox Europe
Four locations
- Reinsurance
- Property
- Marine and
Energy
- Specialty
- Space
- Technology
and Media PI
2006 gross written premium £1,126 million
5. Business growth
Global Markets 335 352 5
UK 87 92 5
Europe 30 36 20
Bermuda (external reinsurance) 41 82 100
Guernsey 21 20 (1)
USA 1 8 800
GWP total 515 590 15
Panther Re - 27 -
GWP total (excluding Panther Re) 515 563 9
IFRS Hiscox Group share
2006 £m 2007 £m %
Gross written premium for the five months to May
7. What do we do?
Characteristics of what we do
• Larger individual risks
• Bundles of small risks
• Catastrophe exposed risks
• Specialist lines
Characteristics of what we do not do
• Process orientated
• High volume, small margin
• Direct to consumer
Offices in London, Paris and New York
8. An experienced underwriting team
Division Director
Years'
experience
Years at Hiscox
Active
Underwriter
Richard Watson 26 21
Reinsurance Russell Merrett 17 10
Property Paul Lawrence 21 15
Marine and
Energy
Simon Williams 22 12
Specialty David Bruce 35 35
Space Bruno Ritchie 13 9
Technology and
Media PI
Neil Bolton 16 13
9. Rates
Hiscox Global Markets - divisional 12 month rolling rate since 1998
May-98toApr-99
Sep-98toAug-99
Jan-99toDec-99
May-99toApr-00
Sep-99toAug-00
Jan-00toDec-00
May-00toApr-01
Sep-00toAug-01
Jan-01toDec-01
May-01toApr-02
Sep-01toAug-02
Jan-02toDec-02
May-02toApr-03
Sep-02toAug-03
Jan-03toDec-03
May-03toApr-04
Sep-03toAug-04
Jan-04toDec-04
May-04toApr-05
Sep-04toAug-05
Jan-05toDec-05
May-05toApr-06
Sep-05toAug-06
Jan-06toDec-06
May-06toApr-07
Jan-88toDec-98
900%
800%
700%
600%
500%
400%
300%
200%
100%
0%
Rolling12monthindexofrates
Marine and Energy Professional Indemnity Property Reinsurance Specialty and other
10. Reinsurance - Panther Re
Panther Re created with W L Ross & Company
• Special purpose reinsurer, capitalised at $360m, $144m of equity and two
debt tranches totalling $216m, rated BBB+ and BB+ by Standard and
Poor's
• Underwrites a 40% pro-rata quota share of property catastrophe account
• Hiscox Syndicate 33 receives an over-rider and profit commission
• Arrangements cover 2007 and 2008, but with appropriate mid-term
protections
Good opportunities at January renewals
• May 07 GWP £224m
• May 06 GWP £168m
• June renewals went well
Market share for reinsurance business in Lloyd's increased
from 6.0% to 10.9%
Good prices and volume in Florida
11. Looking ahead
• Across the board reductions
• Reduction of Syndicate capacity for 2008
- First cut business plan for Lloyd's sets capacity for 2008 at
£700 million (2007: £875 million)
- Trimming of exposure of less profitable classes
- Maintain exposure in well rated catastrophe business
• Continue to develop hub offices in Paris and New York
13. Established team
Rob Childs
Chief Executive Officer, Hiscox Bermuda; Chairman, Hiscox USA; Chief Underwriting Officer, Hiscox
• 21 years at Hiscox, active underwriter of Syndicate 33 from 1993 to 2005
Chris Sharpe
Senior Vice President
• Ten years at Hiscox as a treaty reinsurance underwriter, writing catastrophe and risk
excess of loss and pro rata reinsurance worldwide
Robin Mehta
Chief Financial Officer and Chief Operating Officer; Company Secretary, Hiscox Ltd
• Joined Hiscox in 2006, 17 years with the Munich Re group of companies
Krystalle Tobin
Financial Controller and Treasurer
• Joined Hiscox in 2006 with nine years experience in the reinsurance industry, previously
worked with the Munich Re group of companies
14. Hiscox Bermuda written premium 2006
Gross written premium 2006 - $310 million
$173 million $137 million
56%
23%
9%
8%
4%
Reinsurance
Kidnap and Ransom
Hiscox Insurance Company (Guernsey) Limited
UK errors and omissions
Hiscox Insurance Company Limited
Share of Hiscox Syndicate 33
Hiscox Dedicated Corporate Member
Fine Art
Hiscox Insurance Company (Guernsey) Limited
External business Internal Group business
16. Hiscox Bermuda written premium 2007 YTD
External reinsurance
Total $239 million
Catastrophe excess of loss
60%
17%
Proportional treaties
Risk excess of loss
18%
Industry loss warranty 2%
Aggregate excess of loss 1%
Stop loss 1%
17. Where we get our business from
Gross written premium by broker 2007 YTD
Aon
29%
Guy Carpenter
25%
Benfield
20%
Other
13%
Willis
13%
18. Looking ahead
• Future prospects
• Maintain underwriting discipline
• Internal quota shares depends on my colleagues!
• External: catastrophe market firm in 2007, will it
continue in 2008?
• Bermuda under no pressure to follow market down
22. The intellectual capital
Edward Donnelly
President
• Over 24 years insurance experience
• Formally with AIG
• Started and grew professional lines with Houston Casualty Company
• Underwrote on behalf of Lloyd's for 17 years as a PI coverholder
Gavin Watson
CFO
• Joined Hiscox in 1998, FD of Hiscox Insurance Company for four years
Eric Pruss
COO
• Ten years in the insurance industry, five years of management consulting, most
recently with Chubb
23. Admitted vs. surplus lines
• $470 billion market
• Intense regulation of rates
and wordings, less
flexibility
• State guarantee funds
available
• No individual risk filings
• More direct client and
broker relationships
• More cost-efficient at the
right scale
• $33 billion market
• Less regulation of rates
and wordings
• No guarantee funds
• Heavy administration/
documentation on heavy
risks
• Must deal through surplus
brokers
• Less cost-efficient
Admitted Surplus lines
24. Phased approach to growth
- Scale through
reputation of
staff
- Small
wholesale
surplus lines
business
Phase 3Phase 1 Phase 2
- More surplus
lines business
- Entry to the
admitted market
- Build reputation
of Hiscox
- Rollout
products into
the admitted
market
25. Core Hiscox products
• Non-profit Directors and Officers' Liability
• Public Officials' Liability
• Terrorism
• Professional Indemnity (E&O)
- Allied Healthcare
- Architect and Engineers
- Miscellaneous
• Media and Broadcasters' Liability
• Technology and Privacy Liability
26. American Live Stock Insurance Company
Acquired, subject to regulatory consents (closing expected in July)
• Purchase price of $55m: net tangible assets of $45m
• 2006: GWP of $16.9m, combined ratio of 80.9%
Admitted in all 50 states
• Licences for all livestock products
• Application process for Hiscox products will begin immediately
Presence in the important mid-west market
• Located just outside Chicago, a key insurance hub
Strong brand and complimentary business
• Recognised as a leading livestock insurer in the USA
• Hiscox active in bloodstock insurance for 15 years
27. Looking ahead
• Roll out admitted PI products across the whole of US
• Kidnap and Ransom product coming
• Hiscox Global Markets integration
• Extend geographic spread
New office in Chicago
29. European management team
Marc van der Veer
Managing Director
• 13 years' insurance experience, previously with XL Capital
Marianda Quadakkers
European Operations Manager
• Previously with Deutsche Asset Management managing the start up
of new operations in Europe and the UK
Heino Hovingh
Head of Sales and Marketing
• Previously with Axa and CocaCola
Paul Cooper
Finance Director
• Previously with Ernst and Young
30. Changing business mix
Business split 2000 Business split 2007
27%
73%97%
3%
Art and private client
Professions and specialty commercial
31. Growing distribution
• Focus within core
countries
• Regional offices to get
closer to local brokers and
leverage scale
• Distribution partnerships
with other insurers and
private banks
• 20% YTD growth
33. Improving the expense ratio
France Germany Belgium Netherlands Europe total
10%
0%
Difference in growth between GWP and expenses YTD 2007
11.4%
12.7% 12.6%
7.5%
11.1%
34. Pricing environment
180%
160%
140%
120%
100%
80%
Europe rate index for Europe
Mar-01toFeb-02
Nov-01toOct-02
Jul-02toJun-03
Mar-03toFeb-04
Nov-03toOct-04
Jul-04toJun-05
Mar-05toFeb-06
Nov-05toOct-06
Moy-06toApr-07
Jul-00toJun-01
Europe property
Europe PI
Rolling12monthindexofrates
38. Brand and underwriting experience
Steve Langan
Managing Director and Group Marketing Director
• Ten years with Diageo and CocaCola
Gary Head
UK Underwriting Manager
• Ten years broking, 11 years at Hiscox
Austyn Tusler
Head of Art and Private Client
• 17 years in the insurance industry, three years with AIG
Glenn Caton
Commercial Director
• Ten years with Proctor and Gamble
Alan Millard
Chief Operating Officer
• Ten years with GSK, previously with JP Morgan
Paul Cooper
Finance Director
• 12 years at PWC and Ernst and Young
39. Retail distribution model complete
• Market leading products
• Focus on:
emerging wealth and
high net worth
individuals
Professions/Specialty
Commercial SMEs
• 250 employees in nine
locations
• Nine underwriting offices
plus Colchester
(underwriting and claims
processing)
40. Market opportunities - personal lines
1,000,000 • 2.8m M/HNW households
in UK: c17% of total
• 39% of all household
sums insured
• Only 25% of these
households have a
specialist policy
• Hiscox = market leaders
UK contents > £75k The facts
750,000
500,000
250,000
0
£75k £1m +
Contents sum insured
Policyvolume
Source: Hiscox, Datamonitor, ABI
41. Market opportunities - commercial lines
• 95%+ UK companies
employ <250 people
• Explosive growth in
insurance opportunity
• Cost effective service is key
SMEs in the UK (2005) The facts
No.ofbusinesses
Source: DTI SME stats 2005
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
Self employed Micro
1-9
employees
Small
10-49
employees
Medium
50-249
employees
Large
250+
employees
43. Building the brand
Direct
Direct marketing cost per sale total brand awareness growth
and policy count (Jan-06 to May-07)
Brand awareness index
Commercial Direct policy count
Home Direct policy count
300%
250%
200%
150%
100%
50%
0%
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
350%
55,000
Cost per sale index
Index
Policycount
44. Outlook: choppy!
• New marketing campaign
• Steady growth of regions
• Grow commercial lines
• Walk away from unprofitable business
• Ongoing management of costs
46. Hiscox 2007
Hiscox Ltd
Hiscox
Global Markets
Hiscox
Bermuda
Hiscox
Guernsey
Hiscox
USA
One location
- Reinsurance
- Group
Capital
Support
One location
- Art and
Private Client
- Kidnap and
Ransom
Three locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
Hiscox International
Hiscox
UK
Hiscox
Europe
Ten locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
Nine locations
- Art and
Private Client
- PI and
Specialty
Commercial
- Regional
Media and
Technology
- Direct
Hiscox UK and Hiscox Europe
Four locations
- Reinsurance
- Property
- Marine and
Energy
- Specialty
- Space
- Technology
and Media PI
2006 gross written premium £1,126 million
47. Business growth
Global Markets 335 352 5
UK 87 92 5
Europe 30 36 20
Bermuda (external reinsurance) 41 82 100
Guernsey 21 20 (1)
USA 1 8 800
GWP total 515 590 15
Panther Re - 27 -
GWP total (excluding Panther Re) 515 563 9
IFRS Hiscox Group share
2006 £m 2007 £m %
Gross written premium for the five months to May
48. Balance sheet
• Current debt facilities:
- Syndicated Letter of
Credit (LoC) Facility -
£137.5 million
- Revolving Credit Facility
- $91 million
- Term Loan - $91 million
• Gearing at 31/12/06
(including LoC) - 25%
• Looking to extend Facility
duration
• Announced 2007 target
dividend of 12p
(2006:10p)
• Gained shareholder
approval to buy back up
to 10% of shares into
treasury
• Capital management
decision dependent on
2007 performance
Current debt arrangements Capital management
50. Clear strategic focus
100% = £1,407m
Total group controlled income for 2006
London Market
Syndicate 33 and
Hiscox Bermuda
Regional
Syndicate 33, Hiscox
Insurance Company,
Hiscox Guernsey
and Hiscox USA
London
Market
Reinsurance
and Major
Property
27%
30%
TMT
Art and
Private Client
Specialty
Professions
and Specialty
Commercial
14%
6%
17%
6%
