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Hiscox plc

Interim results for the six months ended 30 June 2005 Robert Hiscox, ChairmanBronek Masojada, Chief ExecutiveStuart Bridges, Finance DirectorRobert Childs, Director of Underwriting

12 September 2005

Return on equity** (%)

FY 2004 HY 2004

29.420.6 35.9

** annualised, based on adjusted opening shareholder’s funds

HY 2005

A Strong Performance

2H1 H2

FY 2004 HY 2004

Combined ratio* (%)

84.6 83.5

Profit before tax (£m)

FY 2004 HY 2005

88.160.3

29.2

89.5

HY 2005

* based on net earned premium

92.6

Dividend per share (p)

2004 HY 200530 Jun 2004 31 Dec 2004

A Strong Performance

Net Asset Value per share (p)

125.7

EPS (p)

FY 2004 HY 2005

20.814.9

3

7.0

H1 H2

30 Jun 2005

143.3

21.9

120.2

2.251.5

3.5

5.0

Highlights

Record profits

Underwriting discipline

Growing distribution

Retail expansion working

– UK profits doubled

– International strongly ahead

Strong additions to senior management

4

Financial Performance

5

Hiscox plc ResultsIFRS June 2005

(unaudited)

£m

June 2004

(unaudited)

£m

FY 2004

(audited)

£m

Gross Premiums Written

Net Premiums Written

Net Premiums Earned

437.2

345.0

345.7

489.0

396.5

349.7

816.6

704.1

714.9

Profit before tax 88.1 60.3 89.5

Profit for the period 61.1 43.3 63.9

Basic earnings per share (p) 20.8p 14.9p 21.9p

Interim/Final Dividend (p) 2.25p 1.5p 5.0p

Net Asset Value

• £m 421.7 350.2 368.8

• p per share 143.3p 120.2p 125.7p

Return on Equity 35.9%* 29.4%* 20.6%

*annualised, based on adjusted opening shareholder’s funds6

Segmental Analysis

7

Six months to 30 June 2005 Six months to 30 June 2004

London Market/Group

£mUK£m

International£m

Group Total£m

Gross Premiums Written 306.2 437.284.1 364.4 489.045.679.0

LondonMarket/Group

£mUK£m

International£m

Group Total£m

Combined Ratio* 82.8% 83.5%95.4%81.6% 82.4% 84.6%103.8%89.3%

London Market/Group: Hiscox plc share of Syndicate 33, Managing Agent, Hiscox Investment Management and central Group costs. UK : UK within Hiscox Insurance Company and ConnectInternational : Guernsey Insurance Company and European business within Hiscox Insurance Company.

Net Premiums Earned 235.7 345.732.377.7 256.4 349.729.264.1

Profit before tax 88.13.064.0 21.1 49.5 60.30.510.3

Net Premiums Written

* Based on Net Earned Premium

IFRS(unaudited)

46.9

233.3 75.0 36.7 345.0 295.3 68.1 33.0 396.5

30 June 2005 31 December 2004

Asset Allocation

%

Return%

Return£000

Asset Allocation

%

Return%

Return£000

Bonds 69.8 3.5 14, 874 75.9 2.7 19,088

Equities 7.5 8.9 3,729 7.9 10.3 8,529

Deposits/Cash 22.7 4.5 4,319 16.2 2.9 5,467

Actual Return 4.0 22,922 3.4 33,084

Group invested assets* 1,238.9m 1,098.9m

Investment Performance

8

* Includes investments, cash and cash equivalents

Summary Consolidated Balance Sheet

IFRS 30 June 2005(unaudited)

£m

30 June 2004(unaudited))

£m

31 Dec 2004(audited)

£m

Intangible assetsDeferred acquisition costs

Investments, cash and cash equivalents

Reinsurance contract receivables

Trade receivables and other assets

TOTAL ASSETS

Claims and claims handling provision

Unearned premiums

Other liabilities

TOTAL LIABILITIES

SHARHOLDERS EQUITY

LOC drawn

Net Asset Value per share (basic)

Net Tangible Assets per share (basic)

32.4114.9

1,238.9

290.3

342.8

2,019.3

928.6

445.3

223.7

1,597.6

421.7

137.5

143.3p

132.3p

26.6117.9

966.7

270.8

368.6

1,750.6

727.7

470.7

202.0

1,400.4

350.2

132.4

120.2p

111.0p

30.0110.0

1,098.9

238.9

340.6

1,818.4

830.7

416.2

202.7

1,449.6

368.8

137.5

125.7p

115.4p

9

Hiscox Global Markets

10

Rates vs Exposure

100 9478

6071

100 106126

191

240

Exposure Premium

Rolling 12 Month Index to June

11

67

239

70

217

1999 2000 2001 2002 2003 2004 2005

Rating

12

0

100

200

300

400

500

Jan9

8 to

Dec

98

Jul9

8 to

Jun

99

Jan9

9 to

Dec

99

Jul9

9 to

Jun

00

Jan0

0 to

Dec

00

Jul0

0 to

Jun

01

Jan0

1 to

Dec

01

Jul0

1 to

Jun

02

Jan0

2 to

Dec

02

Jul0

2 to

Jun

03

Jan0

3 to

Dec

03

Jul0

3 to

Jun

04

Jan0

4 to

Dec

04

Jul0

4 to

Jun

05

Specialty

London Market

Reinsurance

Syndicate 33 12 month rolling rate and index since 1998

Hurricane Katrina

13

Hiscox plc Net Loss = $100m estimate

Marine Reinsurance

$25m

Non Marine Reinsurance

$30m

Non MarineInsurance

$30m

Marine Insurance

$15m

£1 = UDS$ 1.84

This analysis is without prejudice to the interpretation of any contract and the handling or outcome of any claim.

Reinsurance Underwriting

14

19%29% 25%

20%

44%

103%

175%

56%

166%

23%18%

69%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Reinsurance Account: Gross Incurred Loss Ratio

Average 58%

Claims Breakdown

15

Budgeted Breakdown of Claims for 2005

Risk 47%

Attritional42%

Catastrophe11%

Extending Geographic Reach

16

2004

Distribution

Global brokers

Major wholesale broker -London wholesale brokers

All other risks – London wholesale broker

London Business Development

Extending Geographic Reach

17

2005

Creation of local underwriting centre

Ed Donnelly - Establishment

of office in Armonk, NY

Regional business development

Bruno Ritchie – Europe

Nick Ward – New York

David Chavez – West Coast

Global Markets Summary

18

Experienced underwriting team - maintain discipline

Extend geographic coverage

Focus on known business areas

Hiscox UK and Europe

19

Hiscox Insurance Company

Gross Written Premium: £m Combined Ratio: %

20

0

20

40

60

80

100

120

140

1997 1998 1999 2000 2001 2002 2003 2004 2005

93

.697.897.7102.6

107.9

118.0

0

50

100

150

200

250

1997 1998 1999 2000 2001 2002 2003 2004 2005

218.7

163.9

127.3

97.890.0

74.7

176.497.9

FYHY

98.8 105.5

FYHY

91

.8

93

.9

2003 and prior years not restated

229.8

110.6

85.2

94

.6

Retail Performance

30 June 2005 (£m) 30 June 2004 (£m)

UK Guernsey UK EuropeEurope Guernsey

Gross Premiums Written 84.1 20.426.5 79.0 19.126.5

Operating Profit 21.1 1.31.7 10.3 0.30.2

81.6% 90.6%97.6%Combined Ratio 89.3% 93.4%108.6%

21

9.9Net Premiums Earned 77.7 22.4 64.1 20.1 9.2

UK & Europe: Rates

22

50%

70%

90%

110%

130%

150%

170%

190%

Jul-0

0 to

Jun

-01

Jan-

01 t0

Dec

-01

Jul-0

1 to

Jun

-02

Jan-

02 to

Dec

-02

Jul-0

2 to

Jun

-03

Jan-

03 to

Dec

-03

Jul-0

3 to

Jun

-04

Jan-

04 to

Dec

-04

Jul-0

4 to

Jun

-05

Month

Ro

llin

g 1

2 M

on

th In

dex

of

Rat

es

UK Personal Lines UK PI France Germany

Business Areas

Art and Private Clients

High Value Household and Contents; Fine Art; Classic Cars; Specie

Updated Hiscox HVH wording awarded top Defaqto rating

Inscribe semi-automated underwriting system being rolled out

Good growth from direct; marketing responses going well

Competitive in London, opportunities in UK Regions and Europe

Acquired fine art renewal rights from Ascot

Professions & Specialty CommercialProfessional Indemnity; D&O; Employers’ Liability; Property

Good growth of emerging professions

Additional underwriting resource focussed on Specialty Commercial and Ireland

Launch of direct business focussed on small PI

Launch of automated underwriting of business up to £250k turnover

Continued competition for large traditional professions

Solicitors book reduced

23

Summary and Outlook

24

Developing balance by growing retail

Retail - Hiscox Insurance Company

0

200

400

600

800

1000

1200

1993 1995 1997 1999 2001 2003

Gro

ss W

ritt

en P

rem

ium

Retail - Syndicate 33

London Market - Syndicate 33

25

1994 1996 1998 2000 2002 2004

Expand Distribution

Expand

Closer to UK brokers via regional offices

Create local presence in Europe and Guernsey

Open direct channels via internet and telephone

Create local presence in USA and regional business

development for Global Markets

26

Capitalise in London Market on opportunities post Katrina

Grow retail through distribution initiatives

– UK Retail locations

– UK Partnerships & Direct

– Europe & Guernsey

– USA underwriting & marketing

Market will become more disciplined

Profit outlook remains strong

27

Outlook

Questions and Answers

28

Appendix

29

Hiscox Business Mix:2004Controlled GWP100% = £1,051m

London Market Insurance• Energy• Marine• Terrorism• E&O and D&O

Art & Private Clients• Fine Art• Jewellery• Specie• Home & Contents

Speciality• Kidnap & Ransom• Personal Accident • Bloodstock• US SME Commercial

ATMT• Aerospace• Technology• Media• Telecommunications

17%

33%

9%

10%6%

25%

London Market Retail

Syndicate 33 Syndicate 33, Hiscox Insurance Company & Hiscox Guernsey

Reinsurance & Major Property• Major Property• Marine RI• Non-Marine RI• Whole Account RI

Professions & Speciality Commercial• Traditional PI• Emerging PI• UK SME Commercial

30

Management Structure

• RAMP• London Market• Speciality• ATMT

• Art & Private Clients• PI & Speciality

Commercial• Regional TMT• Executive Household

• Hiscox Guernsey• Hiscox

Investment Management

Hiscox plc

Hiscox Global Markets

Hiscox UK & Europe

Other activities

Hiscox USA

• Art• Regional TMT• Small ticket terrorism

Currently under development; will initially be part of Global Markets

31

48

Syndicate 33 Capacity & Hiscox plc Ownership

32

0

100

200

300

400

500

600

700

800

900

2000 2001 2002 2003 2004

Capacity Hiscox plc Ownership QQS

£ m

2005

360191 (53%)

360191(53%)

504

201

277(55%)

547(65%)

842

551(65%)

847 775

550(71%)

2006 estimate

775

550(71%)

Geographical & Currency Split

33

CAD

USD

EUR

GBP

11.9%43.5%

42.8%

1.8%

2005 Geographical Split 2005 Currency Split

USA

39.2%

EUEurope (exc. UK)

11.4%

31.4%UK

3.4%Canada

1.5%Australia

2.0%Asia (exc. Japan

& China)

1.0%China &

Japan

1.4%Central &

South America

4.4%Other

0.3%Israel

0.4%Middle East (exc. Israel)

1.0%Africa

1.2%Caribbean

1.4%Non-EU Europe

& Russia

Loss Ratios as a % of Syndicate Premiums

34

GILR NILR

YOA 2002 2003 2004 2005 2002 2003 2004 2005

6 mths 1.4% 2.7% 5.1% 7.0% 8.0% 4.9% 7.6% 10.6%

12 mths 13.7% 11.6% 29.6% 20.0% 14.2% 30.8%

18 mths 19.8% 20.3% 42.5% 23.8% 24.4% 43.9%

24 mths 27.9% 29.8% 37.0% 35.5%

30 mths 31.3% 35.9% 40.4% 43.1%

36 mths 37.0% 45.7%

Syndicate 33 incurred losses as a percentage of signed premium

Realistic Disaster Scenarios

35

Syndicate 33 – potential losses shown as a percentage of 2005 capacity

0

5

10

15

20

25

30

35

40

$70bn FloridaWindstorm

$54bnCalifornia

Earthquake

$30bnEuropean

Windstorm

$50bnJapanese

Earthquake

$35bn NewMadrid

Earthquake

$60bn Gulf ofMexico

Windstorm

Loss %

28.1

8.1

31.8

7.7

22.0

10.1

24.4

11.3

24.4

5.1

Gross Loss

Net Loss

11.3

34.3

Group Reinsurance Security

36

AAA1% AA

36%

A49%

Other 14%

2005 Programme

A

51%

AAA

AA38%

11%

Receivables at 30/06/05 of £222m

Reinsurance

37

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 2004 HY 2005

35.3%

27.3% 26.0%

17.3%13.7%

Reinsurance as a % of GWP (ex. QQS)

Reinsurance Receivables as a % of Total Assets

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 HY 2005

18.2%

26.9%

15.4%

11.8%

%%

11.0%10.6%15.4%

HALF YEAR TO 30TH JUNE

Glossary of Terms

38

Annual Venture The system used for running a Lloyd’s syndicate under which each “year of account” is treated separately. Members own capacity on a syndicate for a “year of account” and the results are declared when the year is closed by the RITC mechanism, usually after 3 years.

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

Combined ratio The total of the claims and expenses ratios.

Equalisation provision This a provision made to cover future catastrophe losses and is calculated in accordance with a set sector formula, which has the effect of smoothing the profit cycle.

Expenses ratio Expenses as a percentage of net earned premiums.

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

Gross written premium Premiums contracted for before any deductions.

Group controlled The total gross written premium controlled by the group including the 29% of the syndicate capacity not owned by Hiscox in 2005 (35% in 2004).

IBNR Incurred 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.

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.

gross written premium

Glossary of Terms

39

Long-tail A 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.

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

Net premiums earned Premiums 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 written Premiums 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 share These 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 – RITC The 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 account At Lloyd’s, a year of account which is kept open after the date on which it would normally have been closed.

Subrogation The 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 Capacity Also 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.

reinsurance