Ye a r E n d 2 3
Hiscox Ltd
Report and Accounts 2023
As a Bermuda-incorporated
company, Hiscox is not subject to
the UK Companies Act. However,
the material provisions of Section
172 of the UK Companies Act
are substantively covered by the
Bermuda Companies Act, which is
the applicable legislation that the
Company is required to comply with
under Bermuda law. As a company
listed on the London Stock Exchange,
we comply with the requirements set
out in the UK Corporate Governance
Code 2018 and the Listing Rules and
Disclosure & Transparency Rules of
the UK Financial Conduct Authority.
Our remuneration report is consistent
with UK regulations. Any additional
disclosures over and above these
requirements, have been made for
the benefit of shareholders, on a
voluntary basis.
Chapter 1
6 Performance and purpose
6 Our key performance
indicators (KPIs)
8 At a glance
10 Our strategy and how we
create value
12 Key risks
16 Business priorities for 2024
Chapter 2
22 A closer look
22 Chief Executive’s report
36 Risk management
40 Stakeholder engagement
46 Sustainability
50 Task Force on Climate-related
Financial Disclosures (TCFD)
62 Diversity, equity and inclusion
(DEI)
Chapter 3
72 Governance
72 Board of Directors
75 Board statistics
76 Group Executive Committee (GEC)
82 Chair’s letter to shareholders
84 Corporate governance
90 Compliance with the UK
Corporate Governance
Code 2018
95 Nominations and Governance
Committee report
99 Audit Committee report
Chapter 4
106 Remuneration
106 Annual statement from the Chair
of the Remuneration Committee
110 Summary of remuneration
arrangements
112 Annual report on
remuneration 2023
123 Implementation of remuneration
policy for 2024
126 Other remuneration matters
134 Remuneration policy
Chapter 5
148 Shareholder information
148 Directors’ report
151 Directors’ responsibilities
statement
151 Advisors
Chapter 6
165 Financial summary
166 Independent auditor’s report
174 Consolidated income statement
174 Consolidated statement of
comprehensive income
175 Consolidated balance sheet
176 Consolidated statement of
changes in equity
177 Consolidated statement of
cash flows
178 Notes to the consolidated
financial statements
246 Additional performance
measures (APMs)
247 Five-year summary
248 Glossary
About this report
For more information visit
hiscoxgroup.com
To view our interactive online
Report and Accounts, or to
download all or portions of the full
report, please scan the QR code
below or visit our website:
hiscoxgroup.com/investors/
report-and-accounts-2023
Q&A:
Driving force
Q&A with Aki Hussain
Group Chief Executive Officer
2
In the chair
Q&A with Jonathan Bloomer
Chair
18
Market force
Q&A with Kate Markham
Chief Executive Officer,
Hiscox London Market
32
Claim to fame
Q&A with Steve Parry
Group Claims Director
42
Retro perspective
Q&A with Lisa Waters
Head of Retro, Hiscox Re & ILS
68
On brand
Q&A with Fiona Mayo
Chief Marketing Officer, Hiscox UK
78
Express delivery
Q&A with Sarah Bourdeau
Head of Distribution, Hiscox USA
102
Spanish lessons
Q&A with David Heras
Managing Director, Hiscox Spain
144
Read about the Hiscox
community portrait
152
Scan the QR code to view
‘the making of the Hiscox
community portrait’ video.
1Hiscox Ltd Report and Accounts 2023 1Hiscox Ltd Report and Accounts 2023
The people behind the policy:
Hiscox community portrait
During 2023, we embarked on an exciting
engagement programme across the Group.
Everyone at Hiscox has a key role to play,
and working with globally renowned artist,
Tim Mann, we’ve been busy capturing that
sense of community in a piece of art.
Find out more about what ‘community’
means at Hiscox on the pages that follow.
2 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Aki Hussain
Group Chief Executive Officer
Driving force
Since Aki was appointed Group Chief
Executive Officer of Hiscox two years
ago, he has refreshed the Group strategy,
established a new-look leadership
team and led the business to deliver
record profits and its highest employee
engagement scores in ten years. >
Aki Hussain joined Hiscox in 2016 as
Group Chief Financial Officer, before
stepping up to the role of Group Chief
Executive Officer in January 2022.
Under his leadership the business has
undergone a ‘strategic tilt’, allowing it
to focus on realising the opportunities
in each of its geographies and
business segments, while managing
volatility through the market cycle.
3Hiscox Ltd Report and Accounts 2023
4 Hiscox Ltd Report and Accounts 2023
Q: You’ve been Group Chief Executive
Officer of Hiscox for two years now.
How is it going?
A: It’s always a privilege, and it’s also
a lot of fun. It’s been a great time to
become the Group Chief Executive
Officer; market conditions have been
improving, which drives opportunity
on multiple fronts. We’ve refreshed
our leadership team, bringing together
veterans who have helped to build
the business, with new talent from
outside Hiscox and even outside the
insurance industry. Each one brings
fresh perspectives, new ideas and new
ways of thinking. Blending that deep
expertise and understanding of our
culture with fresh thinking is good for
our culture and our business; anything
that remains static for too long risks
losing its relevance, and that’s not
where I want us to be.
Q: What have been the major
highlights of your tenure so far?
A: Business performance is obviously
fundamental. Seeing the new leadership
team coming together has been another
highlight. That’s partly a result of the
culture here – we tend to be pretty open,
low ego, and good at both bringing our
views forward and listening to other
people, and I think that has helped us
quickly gel as a team. For me, though,
one of the most significant highlights
has been our employee engagement,
which is now at a record high. Without
colleagues who are happy and motivated
and believe in the strategy, we’re not
going to achieve a great deal, so that’s
something I’m especially proud of.
Q: What do you put that increase in
engagement down to?
A: Last year we made a big effort to
modernise our thinking. We relaunched
our strategy with what we refer to as a
‘strategic tilt’ – not a radical departure
from the past, but a refreshed approach
to our future. It provides clarity on our
direction of travel and priorities. We all
know what we’re doing and why we’re
doing it, and that’s so important. We have
also modernised some of our benefits
to make them more relevant to the
organisation we are now, with over 3,000
people and a changing demographic.
And we’ve been quite open about the
fact that work should be fundamentally
enjoyable; it shouldn’t be a chore. It’s so
important that we try to make the work
itself, and the environment in which we
work, as engaging as possible, and
I’m pleased to see how our people are
responding to our efforts.
Q: How important is it to you to be
engaging directly with people at
every level of the organisation?
A: Incredibly important. From day one I’ve
been travelling the world to get to know
people. It allows me not only to share my
priorities but also to listen to colleagues
in all of our different countries and to
understand what’s top of their mind.
When I travel to an office, I always do a
‘townhall’ where I get the whole team
together. I talk for five minutes, and leave
the bulk of the time for their questions.
It’s through those questions that I find
out what’s really on people’s minds. I can
never get enough of hearing from our
people. Those interactions are key to me
understanding the health of the business
from a people perspective.
Q: Is it useful to hear from people
outside the organisation too?
A: Definitely. When I took on the role,
I knew there would be what I call the
‘ambassador’ component, where
you’re out in the world promoting
Hiscox and absorbing information
from all kinds of places. I spend a
lot of time with brokers, who are an
incredibly important part of the insurance
ecosystem and a really good source of
information. I also attend a number of
industry roundtables where I absorb
as much as I can. The ones I’m most
drawn to are those where I’ll get to
meet and talk to CEOs from insurance
and other industries. You always learn
something new.
Q: What are your current priorities?
A: Our focus is on profitable growth
while managing volatility. We’re looking
to grow in a scaleable way, making
smart decisions about technology
and about people. We know that a
significant amount of technical expertise
in a range of professions is required
to be able to decide prices and fulfil
our promises to our customers. That
means investing in our people to ensure
we have the skills and competencies
needed not just today, but for the
future of our business.
And of course, the biggest priority for
us is delivering on our promise to our
customers, and being attuned to their
changing needs. It’s about evolving our
model, our products and our customer
journeys so that we’re easy to do
business with – whether you’re a small
business owner, an individual insuring
their home or a broker placing a risk for
a listed company.
Q: Where do you see those
opportunities for profitable growth?
A: For our big-ticket business, written
through Hiscox London Market
and Hiscox Re & ILS, the growth
opportunities are often cyclical. At the
moment both of those businesses are
in the upward part of the cycle, and we
have allocated additional capital which,
combined with our underwriting teams’
Q&
A:
with Aki Hussain
Group Chief Executive Officer
5Hiscox Ltd Report and Accounts 2023
capabilities, means we are growing
strongly. On the retail side, the paradigm
is a bit different. There, we have what
we call a structural growth opportunity,
where it’s much less cyclical. The market
is large, it’s fragmented, and we have a
particular expertise in the products we
offer and the way we distribute those
products. We want to grow in the areas
we already have expertise, and as new
compelling opportunities emerge where
we can specialise, we will look to invest
and grow into them. We’re always looking
to build new areas of expertise and
expand our universe of risk, but in a
highly specialist way.
Q: The speed of technological change
continues – are you more excited by
the potential of new technology or
concerned about its risks?
A: I have an optimistic view. All
technological change brings both good
and bad, but I believe that the good far
outweighs the bad. Generative AI is
bringing about another big transition,
but beyond that, new industries and
professions will emerge that we can’t
even imagine today.
One of the things we, at Hiscox, have
an appetite for is experimenting with
and adopting new technologies that we
believe make our business better. That
has given us particular advantages in
building our digital business globally,
and we’ve also seen how technology
can improve the way we do things –
whether that’s using data to enhance
our products or to streamline processes
so our people can focus on the areas
where human ingenuity and creativity
really matter. A good example of this
is the work we’re doing with Google
Cloud, where we’re using generative
AI technology – together with our own
proprietary AI platform – to automate
some of the underwriting process, which
is incredibly exciting. But, the important
thing to remember is that whatever
benefits these new technologies bring,
we still need that human touch where it
counts. Ultimately, you need people to
take responsibility and accountability
and the creativity needed to prosper –
a machine will not do that for you.
Q: Do you feel a sense of community
at Hiscox, and if so, how is that
best exemplified?
A: We are one community, even if we’re
dispersed over thousands of miles in
different continents. From everything
I’ve seen, people here care a lot for each
other. There is a genuine sense that we
are invested in each other’s success.
That might be the person sitting next
to you, or someone 4,000 miles away
across the Atlantic – it doesn’t matter.
You want them to be successful.
One of the things we, at Hiscox, have
an appetite for is experimenting
with and adopting new technologies
that we believe make our business
better. That has given us particular
advantages in building our digital
business globally, and we’ve also
seen how technology can improve
the way we do things – whether that’s
using data to enhance our products or
to streamline processes so our people
can focus on the areas where human
ingenuity and creativity really matter.”
20
23
20
22
‡
951.1
764.5
20
23
20
22
‡
4,598.2
4,355.4
20
23
20
22
‡
3,555.8
3,225.5
20
23
20
22
‡
625.9
275.6
20
23
20
22
‡
162.7
§
73.8
20
23
20
22
20
21
20
20
20
19
37.5
36.0
34.5
0.0
13.8
20
23
20
22
‡
89.8
91.1
20
23
20
22
‡
21.8
§
10.1
6 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Our key performance indicators (KPIs)
Insurance contract
written premium*
†
$4,598.2m
Net insurance contract
written premium*
†
$3,555.8m
Profit before tax
$625.9m
Undiscounted
combined ratio*
†
89.8%
Basic earnings
per share
162.7¢
§
Ordinary dividend
37.5¢
Net asset value per share
†
951.1¢
Financial KPIs
Return on equity
†
21.8%
§
*
New KPI for 2023 due to the adoption of IFRS 17.
†
Represents alternative performance measure
(APM) used by the Group. APM measure
definitions used by the Group are included within
the condensed consolidated financial statements
on page 246.
‡
Restated for the adoption of IFRS 17 and IFRS 9.
§
Excludes Bermuda deferred tax asset (DTA).
Including Bermuda DTA, basic earnings per share
is 206.1¢ and return on equity is 27.6%.
7Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Our key performance
indicators (KPIs)
Non-financial performance
20
23
20
22
20
21
20
20
20
19
4.7
4.6
4.8
4.8
4.8
20
23
20
22
20
21
20
20
20
19
82%
82%
64%
68%
71%
20
23
20
22
20
21
20
20
2019
95%
96%
95%
90%
99%
20
23
20
22
20
21
20
20
2019
61%
79%
71%
69%
78%
2023
20
22
20
21
20
20
2019
90%
92%
92%
92%
89%
0.0 12.5 25.0 37.5 50.0 62.5 75.0 87.5 100.0
20
23
20
22
20
21
20
20
2019
16.0%
16.0%
19.1%
21.2%
26.1%
UK gender pay gap
16.0%
In the UK, we have been annually disclosing our
UK gender pay gap since 2017, and have seen
steady progress over time in our UK gender pay
gap on a mean basis. Improving DEI at Hiscox is a
high priority; we enhanced our ethnicity reporting
in our 2022 Report and Accounts with the disclosure
of all-staff ethnicity data, and this year we have
disclosed a new ethnicity target in line with the
Parker Review (see page 66).
London Market broker
satisfaction 61%
The Hiscox London Market broker survey acts
as a barometer for how our brokers perceive
Hiscox London Market across each of our lines
of business. This year’s score is lower than
prior years, with some brokers moving from
‘satisfied’ to ‘neutral’, but at the same time
broker dissatisfaction has decreased and
continues to remain low.
UK customer satisfaction
90%
In the UK, customers who speak to one of our
insurance experts in our customer experience
centre in York are asked to rate their experience
of Hiscox at the end of the call. Whether they
have phoned for advice, a quote, to purchase a
new policy or make changes to an existing one,
their feedback helps us to constantly improve
our service.
Employee engagement
82%
In 2022, we reported our highest employee
engagement score in ten years and are proud to
have sustained such a high level of engagement in
2023. We continue to evolve our employee listening
strategy and how we gather feedback on specific
topics to ensure we have timely feedback on what
is working well and where we may need to make a
change. In 2023, our global pulse survey focused
on engagement levels and hybrid working and was
completed by 80% of our people (see page 47).
Germany customer
satisfaction 95%
Germany is our largest operation in Continental
Europe, and here we ask all customers that
purchase a policy to provide feedback on their
experience so that we can continue to improve
our service. This includes quantitative analysis
on their experience with us and qualitative
insight on what they were satisfied with, whether
they would recommend Hiscox, and any areas
for improvement, so we are pleased to have
maintained consistently high scores over time.
US customer reviews
using Feefo 4.7/5
In the USA, we ask customers to review their
experience of Hiscox post-purchase. We do this
using Feefo, which has a five-star rating system,
and are pleased to maintain such high scores
year after year, even as the business grows.
8 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
At a glance
Hiscox is a FTSE-listed, global specialist insurer with 1.6 million
retail customers, 3,000 employees and 34 offices across
14 countries.
Our purpose
We give people and businesses the
confidence to realise their ambitions.
To do this, we need differentiated
products and services that address
our customers’ needs, great talent
and energised and connected teams.
Success is measured in our reputation,
financial performance and customer
attraction and retention.
Our distinctive mix of
big-ticket and retail
business means we
are well positioned to
generate sustainable
and profitable growth
through the cycle.”
Paul Cooper
Group Chief Financial Officer
Our values
We have had a strong set of values for decades and they are incredibly important to
us; we talk about them often and they guide our decision-making.
We want our values to differentiate us, which is why they play an important part in
our strategy and how we operate, in being a business our customers can relate to,
and in providing all employees with a work environment in which they can flourish.
We periodically review our purpose, values, culture and vision to ensure they are still
true to the business and fit for the future.
Human
Clear, fair and inclusive.
Connected
Together, build something better.
Integrity
Do the right thing, however hard.
Courage
Dare to take risk.
Our vision
For Hiscox to be the leading specialist
insurer in material markets – not the
biggest, but the most respected.
We want to be known by customers for
being true to our word, by our employees
as a great place to work and grow for
those who are ambitious and talented,
and as an industry leader in growth,
profits and value creation.
Ownership
Passionate, commercial and accountable.
9Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
At a glance
Group
$1.5bn
Returned to shareholders over the
last ten years.
11.1%
Average return on equity over the
last ten years.
327%
Growth in customer numbers over the
last ten years.
Our business model
The Hiscox Group has grown from its
roots as a niche Lloyd’s underwriter
into a diversified international specialty
insurance group, headquartered in
Bermuda. We have a powerful consumer
brand, strong balance sheet and plenty
of room to grow in each of our chosen
markets. Our strategy is focused on
high-quality growth (see pages 10 to 11)
and designed to provide opportunities
throughout the insurance cycle, reducing
undue reliance on any one division for the
Group’s overall profitability.
Hiscox London Market
Hiscox London Market uses the global
licences, distribution network and
credit rating of Lloyd’s to insure clients
throughout the world with large, and
often complex, insurance needs. This
business is written through a number of
our syndicates including Syndicate 33,
one of the largest syndicates at Lloyd’s
of London. Our product range includes
property, casualty, crisis management
(including terrorism and kidnap and
ransom), marine, energy and specialty
areas such as space insurance. We now
lead on more open market risks, with a
combination of underwriting and digital
expertise that differentiates us. See
pages 26 to 27 for more information.
Hiscox Re & ILS
Hiscox Re & ILS serves clients
worldwide in different ways. Hiscox
Re is our global reinsurance business,
written out of London and Bermuda
and offering property, specialty, cyber,
marine and aviation and risk excess of
loss reinsurance products, as well as
retrocessional cover. Hiscox ILS is our
alternative investment advisor, which
manages capital for third parties through
insurance-linked strategies. See pages
27 to 28 for more information.
Hiscox Retail
Hiscox Retail comprises our retail
businesses around the world: Hiscox UK,
Hiscox Europe (which operates across
five markets) and Hiscox USA. Our retail
operations focus on specialist areas
of personal lines, such as high-value
homes and fine art, and commercial
StructurePropositionDistributionCustomer
Insurers and
reinsurers
Corporates SMEs SMEs
High net worth
SMEs
High net worth
Brokers Brokers Direct and
partners
Direct Direct
Brokers
Brokers Brokers
Property
Marine and
specialty
Property
Marine, specialty
and energy
Commercial Commercial
High-value
personal lines
Commercial
High-value
personal lines
ILS* Casualty
Crisis
management
Re & ILS London Market Retail
†
USA UK Europe
lines including emerging professions,
media and tech, and small business
insurance, and we aim to be available
however customers choose to purchase
– whether that’s through a broker, via
our website or over the phone. With each
of our retail operations at different stages
of maturity, we are focused on building
scale as the size of our addressable
markets is huge, so we continue to
invest in our brand, distribution and
technology. See pages 24 to 26 for
more information.
Strong track record of growth
†
DirectAsia is no longer regarded as part of the core Hiscox Retail portfolio and is classified
as a disposal group held for sale in the financial statements.
* Includes ILS, quota share and catastrophe bond funds.
10 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Our strategy and how we create value
A strategy focused on high-quality growth
The Hiscox Group comprises four businesses facing different opportunities and challenges, but with a common set of capabilities
and the capital support required for success.
• Global risks through
Lloyd’s platform
• Heritage of deep
technical expertise
• Leading the market in applying
technology to distribution
and underwriting
Delivers profits and capital
generation for reinvestment
• Small and micro businesses
• Digitally traded, with
low-cost distribution
and auto-underwriting
• Partnership management
capability through
digital connectivity
Significant structural
growth opportunity
• Specialist reinsurance
capability
• Holistic risk insights
• Expert alternative
capital manager
Delivers underwriting profit
and capital-light fee income
• Focus on SMEs,
not traded digitally
• Leadership in specialist lines
• Long-term broker partnerships
Delivers stable profit
generation and growth
People
and culture
Brand
Underwriting
Technology
Capital
Balanced portfolio of large and complex risks
SME and personal lines
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Attractive and sustainable returns for shareholders
Long-term
profitable growth
Operational leverage Attractive and
sustainable ROE
Managed volatility
delivering lower
cost of capital
Progressive dividend
11Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Our strategy and how
we create value
Our strategy in practice
Opportunity
There is an abundance of opportunity
ahead for Hiscox. In many of our
chosen lines and markets, our market
shares remain small, giving us plenty
of headroom for growth. This is
where our specialist knowledge
and multi-year investments in digital
trading differentiate us.
Innovation
The insurance industry consists of an
ecosystem of different types of business;
there are the ‘wave surfers’ for example,
who enter the market on the upside of
opportunity and retreat when it recedes.
Hiscox aims to be a ‘game changer’
and here for the long term: innovating
through long-held market experience
and underwriting acumen, embracing
technology, taking risks to evolve with,
and lead market change, and being
there for our customers.
Growth
Growth is important to us, but not at the
expense of profitability. That’s why our
focus is on maximising the structural
growth opportunities ahead as we
see them in retail, and in building out
balanced portfolios in our bigger-ticket
businesses where we currently see
exceptional market conditions.
Volatility
Our business is naturally exposed to
volatility. We manage this through
our underwriting experience and
expertise, our investment in data,
and our risk management processes,
and we work hard to ensure the risks
we take are commensurate with the
premium that is paid.
A differentiated offering
Global reach
We are a truly international business,
but we invest in local market knowledge
and experience to truly understand
the markets we operate in and provide
relevant products and services.
Specialist products
In every part of the Hiscox Group, we
focus on providing products and services
that differentiate us. These range from
high-value home insurance and fine art –
areas where we have deep foundations
to build on – to small business, flood and
kidnap and ransom – where innovative
products and service set us apart.
Claims experience
Being true to our word is the cornerstone
of our claims service. Each customer
and each claim is different, which is why
we have embedded experienced claims
teams with specialist product knowledge
in every part of our business.
Talented and highly skilled people
The quality of our people is a crucial
factor in our continuing success. Their
expertise, energy and commitment
drive our reputation for quality and
professionalism. In return, we aim to
provide a work environment that brings
out the best in everybody and rewards
hard work.
Powerful brand
We have invested significantly over
many years to build a recognised and
renowned brand. Our distinctive
marketing campaigns are developed
from a deep understanding of our
customers and positively contribute
to consumer buying decisions.
Building through the cycle
Over the years, we have built a strong
reputation as a specialist insurer in our
chosen segments. In our big-ticket
businesses – Hiscox London Market
and Hiscox Re & ILS – we focus on
building balanced portfolios through
controlled growth and with an emphasis
on leading the business we write.
In retail, where more stable returns have
typically offset the greater volatility of
our big-ticket businesses, we focus
on building a differentiated brand and
product offering that customers value.
Volatility exists in every part of insurance,
but through a focus on building and
maintaining balanced portfolios we
create more manageable volatility
across the Group. As such, we are
well positioned to maximise both the
profitable, cyclical growth and the
structural growth opportunities
ahead, and to balance consistent
and progressive shareholder returns
with continued reinvestment into
the business to support long-term
growth and value creation.
54m SMEs
We currently have 1.6 million retail
customers against an addressable
market of 54 million SMEs across
the UK, USA and Europe, which
represents a huge opportunity to
build market share over time.
Two-thirds
We currently lead on two-thirds of the
London Market business we write,
enabling us to set terms and conditions,
and are leading the way in augmenting
underwriting through the use of digital
and AI.
Diverse capital
We doubled our fee income in 2023
in Hiscox Re & ILS and continue to
leverage the benefits that come from
our strong partnerships and diverse
access to capital which includes our
own balance sheet, ILS, quota share
and catastrophe bond funds.
12 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
The risk
As an insurance group, specific risks related to our
business include:
Risk landscape and how we manage the risk
Strategic risk
The possibility of adverse outcomes
resulting from ineffective business
plans and strategies, decision-making,
resource allocation or adaptation to
changes in the business environment.
The Group’s continuing success
depends on how well we understand
our clients, markets and the various
internal and external factors affecting
our business, and having a strategy in
place to address risks and opportunities
arising out of this. Not having the right
strategy could have a detrimental impact
on profitability, capital position, market
share and reputation.
We consider strategic risks in a holistic way, to better prepare our
business for emerging threats, shifting trends, and opportunities in
the environment in which we operate. During 2023, we have remained
vigilant to potential adverse impacts of economic, geopolitical, social,
technological and regulatory developments on our Group strategy.
Our Group strategy was refreshed during 2021, with clarity of focus on
consistent delivery from our big-ticket businesses, accelerated growth
in retail digital and balanced growth in retail traded. The Group strategy
remains unchanged with a strong focus on execution throughout 2023.
The external environment remains complex and uncertainties persist,
but our robust strategy means that despite the external headwinds there
is still tremendous opportunity for Hiscox in each of our chosen segments.
Underwriting risk
The risk that insurance premiums prove
insufficient to cover future insurance
claims and associated expenses. Likely
causes include failing to price policies
adequately for the risk exposed, making
poor risk selection decisions, allowing
insurance exposures to accumulate
to an unacceptable level, or accepting
underwriting risks outside of agreed
underwriting parameters. This includes
people, process and system risks
directly related to underwriting, and
considers emerging external risks such
as climate, geopolitical and changing
customer trends.
We continue to focus on maintaining and improving, where needed, the
quality and balance of our portfolios, strengthening our pricing and risk
selections, and growing where the opportunities are commensurate
with the risk.
During the year, we continued to navigate a set of complex external
conditions impacting underwriting risk. These ranged from the more
volatile geopolitical environment (notably, the Russia/Ukraine conflict and
more recently the conflict in Israel and the Gaza Strip), macroeconomic
shifts (particularly inflationary pressures in most Western economies),
emerging societal trends (such as increased propensity to litigation),
and the continued potential impact of climate change.
Our active monitoring and enhanced view of economic and social inflation,
impact from supply chain disruptions, the heightened threat of cyber
attacks, and emerging litigation trends, has continued to allow Hiscox
to respond promptly, ensuring our pricing keeps pace with costs. We
continue to monitor and evolve our view of property exposure risks from
natural catastrophes influenced by climate change through our set of
realistic disaster scenarios (see pages 38 to 39). Our underwriting
exposure remains well within our Board-approved risk appetite levels.
We also continue to invest in the underwriters of the future through our
award-winning faculty of underwriting training academy, which was first
rolled out in 2022 to help manage and mitigate underwriting talent risks.
Key risks*
* The key risks to which we refer here, and elsewhere in this
document, also constitute the emerging and principal risks
required under the UK Corporate Governance Code 2018.
13Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Key risks
The risk
As an insurance group, specific risks related to our
business include:
Risk landscape and how we manage the risk
Reserving risk
The Group makes financial provisions for
unpaid claims, defence costs and related
expenses to cover liabilities both from
reported claims and from ‘incurred but
not reported’ (IBNR) claims. Reserving
risk relates to the possibility of unsuitable
case reserves and/or insufficient
outstanding reserves being in place to
meet incurred losses and associated
expenses, which could affect the
Group’s future earnings and capital.
Our consistent and prudent reserving philosophy serves to manage
the risk of insufficient reserves to cover claims cost and associated
expenses. The Group’s reserve levels remain resilient and we continue
to respond to the heightened inflationary environment through
maintaining and enhancing processes focused on reviewing our key
inflation assumptions against emerging experience and explicitly allowing
further reserve margins for uncertainty. Close monitoring of developments
will continue in 2024.
Credit risk
There remains an increased threat of global
recession, particularly given central
bank interest rate response to inflation,
which could, in turn, increase default
risk. There is also the risk of a reinsurance
counterparty being subject to a default
or downgrade, or that for any other
reason they may renege on a reinsurance
contract or alter the terms of an
agreement. The Group buys reinsurance
as a protection, but if our reinsurers do not
meet their obligations to us, this could put a
strain on our earnings and capital and harm
our financial condition and cash flows.
Similarly, if a broker were to default, causing
them to fail to pass premiums to us or pass
the claims payment to a policyholder, this
could result in Hiscox losing money.
Many of our counterparties have faced the same external conditions
as we have, and there remains an increased threat of global recession,
particularly given central bank interest rate responses to inflation, which
would, in turn, increase default risk. We closely monitor our counterparty
exposures throughout the year, and while the risk factors have increased,
our credit exposures remain within the Group’s risk appetite. We also take
into account the economic outlook in our decision-making on outwards
reinsurance purchasing for 2024.
Market risk
There is the threat of unfavourable or
unexpected movements in the value of
the Group’s assets or the income expected
from them. This includes risks related to
investments – for example, losses within
a given investment strategy, exposure to
inappropriate assets or asset classes,
or investments that fall outside of authorised
strategic or tactical asset allocation limits.
Whilst the economic environment has remained volatile, the rises
in inflation and accelerated interest rate increases, which drove
mark-to-market investment losses on our bond investment portfolio
during 2022, have now led to higher returns during 2023.
The Group also maintains modest exposure to selected non-fixed income
investments which provide diversification benefits to the overall portfolio.
We continue to look at incrementally improving long-term risk and
capital-adjusted outcomes through further diversification across the
wider investment universe.
We operate within a
complex and rapidly
evolving risk landscape,
and actively manage risk
through our embedded
policies, processes and
practices Group-wide.”
Fabrice Brossart
Group Chief Risk Officer
Risk management is also discussed
in our risk management section, TCFD,
and note 3.
36 50 191
14 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Key risks
The risk
As an insurance group, specific risks related to our
business include:
Risk landscape and how we manage the risk
Liquidity risk
The risk of being unable to meet customer
or other third-party payments as they
fall due. This could result in high costs in
selling assets or raising money quickly to
meet our obligations.
The Group’s liquidity risk appetite is designed to ensure that appropriate
cash resources are maintained to meet obligations as they fall due, both in
business-as-usual and stressed circumstances. This is measured using a
liquidity coverage ratio, which compares liquidity sources to stress-tested
liquidity requirements.
The Group’s liquidity position remains robust, with around $1 billion of
fungible liquidity at 31 December 2023 (including $600 million of undrawn
committed facilities). The Group has access to further liquidity through the
debt capital markets.
Regulatory, legal and tax governance
This relates to the risk that the business
fails to act, or is perceived to have failed
to act, in accordance with applicable
legal, regulatory, and tax requirements
in all of the jurisdictions where the Group
operates. The regulatory, legal and tax
environment continues to be complex,
with frequent changes in rules and
expectations which increase complexity
in this area.
We monitor the regulatory, legal and tax compliance landscape for
emerging changes to local and international laws and regulations in the
jurisdictions in which we operate.
Regulatory developments during the year have included several ongoing
developments in relation to Solvency II (for example, Bermuda Solvency II
equivalence status and proposed changes to the application of SolvencyII
in the UK), as well as the FCA Consumer Duty impacting our UK entities.
Our embedded sanctions management processes, supported by the
compliance team, have continued to ensure our business can respond
quickly and adhere to changes in the sanctions landscape, as was seen
during 2022 following the Russian invasion of Ukraine.
In relation to tax developments, 2023 saw the continued movement
towards implementation of the OECD’s Global Anti-Base Erosion Model
Rules (Pillar Two) at a local level; and in December 2023, Bermuda
enacted a new corporate income tax, effective 2025. Our preparations
for the incoming rules have included working with expert advisors and
industry bodies such as the ABI and the ABIR to ensure industry-specific
issues are identified and addressed, as well as working transparently and
collaboratively with our key tax authority stakeholders.
We invest in proactive engagement with all of our regulators, including
through our participation in the annual college of supervisors, hosted by
the BMA, which is an opportunity to update all of our regulators together
on strategic developments across the Group.
Climate change-related risk
This relates to the range of complex
physical, transition and liability risks
arising from climate change. It includes
the risk of higher claims as a result of
more frequent and more intense natural
catastrophes; the financial risks which
could arise from the transition to a
low-carbon economy; and the risk
that those who have suffered loss
from climate change might then seek
to recover those losses from others who
they believe may have been responsible.
Climate change-related risk is not
considered a stand-alone risk, but
a cross-cutting risk with the potential
to amplify each existing risk type.
We continue to monitor climate change-related risk through a number of
lenses, including underwriting selection, pricing, multi-year view of natural
catastrophe risk, asset types, and developments in potential climate
litigation. Every year we run a range of realistic disaster scenarios, in line
with emerging trends and updated with our in-house climate research.
We utilise investment dashboards for each of our insurance carriers and
we continue to embed our greenhouse gas targets for the Group, which
in 2023 has included progressing work on a supporting action plan.
More information on how we manage climate change-related risks can
be found in our TCFD disclosure on pages 50 to 61.
15Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Key risks
The risk
As an insurance group, specific risks related to our
business include:
Risk landscape and how we manage the risk
Operational risk
The risk of direct or indirect loss resulting
from internal processes, people or
systems, or from external events. This
includes cyber security risk, which is
the threat posed by the higher maturity
of attack tools and methods and the
increased motivation of cyber attackers,
in conjunction with a failure to implement
or maintain the systems and processes
necessary to protect the confidentiality,
integrity or availability of information
and data. Operational risk also covers
the potential for financial losses, and
implications from a legal, regulatory,
reputational or customer perspective,
for example, major IT, systems or
service failures.
Risks from people, process, systems and external events are closely
monitored by senior executives across the business. Ongoing competition
and retention of talent, heightened threat of cyber attacks and continued
growth in hybrid working practices are all examples of risks affecting the
operational risk landscape.
We continue to evolve our operational risk management processes
including our defences against, and response to, information security
and cyber threats. Our information security policy is updated annually
and approved by the Board. The policy sets out the Group’s approach
and commitment to information security, including the Group’s
requirements for a robust approach to protect, preserve and manage
the confidentiality, integrity and availability of the Group’s information
assets and information systems (including technology infrastructure).
It is supported by a suite of other policies including our acceptable use
policy, encryption policy, access control policy, data classification policy,
and third-party security policy. We also buy insurance against liabilities
including but not limited to those related to cyber and information
security risks.
We regularly reassess our information security standards and
methodologies to ensure appropriate governance and consistency has
been applied to our approach. For example, a maturity assessment
facilitated by an independent external third party was conducted in
2022, and another maturity assessment involving both our internal audit
team and an independent external third party will take place in 2024. Our
approach to information security risk management extends to third-party
providers, so through our procurement and claims teams we ensure third
parties receive notification of the security requirements expected of them
upon contract signing and at contract renewal.
2023 also saw a continued focus on Group-wide crisis management
response planning, which included performing a series of cyber crisis
simulations to test and enhance the response plans that are embedded
across business areas and functions including business continuity plans,
surge plans, people plans and communication plans.
The organisation has also established an enterprise portfolio management
(EPM) capability during 2023, aimed at strengthening operational maturity
and controls in relation to the Group’s change agenda over the next two to
three years.
Talent and capabilities risk is also being actively managed. We continue to
monitor and adapt our hybrid working policies and practices and ensure
that our workforce is equipped with the necessary technology to enable
this. In the second half of 2023, we also completed a ‘ways of working’
review. These measures have continued to be successful in addressing
the associated operational risks and we are pleased to have maintained
a high level of employee engagement in 2023 (see pages 7 and 47).
Please see the glossary on page 248 for definitions of acronyms.
16 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
We continue to pursue cyclical growth
and managed volatility in our big-ticket
businesses, while targeting structural
growth in retail. In big-ticket, we will
focus on the continued optimisation of
our underwriting portfolios, while also
prioritising innovation and digitisation.
In retail, we will continue to evolve
our digital SME ecosystems, invest
in our brand, and embed systems
transformation to further build our
reputation as a best-in-class insurer
for specialist classes, such as small
business insurance.
Technical excellence remains a
long-term priority for the Group,
and we continue to advance our
capabilities through the closer
alignment of underwriting,
claims, reserving and pricing.
In particular, we will continue to build
out and expand our Management
information and analytics capabilities,
to further enhance the timeliness,
volume and quality of data-driven
insights feeding into business
performance – driving earlier insights
into portfolio performance.
Business priorities for 2024
The underwriting
environment in 2023
and into 2024 is
attractive yet complex,
requiring balance
between capturing
the opportunity and
retaining discipline,
so we continue to
focus on technical
excellence, disciplined
profitable growth,
managing volatility,
and technology as a
competitive advantage.”
Joanne Musselle
Group Chief Underwriting Officer
1.
Profitable growth and
managed volatility
2.
Technical excellence
17Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Business priorities
for 2024
During 2023, we made significant
progress in refining and maturing
our operating model, resulting in a
rebalancing of global versus local
capabilities and allowing us to
start to unlock the benefits of scale
and consistency. This year will see
a detailed review of key activities,
particularly across our retail
businesses, to identify opportunities
to further optimise structures,
processes, technology and tools
across the organisation.
Building connected and energised
teams has been a multi-year priority,
which, in 2022, resulted in our highest
employee engagement scores for
ten years. In 2023, we are proud to
have retained such a high level of
engagement. Our 2024 priority is the
development of a strategic workforce
plan that ensures we have the relevant
skills and capabilities in place to drive
future growth and build a diverse and
multi-talented employee base around
the world. We will also continue to
embed our new employee value
proposition, enabling us to attract
and retain top talent, while fostering
a high-performance culture.
Our Company purpose is to help
people and businesses realise their
ambitions, and understanding and
serving our customers continues to
be our top priority. In 2023, we enjoyed
strong customer service and claims
satisfaction scores in many of our
chosen markets, and in 2024 we will
continue to promote and embed our
customer-centric culture across the
Group. We will do this by evolving our
service and product offerings to keep
pace with customer needs and respond
to changing consumer behaviours.
4.
Connected and
energised teams
5.
Customer-centricity
3.
Operational leverage
Find out more about our 2023
business performance in our
Chief Executive’s report.
22
18 Hiscox Ltd Report and Accounts 202318 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Jonathan Bloomer
Chair
In the chair
In 2023, Hiscox appointed a new
Chair of the Board, the first Chair in
the Company’s history from outside
of the business. >
Jonathan Bloomer was appointed
Hiscox Group Chair in July 2023. He
brings with him invaluable experience
as the former Chief Executive Officer
of several major companies in the
financial services and insurance
sectors, including Prudential Plc,
and as the Chair of several boards
across a range of industries.
19Hiscox Ltd Report and Accounts 2023 19Hiscox Ltd Report and Accounts 2023
20 Hiscox Ltd Report and Accounts 2023
Q: When did you first become aware
of Hiscox, and what were your
perceptions of the business from
the outside?
A: I’ve known of Hiscox for decades and
I always thought it was a high-quality
company. In fact, I’ve been a Hiscox
policyholder for ten years or more. That
came from a recommendation from a
broker, originally. Because I’ve grown
up in the insurance industry, I’m not a
normal buyer of insurance. Whenever
I get quotes or recommendations, I
always have a strong view on whether
it’s a company I want to be insured by, so
the decision to buy a policy is not one I
take lightly! One of the things I’ve noticed
since taking on this role is that lots of
people I meet say: “Well, I’m insured
with Hiscox”. And they’ve all given me
a brief anecdote, whether it’s about
underwriting, or claims or whatever, as
to why they think it’s a great business.
So it’s all been really positive.
Q: Is there anything that has
particularly surprised you about
Hiscox since you’ve joined?
A: One thing is the concept of the Hiscox
Partnership; something the business has
operated for years whereby significant
contributors are recognised by becoming
a Hiscox Partner. I’m struck by what
an interesting and important part of
the culture it is. In most companies,
partnership is a mark of seniority, but
here it’s a much broader church. It’s
about people’s commitment to Hiscox
over time. It’s about going the extra mile,
carrying the culture, and really influencing
people. Our Partners are very proud to
belong to it.
More generally though, I’ve been
extremely encouraged by the positive
attitude that people here have, and the
partnership is just one manifestation of
that as it shows that people are really
invested in the business.
Q: What do you think the Board was
looking for in your appointment?
A: I’m the first external person to Chair the
business. With Robert Hiscox – well, the
clue is in the name – and my predecessor,
Robert Childs, had also been here many
years before taking on the role. Talking to
Robert Childs, he considered part of his
role for the past few years to be getting
the organisation to a point where they
could bring in an external Chair. I think
the Group was looking for someone
who was already an experienced Chair,
who has fulfilled this function at other
organisations. I arrived here having a
clear view of what chairing a business is
like, and what the role means. I think it’s
probably much easier coming in as an
outsider if you already know the industry,
and while I have a lot to learn about the
nuts and bolts of the business,
I do know the industry inside out.
Q: How would you characterise the
role of Chair?
A: It’s about making sure the Board is
focused on the right things, and that the
relationship between the Non Executive
and the Executive sides of the Board,
and the Executive more broadly, is
effective – that we’ve got a constructive
degree of challenge between the two.
As Chair, it’s also vital that you build
a positive relationship with the Chief
Executive. You need to act as a sounding
board, someone the CEO can discuss
issues and challenges with, and you
need to have a broad enough business
experience for that conversation to be
meaningful. Parts of the role, though,
are somewhat intangible. It’s tricky to
describe an elephant, but you know it
when you see it in the same way as it’s
tricky to describe an effective Board,
but you know one when you see one and
I’ve certainly seen that here.
Q: How important then is that
Chair/CEO dynamic?
A: I wouldn’t be sitting here in this seat
if Aki and I hadn’t immediately had a
good connection and thought we could
work effectively together. From my
own experience as a Chief Executive, I
know that finding people you can talk to
about difficult topics in a safe way is so
important for any CEO. A CEO will find
a range of people they can do that with,
but one of them needs to be the Chair.
And I think we’ve already developed
that relationship. We also have very
similar views of where we want to take
this business and what the business
can achieve. That means really seizing
the opportunities we’ve got in our retail
markets, creating more volume and
handling that volume efficiently. On the
Lloyd’s side, we’re currently in a cycle
where it’s a strong market, and we think
we’re getting paid well for the risk we’re
taking on. But dealing with a cyclical
business like that, it’s about making sure
we see how the trends are going and
when we might want to pull back a bit.
We need to make sure we stay profitable
as the cycle changes. We have a clear
strategy; the key now is in its execution.
Q: Hiscox is also focused on
building a sustainable business with
a diverse workforce. How important
is that to you?
A: There’s an absolute imperative to do
it – not because we need to, but because
it’s the right thing for the business. It
comes back to the fact that at heart,
we’re a people business. We want the
best people to work for us and achieving
that means being open to a diversity
of people. We want a culture where
everybody feels welcome and involved.
Q&
A:
with Jonathan Bloomer
Chair
21Hiscox Ltd Report and Accounts 2023
That’s just critical. And we want our
impact on people outside of Hiscox to be
a positive one too, so keeping that focus
on sustainability is a fundamental part of
our business.
Q: What have your initial areas of
focus been?
A: Financial services is ultimately a
people business, so you’re not just
learning about the business – you have
to understand the people working
within it. So that’s been one of my
priorities. Another focus for me has been
understanding IFRS 17, which has been
a big change in insurance accounting
standards, but which our Chief Financial
Officer, Paul Cooper, has done a great
job of explaining to our investors. I’ve also
been focused on understanding our US
business. The USA is a huge market, and
although I’ve run US companies in the
past, we’re functioning in a very particular
segment of it. So I’m spending some
time with our American team, becoming
familiar both with the people and with
the business we do there. The same is
true of parts of our European operations
and the segments of big-ticket business
we’re involved in. In all those areas, it’s
about making sure I understand the
details. Where are we strong now and
where do we want to be strong? Half the
fun of doing a role like this is learning the
particulars of the business – that’s what I
really enjoy.
Q: From what you’ve seen so far, what
has struck you most about the sense
of community at Hiscox?
A: I’ve taken over chairing the Hiscox
Foundation, which Hiscox has had since
the 1980s. A lot of the focus there is on
supporting charities and organisations
that our colleagues and people are
already involved with, or that do work
that’s important to them. They choose
who we support. It’s their way of giving
back to their communities. To me,
that’s a big part of what Hiscox should
be about: supporting communities not
only within our business, but within the
wider ecosystem that our colleagues
are part of.
We want the best people to work
for us and achieving that means
being open to a diversity of people.
We want a culture where everybody
feels welcome and involved. That’s
just critical.”
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
22 Hiscox Ltd Report and Accounts 2023
Chief Executive’s report
Our business has delivered excellent
results, with record profits of
$625.9 million underpinned by a 36%
improvement in the underwriting
result and a record investment
income. The Group combined ratio
below 90% and ROE of 21.8%
1
have
led to very strong capital generation,
which we are deploying for further
growth in all parts of the business
in addition to a special return to
shareholders of $150 million.”
Aki Hussain
Group Chief Executive Officer
Strategic execution
Underwriting excellence and investment
result drive record profits
I am pleased to announce the Group
has delivered a record profit before
tax of $625.9 million. High-quality net
ICWP growth of 10.7% in constant
currency at expanding margins resulted
in an undiscounted combined ratio of
89.8% and an insurance service result
approaching half a billion Dollars, up
36% year on year. This is complemented
by a record net investment income
of $384.4 million, as higher bond
reinvestment yields are now earning
through. Group ROE of 21.8%
1
is the
highest the business has delivered in
seven years. These record profits are
underpinned by continued growth in
each of our business segments, as
we execute our strategy and capture
both cyclical and structural growth
opportunities across our portfolio.
Capital management strategy focused
on delivery of consistently strong returns
to our shareholders
Effective and judicious capital
management is core to our ability to
deliver consistently strong returns to our
shareholders. In 2023, Hiscox capitalised
on some of the best property pricing
conditions in decades and deployed
significant capital in both our London
Market and Re & ILS businesses,
alongside investing in continuing growth
in retail. This strategy, along with a record
investment performance, has resulted
in strong capital generation with an
estimated year-end solvency position of
212% (2022: 199%).
Capital allocation, together with our
expertise in our chosen lines of business
and strong distribution capabilities, is
a key driver of profitable growth. As I
look forward, there are three key factors
driving capital allocation decisions at this
juncture. Firstly, we expect favourable
market conditions in many of our big-
ticket lines of business to continue into
2024, most recently evidenced by the
strong January renewals. In addition, the
structural growth opportunity in retail
remains immensely attractive, and we
increased our investment in marketing by
29% in 2023 to support growth into 2024.
We will continue to allocate more capital
1
Excludes impact of Bermuda DTA.
23Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
to support growth across all of these
opportunities in line with our strategy.
Secondly, we have continued to take
a conservative approach to reserves
and risk adjustment, and have taken
the decision to increase the Group
confidence level to 83% at year end
from 77% at half-year 2023. Reserves
have been strengthened across the
Group, although a significant part of the
strengthening relates to the US broker
business we exited in 2021, comprising
mostly standalone general and other
liability business written for customers
with revenues over $100 million.
Finally, our business has generated
record profits and has a strong balance
sheet. We are using the capital generated
to drive growth and strengthen the risk
adjustment. In addition, we recognise
that surplus capital beyond these
needs should be considered for return
to shareholders. In light of this, and
consistent with our disciplined capital
deployment strategy, medium-term
growth ambition, and the desire to
maintain high levels of financial flexibility,
the Board has recommended a final
dividend of 25 cents per share and a
further return of $150 million of capital to
shareholders in the form of a buyback.
The pro-forma Group Bermuda solvency
capital requirement (BSCR) post the final
ordinary dividend and the share buyback
is estimated at 200%. The Group’s
approach to capital management
ensures that it can invest in the many
attractive growth opportunities available
and maintain its balance sheet strength
and financial flexibility.
Enabling technological transformation
The pace of technological and societal
change continues to accelerate. To
maintain our market-leading position in
our chosen lines of business, we continue
to invest time and resources in building
out our technological capabilities. For
some time now we have been using
technology to make it easier for our
customers to do business with us; to drive
superior risk selection; and to improve,
streamline and automate our processes.
Hiscox London Market is collaborating
with Google Cloud to create the first
AI-enhanced lead underwriting model
in the Lloyd’s market. The proof of
concept was undertaken in Hiscox’s
terrorism line of business, although the
principles will apply to other lines of
business within and beyond big-ticket
insurance. The collaboration combines
our recently built in-house technology
platform called Hiscox AI Laboratories
(Hailo) with Google Cloud’s generative AI
technology to automate lead algorithmic
underwriting from submission to quote.
A manual quoting process that used to
take up to three days has been shortened
to just three minutes when using AI tools,
freeing up time for our underwriters to
focus on higher-value tasks. We are very
excited about the potential applications
of this new technology more widely
across our business.
In retail, we made good progress in
our technological transformation. In
US DPD, all new and renewal business
is now written on the new platform.
We are beginning to see evidence of its
benefits – most notably in direct, where
new business growth was up 31% year
on year. In Europe, the roll-out of the
new policy administration system is
nearing its completion in Germany and
is in progress in France. Europe is still
predominantly a broker-led market, so
the new platform will be accompanied by
digital broker portals. These will create a
seamless digital journey for our brokers
and increase scalability for our business.
In the UK, we continue to expand our
product and distribution capabilities
with solid progress in our e-broker
extranet roll-out.
Building the business of the future
At Hiscox we are proud to have grown
our business organically, and to
sustain this growth we are continuing
to innovate to expand our business
reach. In the USA, we aim to be the
destination brand for our customers’
insurance needs by building out an SME
insurance marketplace. In 2023, we took
a significant step in this direction when
we launched a workers’ compensation
product in partnership with a highly
reputable multi-line US insurer. With the
product set we had available prior to this
initiative, we could reach approximately
half of the total market. The addition of a
workers’ compensation product enables
us to reach a further third of the available
small business market. This partnership
increases our reach and relevance, and
creates a new capital light income stream
from the commission we receive from
selling our partner’s product.
We also see significant growth
opportunities as the ‘green economy’
transition accelerates. We have launched
a green consultant indemnity product
in the UK which covers businesses,
professionals, and their clients within
the environmental and sustainability
sector. Hiscox London Market’s ESG
sub-syndicate went live on 1April2023
and so far has exceeded our expectations,
as we bound risks underwriting offshore
windfarms in Europe, hydro in New
Zealand, battery energy storage systems
in the UK and solar in the USA. We are
continuing to build our capabilities in
this area, with the addition of a team of
engineers planned in 2024.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
24 Hiscox Ltd Report and Accounts 2023
A notable development in the reinsurance
market in 2023 has been a buoyant
natural catastrophe bond market.
The Group has taken the opportunity
to diversify our outwards reinsurance
programme by issuing our own
$125 million natural catastrophe bond
in December 2023, which provides
multi-year protection against North
American named storms and
earthquakes. The issue was upsized
due to strong demand and priced
attractively. In Hiscox Re & ILS, we
launched a new catastrophe bond
fund facility to complement our ILS
offering, in time for the January renewals.
People are at the heart of our success
Our ability to attract and retain talent is
key to our continued success. During
2023 we welcomed our new Chair,
Jonathan Bloomer, following Robert
Childs’ retirement after a long-standing
and extraordinary career at Hiscox
spanning 37 years. Jonathan is a very
experienced Chair with a wealth of
leadership experience in the insurance
sector. Beth Boucher also joined the
Board as an Independent Non Executive
Director in 2023, bringing with her
expertise in cyber security, people
management and transformation.
We have continued to build the
quality and capabilities of our Senior
Management team by adding some
fantastic new senior leaders to our
business during the year. Fabrice
Brossart joined us in November from
AIG as our Group Chief Risk Officer,
and his appointment completes my
Group Executive Committee. We also
welcomed Todd Isaac as our Chief
Investment and Treasury Officer, Chris
Loake as our Chief Information Officer,
and Steve Parry as our Group Claims
Director. We are already benefitting
significantly from their fresh thinking from
both inside and outside of our industry.
We remain focused on building a
connected and engaged workforce and
are pleased to have maintained a high
level of employee engagement of 82% in
2023, after posting this highest employee
engagement score in ten years for the
first time in 2022. Diversity, equity and
inclusion (DEI) is another constant area
of focus. We seek to recruit from the
whole talent pool regardless of gender,
ethnicity or background and to ensure
everyone who works at Hiscox feels a
sense of pride and belonging. We have
chosen to participate in the updated
Parker Review by setting an ethnic
minority representation target of 13%
for Senior Management to be achieved
by the end of 2027. This is part of our
efforts to build transparency, and to
ensure that everyone has an equal
opportunity to make the most of their
potential and progress to the highest
levels in their business careers.
Business performance
Hiscox Retail
Hiscox Retail comprises our retail
businesses around the world: Hiscox
USA, Hiscox Europe and Hiscox UK. In
this segment, our specialist knowledge
and ongoing investment in the brand,
distribution (including broker relations)
and technology reinforce our strong
market position in an increasingly
digital world.
Retail ICWP of $2,368.5 million
(2022: $2,273.1 million) increased by
4.2% in constant currency. We continue
to see strong momentum in Europe
and accelerating growth in US DPD,
although overall retail growth is below
our expectations. In US broker, ongoing
competitiveness of cyber pricing
The Hiscox Retail
business has been
an organic endeavour.
Over the years we
have continued to
invest in building
this business and
becoming the leading
specialist insurer for
small businesses and
selective personal lines.
The long-term growth
opportunity ahead
remains extraordinary
and our objective is
to build a material
position and capture
this opportunity.”
25Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
Hiscox Retail
2023
$m
2022*
$m
Insurance contract written premium 2,368.5 2,273.1
Net insurance contract written premium 2,197.7 2,071.3
Insurance service result 180.2 182.5
Investment result 203.9 (98.9)
Profit before tax 267. 3 130.2
Combined ratio (%) 91.6 91.0
Undiscounted combined ratio (%) 96.2 93.7
*As restated under IFRS 17.
impacted growth, as we chose pricing
discipline over short-term growth.
In the UK, we exited some non-core
underwriting partnerships which
were outside of our risk appetite, and
fourth-quarter growth fell short of
Management expectation following
later than expected activation of signed
broker distribution deals. However, the
issues in both US broker and the UK are
transient and we have taken action to
reverse these trends. As result, we are
seeing positive momentum build early
in 2024. Adjusted for cyber headwinds
in the USA and the exit of underwriting
partnerships in the UK, retail growth was
within the 5% to 15% target range in 2023.
On an undiscounted basis, Hiscox
Retail’s headline combined ratio was
96.2% (2022: 93.7%). This reflects the
Group taking the opportunity to increase
investment in marketing to build
momentum for growth into 2024 and
strengthening reserves for the business
exited in US broker ($160 million of annual
premiums), which was announced in
March 2021 and completed by half-year
2022. This exited business, comprising
mainly large-ticket standalone general
liability and cyber, benefits from some
LPT cover for years 2019 and prior,
which the Group purchased at the
time we decided to exit. However, the
general liability part of this exited book is
experiencing higher loss trends, and as
a result we have added IBNR reserves
for the portion of the book that does not
benefit from LPT cover.
The Hiscox Retail business has been
an organic endeavour. Over the years
we have continued to invest in building
this business and becoming the leading
specialist insurer for small businesses
and selective personal lines. The
long-term growth opportunity ahead
remains extraordinary and our objective
is to capture it and build a material
position. In doing this we will remain
disciplined, as we have done in 2023
when we increased our investment in
marketing by 29% and strengthened
reserves, while achieving a Group RoE
of 21.8%
2
. Our intention remains to run
our retail business within the 89%-94%
operating range for the long-term benefit
of our shareholders.
On 27 September 2023, the Group
announced its agreement to divest
DirectAsia to Ignite Thailand Holdings
Limited. The transaction remains
subject to customary conditions and
regulatory approvals.
Hiscox USA
Hiscox USA provides commercial
insurance for small businesses with
distribution through brokers, partners
and direct-to-consumer. Our ambition
is to build America’s leading small
business insurer.
US ICWP grew by 1.0% to $909.4 million
(2022: $900.2 million), with ongoing
positive momentum in the digital
business tempered by a deceleration
in the broker channel. The broker
deceleration was driven by challenging
market conditions in cyber and the
business taking longer than expected
to pivot to growth after the book was
decisively re-underwritten. To reverse
this trend, we executed a growth
campaign focused on our most profitable
classes, which has moderated the
decline in the fourth quarter. We are
seeing some green shoots and cyber
headwinds are expected to alleviate in
the coming year, although the outlook
remains uncertain.
US DPD ICWP increased 8.5%
year on year to $504.4 million,
crossing the half a billion-Dollar
threshold (2022: $465.0 million). The
second-half growth run rate of 9.2%
is an acceleration versus 7.8% in the
first half. With increased investment in
marketing and increased production
from digital partners, positive momentum
has continued into 2024.
The direct business has been live on the
new technology platform since June
2022 and continues to show excellent
progress, growing at a double-digit rate
with new business up in excess of 30%
in 2023. In the coming year we expect
growth momentum to remain strong,
supported by a new brand campaign
and the expansion of our social
influencer programme. The accelerating
growth in direct provides an excellent
base for the full digital launch of our
workers’ compensation partnership
in February 2024. Our customers are
now able to quote and bind a Hiscox
policy and a workers’ compensation
policy underwritten by our partner
without leaving the Hiscox website. It is
a seamless, convenient and easy user
experience, allowing Hiscox to capture
a bigger share of the small commercial
market. The collaboration has performed
ahead of expectations since its soft
launch in June.
The recovery of our digital partnerships
business from its low point in the first
quarter of 2023 has continued, although
at a slightly slower pace than we initially
anticipated. After a two-year pause, we
onboarded over 30 new partners in 2023,
taking the total to over 180. From our
prior experience, it often takes 12 months
for partners to achieve the appropriate
cadence and momentum, and consistent
with this, momentum has improved
2
Excludes impact of Bermuda DTA.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
26 Hiscox Ltd Report and Accounts 2023
in sequential quarters with the trend
continuing into 2024.
Hiscox Europe
Hiscox Europe provides commercial
insurance for small- and medium-sized
businesses, as well as personal lines
cover, including high-value household,
fine art and luxury motor.
Hiscox Europe continues to be the
strongest growing business in the retail
segment, with ICWP of $606.7 million
(2022: $545.6 million) and growth of
10.6% in constant currency, with all
countries enjoying strong momentum.
Both commercial and personal lines
have seen double-digit growth
year on year, demonstrating the
opportunities that Hiscox has across
its European markets – most notably in
professional indemnity and specialist
sectors such as technology. We continue
to market our small commercial defined
benefit cyber product across all the
countries we operate in, which we
believe responds to the needs of our
target customer base. The cyber market
remains competitive and we are focused
on maintaining pricing discipline and
the high quality of our portfolio. The
European DPD business in Germany,
France and the Netherlands is still
nascent, but is growing at a high
double-digit rate.
Hiscox UK
Hiscox UK provides commercial
insurance for small- and medium-sized
businesses, as well as personal lines
cover, including high-value household,
fine art and luxury motor.
Hiscox UK ICWP grew by 2.4% in
constant currency or 2.0% in US Dollars
to $793.8 million (2022: $778.2 million),
with the premium growth impacted
by the planned exit from non-core
delegated authority business which is
now complete.
Our art and private client (APC)
business returned to growth in 2023.
We continue to innovate to maintain this
momentum and are planning to launch
a new digital high-value household APC
product for brokers that will reduce their
administrative burden and improve ease
of doing business with Hiscox.
The UK broker commercial business
continued to enjoy excellent retention,
illustrating the underlying quality of the
business and the loyalty of our customers.
However, new business growth was
below Management expectation,
particularly in the fourth quarter. This
was primarily due to a delay in the
activation of several broker distribution
deals signed in the latter part of the year.
In September we launched our new
brand campaign, titled ‘Your story…
underwritten by Hiscox’, a concept
focused on recognising the people
and stories behind every policy. It is
a significant milestone as we look
to further increase awareness and
recognition of Hiscox in both our
direct and broker channels. The initial
response has been positive and
we intend to increase brand spend
through key media channels in 2024.
Hiscox UK also has a new Chief
Distribution Officer, Gareth Hemming,
who is bringing a new and higher
intensity to the distribution teams’
operating rhythm. The combination of the
marketing campaign noted above and
the activation of new distribution deals is
increasing the flow of business into the
UK, resulting in a strong start to 2024.
Hiscox London Market
Hiscox London Market uses the global
licences, distribution network and
credit rating of Lloyd’s to insure clients
throughout the world.
Hiscox London Market delivered
strong growth in ICWP of 11.5% to
$1,243.4 million (2022: $1,114.7 million).
Net ICWP grew by 15.1% to
$908.5 million (2022: $789.2 million),
as we deployed more capital in
property and benefitted from
significant opportunities within
renewables and energy construction.
Hiscox London Market benefitted
from an average rate increase of 7%,
contributing to a cumulative rate
increase of 70% since 2018. While
this is ahead of our expectations,
different lines of business are at
varying stages in the cycle. Property
saw significant rate strengthening,
with property binders and major
property rates up 26% and 21%
respectively, and terrorism rates up
15%. In contrast, cyber and D&O
have seen double-digit rate decreases,
following several years of strong
re-rating. We continued our strict
underwriting discipline to maintain the
high quality of our portfolios in these
lines by only writing the business that
fits within our risk appetite and return
expectations. General liability rates are
being sustained and we continue to
grow the book selectively, where we see
attractive new business opportunities.
Upstream energy has benefitted
significantly from the extensive amounts
of construction taking place in the
renewables sector, and new business
more than doubled in 2023. The ESG
sub-syndicate, ESG 3033, launched
earlier this year, is already exceeding
Hiscox London Market
2023
$m
2022*
$m
Insurance contract written premium 1,243.4 1,114.7
Net insurance contract written premium 908.5 789.2
Insurance service result 176.0 123.3
Investment result 109.9 (54.4)
Profit before tax 251.4 101.0
Combined ratio (%) 79.1 84.5
Undiscounted combined ratio (%) 83.8 86.7
*As restated under IFRS 17.
27Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
Hiscox Re & ILS
2023
$m
2022*
$m
Insurance contract written premium 986.3 967.6
Net insurance contract written premium 449.6 365.0
Insurance service result 136.1 55.1
Investment result 70.6 (34.0)
Profit before tax 221.4 46.9
Combined ratio (%) 68.3 84.5
Undiscounted combined ratio (%) 69.8 85.6
*As restated under IFRS 17.
our expectations and the majority
of risks written in 2023 are in the
renewables space.
Overall, we remain focused on
profitable growth through effective
cycle management. While it has been
an active loss year with a number of
weather events, wildfires in Hawaii and
Canada, and several satellite losses,
our London Market business delivered
a strong undiscounted combined ratio
of 83.8% (2022: 86.7%), marking its
fourth consecutive year of delivering
a combined ratio in the 80s.
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 achieved excellent net
ICWP growth of 23.2%, increasing to
$449.6 million (2022: $365.0 million)
as the business deployed additional
capital into the favourable hard market.
ICWP grew more modestly by 1.9% to
$986.3 million (2022: $967.6 million) as
less ILS capital was deployed throughout
this year, reflecting broader ILS fund
market conditions.
Hiscox Re & ILS benefitted from an
average rate increase of 31% on a
risk-adjusted basis, and cumulative rate
increases now stand at 90% since 2018.
Rate growth is beginning to plateau in the
US property catastrophe market, having
achieved significant improvements in
terms and conditions during 2023. The
international property catastrophe book
continues to see a broad rate hardening.
Retrocession rates saw the greatest
increases in 2023, up 42% on prior year,
and are now starting to soften slightly
as more capacity returns to the market.
Despite this, we believe that rates
remain attractive.
Hiscox Re & ILS has delivered an
excellent undiscounted combined
ratio of 69.8% (2022: 85.6%) and a
record profit before tax of $221.4 million
(2022: $46.9 million) in an active year
for natural catastrophe losses. The
business continued the trend of recent
years of reducing exposure to secondary
perils by materially reducing exposure to
aggregate programmes.
Hiscox ILS funds delivered a record
performance with assets under
management of $1.8billion
(2022:$1.9billion) as at 31December2023.
These decreased to $1.6 billion on
1January2024 after a planned capital
return of $270 million. In total, the
business raised $140 million of new
capital ahead of the January renewals,
including capital from new ILS investors
and a newly-launched side-car. The
pipeline of further opportunities
remains strong. The impact of 2023
ILS net outflows was offset through
a combination of increasing Hiscox’s
own allocation of capital and by a
significant increase in ceded quota share
capacity. As a result, gross income
was maintained, net income increased
materially and the excellent underwriting
result has not only generated a 69.8%
undiscounted combined ratio, but a near
doubling of fee income year on year.
We also launched our first catastrophe
bond fund in January to diversify our ILS
funds’ product offering. All of these will
contribute to the bottom line through
fee income that will earn through in 2024
and beyond.
The Hiscox Re & ILS business model
has access to several sources of capital
Upstream energy
has benefitted
significantly from the
extensive amounts of
construction taking
place in the renewables
sector, and new
business more than
doubled in 2023. The
ESG sub-syndicate,
ESG 3033, launched
earlier this year, is
already exceeding our
expectations and the
majority of risks written
in 2023 are in the
renewables space.”
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
28 Hiscox Ltd Report and Accounts 2023
ranging from Hiscox own capital to
third-party capital through a number
of different mechanisms including
strategic quota share partnerships,
ILS funds, and more recently a
side-car and catastrophe bond
fund. This strategy enables the
business to compete effectively in
our specialist areas through providing
scale and lowering the cost of
capital, while providing valuable
fee income for risk origination and
performance-dependent profit
commissions. Following the excellent
underwriting performance in 2023,
fee income has risen from $51.1 million
to $101.7 million as substantial profit
commissions are generated.
Strong foundations
Reserves
Consistent with the Hiscox conservative
reserving philosophy, we have decided
to further strengthen reserves. As at
31 December 2023, the Group’s net
reserves are at the 83% confidence level
(HY 2023: 77%) and a risk adjustment
above best estimate of $272.9
3
million
(HY 2023: $211.13
4
million).
Our reserve philosophy is evident
in the consistently positive reserve
development we have reported over
many years. In 2023, net reserve
releases stood at $122.8 million
(2022: $209.4 million), as the
strengthening of the reserves covering
the exited US broker business was
more than offset by reserve releases
across multiple classes of business.
Over recent years we have been
proactive in executing LPTs to protect
certain lines of business, in particular
those lines we have exited. These LPTs
provide protection for over 31% of
Group gross reserves and 42% of
casualty gross reserves for 2019
and prior years from inflationary and
other pressures. We will continue to
pursue similar transactions to manage
volatility and optimise capital.
Capital
The Group remains strongly capitalised
from both a regulatory and a ratings
agency perspective, allowing us to
pursue our ambitious business plan
while being sufficiently protected
against market events. The Hiscox
Group BSCR ratio at 31 December
2023 is estimated at 212%. The BSCR
currently excludes any benefit from
the $150 million Bermuda deferred tax
asset, as the treatment for capital is
currently uncertain.
Given the strong operational capital
generation in 2023, the Group intends
to return $150 million of capital to
shareholders by means of a share
buyback, in addition to the final ordinary
dividend of 25 cents per share. The
total capital return is equivalent to
12 percentage points of the 2023
year- end BSCR ratio. The Group
continues to see opportunities to
deploy capital at attractive returns
in big-ticket and to invest in the
structural growth opportunity in retail.
We remain comfortably above the S&P
‘A’ rating threshold and significantly
above the regulatory capital ratio
requirement. The Group remains
robustly capitalised, as demonstrated
by its regulatory capital ratio and
continued strong results, from its
three rating agency assessments
(S&P: A, AM Best: A and Fitch: A+).
In November 2023 S&P released the
final details of its long-awaited new
capital model, which gives more credit
for diversification. It has now been
confirmed that the impact on the Group’s
S&P capitalisation was positive and that
Hiscox’s ‘strong’ operating rating with
stable outlook remains unchanged. S&P
has also removed credit watch from
Hiscox’s debt issuance rating with no
change to its rating, following its review
of structural subordination in Bermuda.
Liquidity
The Group, at the holding company level,
continues to retain a significant level of
liquidity with fungible assets in the region
of $1 billion, comprised of liquid assets
and undrawn borrowing facilities. A
full-year 2023 leverage for the Group
on a pro-forma basis post share buyback
of $150 million is 17.5%
5
, comfortably
within the range that the Group chooses
to operate in.
Investments
The total investment result was a gain of
$384.4 million (2022: loss of $187.3 million),
or a return of 5.2% (2022: negative return
of 2.6%). Assets under management
at 31 December 2023 were $8.0 billion
(2022: $7.1 billion).
Inflation continued to fall over the
course of 2023, while employment
remained resilient and economic growth
avoided the more severe adverse
outcomes that can accompany a
sharp rise in interest rates. The robust
economic backdrop gave central banks
room to first raise and then hold interest
rates at restrictive levels until inflation was
back on course to meet policy objectives.
Market expectations shifted several
3
Allows for the reclassification of LPT recoveries
into claims.
4
Excludes impact of Bermuda DTA.
5
Leverage defined as borrowings over borrowings
and shareholder equity.
29Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
times during the year as to the likely
timing of peak rates and when
the interest rates may be cut.
Other than at the very short end,
government bond yields ended 2023
broadly where they started. However,
this disguised significant volatility during
the year, as bond markets reacted to the
US regional banking crisis, inconsistent
economic data and central bank
statements. Yields then fell sharply
towards the year end and corporate
bond spreads tightened to historically
narrow levels as markets moved to
price in the first rate reductions in
early 2024. The bond portfolio made
significant mark-to-market gains
which recovered a large proportion
of 2022’s mark-to-market losses.
Our bond portfolio remains relatively
conservative with an average credit
rating of A and an average duration
of 1.6 years.
Bond coupons of $186.1 million
combined with $49.7 million earned
from our cash and cash equivalents
contributed the majority of the return.
The reinvestment yield on the bond
portfolio fell in the final quarter to 5.1%
as at 31 December 2023, down from
5.7% at the end of September 2023,
and is in line with 5.1% at the end of
2022, a trend which supports strong
forward-looking returns. The book
yield is at 4.3% and is still rising,
underpinning the cash component
of income.
Despite slowing growth and central bank
policy uncertainty, equity markets made
surprisingly strong gains over 2023,
albeit skewed by the performance of a
handful of the largest companies in the
USA. The Group’s exposure to riskier
assets remains modest and we reduced
0.000
0.364
0.728
1.092
1.456
1.820
2.184
2.548
2.912
3.276
3.640
S&P Hiscox
integrated
capital model
(economic)
Hiscox
integrated
capital model
(regulatory)
Bermuda
enhanced
solvency
capital
requirement
$3.32 billion available capital
Economic
Regulatory
Bermuda
enhanced
solvency
capital
requirement
Projected capital requirement
Rating agency assessments shown are internal Hiscox assessments of the agency capital requirements
on the basis of projected year-end 2023. Hiscox uses the internally developed Hiscox integrated 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 basis has been updated
for IFRS 17 and comprises net tangible assets and subordinated debt. Benefit of IFRS 17 discounting is
allowed for within the internal capital model position.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
30 Hiscox Ltd Report and Accounts 202330 Hiscox Ltd Report and Accounts 2023
our equity allocation over the second half
of the year, giving us room to add risk
should appropriate opportunities arise.
Tax
The Group’s tax credit for the year
of $86.1 million (2022: expense of
$21.7 million) reflects income taxes
payable for 2023, offset by the impact
of the initial recognition of DTA generated
by the introduction of Corporate Income
Tax (CIT) in Bermuda.
In December 2023, Bermuda passed
into law a new 15% CIT, which will take
effect for periods from 1January2025.
Broadly, the tax applies to those
Bermudian companies which
are in scope of the Organisation
for Economic Co-operation and
Development (OECD) global minimum
tax, and closely follows the OECD
‘Pillar 2’ model rules, which have
also been passed (or are currently
being legislated), in many other
jurisdictions globally. Bermuda has
announced that this measure forms
part of a wider tax reform programme,
including the introduction of qualifying
refundable tax credits to incentivise
business investment on the island,
which is intended to be designed
and implemented during 2024.
Hiscox will be in scope of the Bermuda
CIT when it comes into effect in 2025,
and we therefore expect our effective
tax rate for 2025 and subsequent years
to increase relative to recent years
with a normal range closer to 15-20%
on average. However, in 2023, as a
consequence of the enactment of the
CIT, Hiscox has recognised a DTA of
$150 million, representing tax assets
which will be available to bring into
the new regime at commencement.
Further legislation anticipated in 2024
may also have the effect of partially
mitigating the economic cost of the CIT,
although these are yet to be finalised.
Outlook
Our diversified business portfolio is
well positioned to deliver high-quality
growth in revenue and earnings and
strong capital generation through the
cycle. We continue to benefit from the
investments we are making in our people,
brand and technology infrastructure
to drive disciplined growth in positive
market conditions across our big-ticket
segments, and to pursue the attractive
long-term structural growth opportunity
in retail, combined with investment
income tailwinds.
The retail outlook for 2024 is positive,
and we have delivered a strong start
to 2024 with US DPD ICWP growing
double-digit in the two months to
29 February. The quarter-on-quarter
growth acceleration in US DPD reflects
the impact of marketing initiatives in
2023, which will be further increased in
2024. The business is also benefitting
from several new partners being fully
activated. In the UK, the combination
of a new marketing campaign launched
in September 2023 and activation of
several distribution deals signed in the
last quarter of 2023 is raising growth
levels and in Europe strong growth
momentum continues. The US broker
business remains challenging due to
cyber-related headwinds, although
they are beginning to dissipate. With
multiple drivers of growth in retail,
we expect to deliver full-year 2024
growth within the 5% to 15% target
range. Our intention remains to run the
retail business within the 89% to 94%
operating combined ratio range for the
long-term benefit of our shareholders.
This opportunity remains immense and
my focus is on execution and delivery
to build a material position in the small
business insurance market.
For Hiscox London Market, the
outlook for 2024 is positive, with rates
and premium growth ahead of our
expectations in January. We continue
to prioritise underwriting discipline
and effective cycle management,
investing capital in lines where the
return is attractive and shrinking
in those lines where the market
is softening.
Reinsurance market conditions are
expected to stabilise and remain
attractive after the significant
improvements in 2023. We have
allocated additional capital to this
segment as Hiscox Re & ILS continues
to seize the opportunities created by
the hard market conditions and
focuses on growing our net book.
Our portfolio of businesses and our
people position us well to continue
delivering high-quality disciplined
growth and earnings. I would like to
thank our people for their hard work
and our partners and shareholders
for their continued support.
Aki Hussain
Group Chief Executive Officer
5 March 2024
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
2021
2022
Restated
2023
5,000
4,500
4,000
3,500
3,000
2,500
2,
000
1
,500
1
,000
500
0
Hiscox Retail Hiscox London Market, Hiscox Re & ILS
1,419
1,494
1,482
2,072
2,397
2,123
2,254
2,215
2,326
2,481
2,656
2,894
2,973
3,258
3,286
3,777
4,031
4,033
4,269
4,355
2003
4,59 8
31Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chief Executive’s report
Chapter 1 6
Performance
and purpose
Big-ticket business
Hiscox Re & ILS
Hiscox London Market
Retail business
Hiscox UK
Hiscox Europe
Hiscox Special Risks
Hiscox USA
Hiscox Asia
* 2020 restated for Hiscox Special Risks.
†
Historic amounts have not been restated
for IFRS 17, but are presented as gross
written premiums on an our-share basis.
Total Group insurance contract written premium
†
($m)
32 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Kate Markham
Chief Executive Officer, Hiscox London Market
Market force
By committing to being a leader
in key insurance classes, Hiscox
London Market is seeking to maximise
opportunities in the highly specialised
London insurance marketplace. >
Kate Markham joined Hiscox in
June2012 to run the UK Direct
business, after 12 years at Vodafone.
She took over as Chief Executive
Officer of Hiscox London Market
in 2017 and since then has been
responsible for leading the Group’s
big-ticket insurance business through
the ever-changing market cycle.
33Hiscox Ltd Report and Accounts 2023
34 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Kate Markham
Chief Executive Officer,
Hiscox London Market
Q: How would you characterise the
condition of the Lloyd’s marketplace
over the past year?
A: What’s been notable about the past
few years is that each class of business
has been at its own distinct point in
the cycle. So, some of the classes we
write are in strong hard-market territory,
where pricing is going up and terms and
conditions are improving. At the same
time though, literally across the table,
we’re seeing other classes coming off a
hard market, where prices are falling and
terms and conditions are softening.
Q: Faced by those contrasting
extremes, what is your
overarching strategy?
A: The whole strategy in London Market
is about balance. Where we’re seeing
opportunity, we’re saying: “Yes, we
want to support that, we’ve got capital
behind us, and we’re going to make the
most of that opportunity.” In property,
for example, where we’re seeing hard
market conditions, we’re really stepping
forward. But in D&O and cyber, where
the market has been much softer,
we’ve had the courage to pull back.
We’ve shrunk our business and had the
confidence to say no. That’s a tough
thing to do but striking that balance
is important for our business.
Q: Are you able to predict with
any certainty when those market
conditions are likely to change?
A: It’s not easy, for lots of reasons. That’s
because the conditions of each market
are triggered by so many factors beyond
our control. I can’t control where the
Atlantic storms may or may not make
landfall, but where they do will have a
material impact on the property market.
I also can’t control what goes on in the
reinsurance market, but that has a direct
impact on what we can do because what
it does impacts our economics. What
we can control, however, is our level of
preparedness. What metrics should
we be looking at now to know when the
market is turning? What actions are we
going to take to protect the profitability
of the book? We need to make the most
of good times while preparing for the
market to turn, so that’s been a focus
for 2023 and will be for 2024 too.
Q: How do you set yourselves up to
be successful in the classes you’re
stepping into?
A: It’s a big market and there’s a lot going
on. In every market, there are leaders and
followers and we’ve made the strategic
choice to be a leader. But to be a market
leader, there’s a level of expertise and
experience you need to have. We can’t
do that in all classes, so we pick the
classes we intend to lead in and make
sure we’re building the deep technical
expertise, credibility and capability
required. Our starting point is to hire the
best people: the best underwriters, the
best pricing people, the best actuaries,
the best claims people. Then, to give
them an edge, we’re building the right
ecosystem around them with the right
operational and tech capabilities;
an ecosystem that harnesses our
data to give them the best insights,
an ecosystem that means they don’t
spend half their time doing admin. We’re
working hard to automate manual tasks
so that our people can use their brain
power on managing the complex risks
we see.
A great example of how we’re doing this
is through our collaboration with Google
Cloud, where we’re using generative
AI technology to automate lead
underwriting from submission to quote.
That might sound incredibly technical,
but what it’s enabling us to do is take
the data and insights we receive from
email submissions and turn that into a
policy quote – a process that could take
up to three days traditionally, but with
this technology can now be done in just
three minutes. We completed the proof
of concept during 2023 in our sabotage
and terrorism line of business, where
it worked really well, and we’re excited
about other potential applications in
other lines of business but also beyond
big-ticket insurance, so that’s something
we’ll be exploring more throughout 2024.
Q: In 2023, you launched a Lloyd’s
sub-syndicate, ESG 3033, which
provides additional capacity
for companies with strong ESG
credentials. What was the thinking
behind that?
A: Energy transition is a source of
massive opportunity, and insurance is
one of the key enablers of that transition.
Trillions of Dollars of investment are
coming in to build more renewable forms
of energy, so the demand for insurance
capacity is huge – and that’s something
we’re keen to be part of. We’re building
the capabilities we need to underwrite
those risks within our main syndicate,
Syndicate 33, using our own capital,
but right now there are lots of financial
backers out there that are keen to
provide capital to support the transition,
backers who don’t have the underwriting
capabilities to deploy their capital on
their own. That’s what we can offer.
By creating a sub-syndicate, we can
underwrite those risks on behalf of third-
party capital providers, and we can do it
in a way that means we’re not competing
against Syndicate 33, so we’ve got skin
in the game, but we’re not competing
with ourselves.
We wrote our first risk in June so it’s still
relatively early days, but so far it’s going
35Hiscox Ltd Report and Accounts 2023
Energy transition is a source of
massive opportunity, and insurance
is one of the key enablers of that
transition. Trillions of Dollars of
investment are coming in to build
more renewable forms of energy, so
the demand for insurance capacity
is huge – and that’s something we’re
keen to be part of.”
really well. The brokers love it, and the
clients love it as well, to an extent we
hadn’t anticipated. When they attract
capacity from 3033, they see it as a gold
star for what they’re doing around ESG,
which is just the icing on the cake for us
and for them.
Q: You’re also the Executive Sponsor
of DEI at Hiscox. What made you want
to take up that role?
A: I’m just a massive believer in all forms
of talent. For us to win, we need to be
able to attract, develop and retain the
very best talent. We need to create
a culture where talented people with
different perspectives and experiences
can thrive. And that’s a work in progress.
On diversity and equity, which is about
having the right mix of people and then
ensuring there is a level playing field, I
think we’re making progress. There is
always more to do, but we’re making
sure we have the right recruitment
strategies in place, the right policies, the
right sponsorship. The bit I think is more
complex, and the part I’m particularly
passionate about, is the inclusion piece.
How can we make sure everybody feels
truly comfortable and valued in their
working environment? How can we make
sure people feel appreciated for who
they are? That’s the part that takes the
longest time.
Q: As a leader, what can you do within
your own area to bring that to life in a
meaningful way?
A: It’s about creating an environment
where people do the right thing, and if
people don’t do the right thing, others
instantly spot it and call it out. We all
want this to be a great place to work for
everyone, so you’ve got to make sure that
when it’s not, you’ve got a culture on the
ground where people feel able to call it
out. I’ve seen our culture in practice so
I know that we’re doing lots of the right
things to make sure our people do feel
empowered in this way. We’re all owners
of the business, and ownership is one of
our values, and these things actually go
a long way to seeing the right behaviours
modelled in every part of the business.
Q: What do you think best exemplifies
the sense of community at Hiscox?
A: I see it all the time, but it’s even
more palpable when things go wrong.
It might not happen to you, or to your
team, but people really rally round
when times are tough. I’ve been in other
businesses where people would have
just gone home, but here they don’t
because they care about their colleagues
and they care about making things right
for our customers. When times are tough,
it’s not: “Well, thank God it’s not me.”
It’s: “What can I do to help?” That type
of community spirit is something I think
you see all the time in Hiscox and is
as strong today as when I first joined
the business.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
36 Hiscox Ltd Report and Accounts 2023
Risk management
Having an effective risk
management culture,
while continuing
to evolve our risk
management maturity,
is key and both have
been areas of focus
for the Risk Committee
during 2023.”
Lynn Pike
Independent Non Executive Director
and Chair of the Risk Committee
The Group’s core business is to take
risk where it is adequately rewarded to
maximise returns to shareholders. The
Group’s success is dependent on how
well we understand and manage our
exposures to key risks.
Risk strategy
Our robust risk strategy positions
us to capture the upside of the risks
we pursue and effectively manage
the downside of the risks to which
we are exposed. It is based on three
key principles:
• we maintain underwriting discipline;
• we seek balance and diversity
through the underwriting cycle;
• we are transparent in our approach
to risk, which allows us to
continually improve awareness
and hone our response.
Risk management framework
The Group takes an enterprise-wide
approach to managing risk. The risk
management framework provides
a controlled system for identifying,
measuring, managing, monitoring
and reporting risk across the Group.
It supports innovative and disciplined
underwriting across many different
classes of insurance by guiding our
appetite and tolerance for risk.
Exposures are monitored and evaluated
both within the business units and at
Group level to assess the overall level
of risk being taken and the mitigation
approaches being used. We consider
how different exposures and risk
types interact, and whether these may
result in correlations, concentrations
or dependencies. The objective is to
optimise risk-return decision-making
while managing total exposure, and in
doing so remain within the parameters
set by the Board.
The risk management framework is
underpinned by a system of internal
control, which provides a proportionate
and consistent system for designing,
implementing, operating and assessing
how we manage our key risks. This
framework is regularly reviewed and
enhanced to reflect evolving practice
on risk management and governance.
During 2023, we have continued to
maintain and further strengthen our
system of internal control.
Risk appetite
The risk appetite sets out the nature and
degree of risk the Group is prepared to
take to meet its strategic objectives and
business plan. It forms the basis of our
exposure management and is monitored
throughout the year.
Our risk appetite is set out in risk appetite
statements, which outline the level of risk
we are willing to assume, both by type
and at an aggregate level, and define our
risk tolerances: the thresholds which
would represent a ‘red alert’ for Senior
Management and the Board.
Risk appetites, which are set for the
Group as a whole and for each of our
insurance carriers, are reviewed annually,
enabling us to respond to internal and
external factors such as the growth or
reduction of an area of the business,
or changes in the underwriting cycle
that may have an impact on capacity
and rates.
Risk management across the business
The Group coordinates risk management
roles and responsibilities across three
lines of defence. These are set out
in the model on page 37. Risk is also
overseen and managed by formal and
informal committees and working groups
across the first and second lines of
O
R
S
A
p
r
o
c
e
s
s
Risk
appetite
Risk
owner
Risk
measurement
Risk
monitoring
Risk
reporting
Risk
definition
Risk
mitigation
Risk
governance
ORSA
governance
ORSA
documentation
Business
planning
Risk
assessment
Capital and
solvency
assessment
Assurance
37Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Risk management
Chapter 1 6
Performance
and purpose
Three lines of defence model
defence. These focus on specific risks
such as catastrophe, cyber, casualty,
sustainability, reserving, investments
and credit, as well as emerging risks.
The Group Risk and Capital Committee
and the Group Underwriting Review
Committee are sub-committees of
the Risk Committee and make wider
decisions on risk. More information
on these Committees can be found
on pages 56 to 57.
The Own Risk and Solvency
Assessment (ORSA) process
The Group’s ORSA process involves a
self-assessment of the risk mitigation
and capital resources needed to achieve
the strategic objectives of the Group
and relevant insurance carriers on a
current and forward-looking basis,
while remaining solvent, given their risk
profiles. The annual process includes
multi-disciplinary teams from across the
business, such as capital, finance and
business planning.
The role of the Board in risk
management and key developments
during 2023
The Board is at the heart of risk
governance and is responsible for setting
the Group’s risk strategy and appetite,
and for overseeing risk management
including the risk management
framework. The Risk Committee of the
Board advises on how best to manage
the Group’s risk profile by reviewing
the effectiveness of risk management
activities and monitoring the Group’s risk
exposures, to inform Board decisions.
The Risk Committee relies on frequent
updates from within the business and
from independent risk experts. At each
of its meetings during the year, the Risk
Committee reviews and discusses a
risk dashboard and a critical risk tracker
which monitors the most significant
exposures to the business, including
emerging risks and risks that have
emerged but continue to evolve. The
Risk Committee also engages in focused
reviews on our key risks and monitors
emerging risks throughout the year.
In 2023, additional risks considered
include risks associated with adapting
to emerging technologies, AI and
ESG. An overview of the processes
for identifying emerging risks through
the Grey Swan Group is described on
page 57. Stress tests and reverse
stress tests (scenarios such as those
shown on pages 38 to 39, which could
potentially give rise to business failure
as a result of either a lack of viability or
capital depletion) are also performed
and reported on to the Risk Committee.
The Risk Committee also provided
input into a number of important
risk management developments
during 2023:
• the risk management maturity
framework, introduced during
2022 to help set the organisation’s
maturity goals against six key
dimensions of risk management,
continued to be further embedded.
This included continuing to monitor
progress made against risk
management maturity goals
during the year;
• processes to assess risk culture
have been maintained, including the
risk culture survey for all staff, which
is completed as part of annual risk
management training and was first
rolled out at the end of 2022;
Owns risk and controls
Responsible for ownership and
management of risks on a day-to-day
basis. Consists of everyone at every
level in the organisation, as all have
responsibility for risk management at
an operational level.
Assesses, challenges and advises
on risk objectively
Provides independent oversight,
challenge and support to the first line
of defence. Consists of the Group risk
team and the compliance team.
Provides independent assurance
of risk control
Provides independent assurance
to the Board that risk control is being
managed in line with approved policies,
appetite, frameworks and processes,
and helps verify that the system of
internal control is effective. Consists
of the internal audit function.
Risk management framework
Understanding and managing the
significant exposures we face.
Hiscox Own Risk and Solvency
Assessment (ORSA) framework
The Group’s ORSA process is
an evolution of its long-standing
risk management and capital
assessment processes.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Risk management
Chapter 1 6
Performance
and purpose
38 Hiscox Ltd Report and Accounts 2023
Our risk management policies can
be found at hiscoxgroup.com/
about-hiscox/group-policies-
and-disclosures.
• there has been a continued focus
during the year on performing
targeted risk reviews at both Group
and legal entity level. Reviews
have focused on risk management
maturity, capital model validation
deep dives, regulatory risk and
change, as well as specific topics
such as inflation.
The Risk Committee also supports the
Board in its review of the effectiveness
of the Group’s risk management and
internal control systems through key
activities that took place over the course
of 2023, including reviewing its annual
declaration of compliance with the BMA’s
Group Supervision Rules, reviewing the
results of the annual Group-wide risk and
control self-assessment and associated
second-line review, reviewing changes
to Hiscox Group risk policies and the
Hiscox Risk and Control Register, as
well as considering risk management
and internal control effectiveness as a
specific topic at a 2023 meeting.
The Board, through the Risk Committee,
has conducted a robust assessment of
the emerging and key risks facing the
Company, including those that would
threaten its business model, future
performance, solvency or liquidity, and
is satisfied that no material changes to
the key risks are required.
The role of the Group risk team
The Group risk team is responsible
for designing and overseeing the
implementation and continual
improvement of the risk management
framework. The team is led by the Group
Chief Risk Officer who reports to the
Group Chief Executive Officer and the
Risk Committee of the Board. During
2023, Hanna Kam was succeeded as
Group Chief Risk Officer by Fabrice
Brossart, and more information on
Fabrice can be found on page 76.
The team works with the first-line
business units to understand how
they manage risks and whether they
need to make changes in their approach.
It is also responsible for monitoring
how the business goes about meeting
regulatory expectations around
enterprise risk management.
Casualty extreme loss scenarios
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 $75-$850 million could be suffered in the following extreme scenarios:
Event Estimated loss
Multi-year loss
ratio deterioration
5% deterioration on three years’
casualty premiums
$245m
Economic
collapse
An event more extreme than witnessed
since World War II*
$400m
Casualty reserve
deterioration
Estimated 1:200 view of a casualty reserve
deterioration on current reserves of c.$2.2bn
$850m
Pandemic Global pandemic considering broader and
alternative impacts than Covid-19
$125m
Cyber A 1:200 cyber event, such as a major
cloud outage or mass ransomware attack.
Includes exposures from outside the cyber
product line
†
$400m
Marine
scenarios
Range of events covering collision and
sinking of vessels and any resultant pollution
up to $75m
Offshore platform Total loss to a major offshore platform complex up to $100m
Terrorism Aircraft strike terror attack in a major city up to $350m
Property
catastrophe
‡
1-in-200 year catastrophe event from $280bn
US windstorm
$650m
*Losses spread over multiple years.
†
Losses incurred from non-cyber product lines from a cyber event.
‡
As a point of comparison.
During 2023, a target operating model
review was completed for the
second-line Group risk and compliance
function. This has resulted in a
re-organisation of the function into
dedicated business unit and Group-level
second-line teams, as well as an increase
in second-line resource, which further
enhances the function’s ability to provide
critical challenge to the business and to
ensure robust risk management oversight.
0
100
200
300
400
500
600
700
800
900
1000
100
0
900
800
700
600
500
400
300
200
100
0
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
02 04 07 02 46
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
06 08 14 09 89
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
13 14 23 24 154
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
22 20 31 49 227
JP
EQ
JP
WS
EU
WS
US
EQ
US
WS
36 29 41 88 319
Industry
loss return
period
and peril
5–10 year 10–25 year 25–50 year 50–100 year 100–250 year
Mean
industry loss $bn
Superstorm Sandy – $20bn market loss
7-year return period
Hurricane Katrina – $50bn market loss
21-year return period
1987 J – $10bn market loss
15-year return period
Loma Prieta Quake – $6bn market loss
15-year return period
Northridge Quake – $24bn market loss
40-year return period
2011 Tohoku Quake – $25bn market loss
45-year return period
Hurricane Andrew – $56bn market loss
25-year return period
Hiscox Ltd net loss ($m)
Upper 95%/lower 5%
Modelled mean loss
This chart shows a modelled range of net loss the Group might expect from any one catastrophe event.
The white on the red bars depicts the modelled mean loss.
The return period is the frequency at which an industry insured loss of a certain amount or greater is likely to occur.
For example, an event with a return period of 20 years would be expected to occur on average five times in 100 years.
JP EQ – Japanese earthquake, JP WS – Japanese windstorm, EU WS – European windstorm, US EQ – United States earthquake, US WS – United States windstorm.
39Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Risk management
Chapter 1 6
Performance
and purpose
Property extreme loss scenarios
Boxplot and whisker diagram of modelled Hiscox Ltd net loss ($m) January 2024.
Stress tests and reverse stress tests are regularly performed and reported on to the Risk Committee of the Board.
These include climate-related scenarios such as those shown in the chart below.
Read more about our key risks.
12
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
40 Hiscox Ltd Report and Accounts 2023
Stakeholder engagement
Regular investor dialogue
We maintain regular dialogue with capital
markets stakeholders, predominantly
via our Group Chief Executive Officer,
Group Chief Financial Officer and
Director of Investor Relations, who meet
with existing shareholders, potential
investors and research analysts
regularly to discuss our strategy, trading
conditions, business performance and
other factors affecting our operations.
We run several comprehensive investor
roadshows a year in the UK, Europe
and USA and participate in a range of
investor conferences. During 2023,
the Company conducted over 400
meetings and met with over 170
investors, representing approximately
78% of our issued share capital.
Financial reporting
We report to the market on Company
performance four times per year,
providing shareholders with an overview
of recent business performance and
trading conditions. These are available
on our corporate website and as an
email alert for subscribers.
Annual Report and Accounts
Our Annual Report and Accounts gives
shareholders a more detailed view of the
business and includes some additional
corporate governance disclosures
beyond our statutory requirements.
Annual General Meeting (AGM)
Our AGM provides another regular
investor touchpoint. At the 2023 AGM,
all resolutions were passed with a
significant majority.
Shareholders
Our shareholders value our clear
strategy, strong underwriting
discipline and sound capital
management, and we maintain
ongoing engagement with them.
Annual employee engagement survey
Our annual employee engagement
survey gives all our employees the
opportunity to provide honest feedback
on how they feel about Hiscox, with the
results discussed at all levels including
Board level and informing future plans.
Board-level Employee Liaison
Non Executive Director, Anne
MacDonald, also serves as the Group’s
Employee Liaison, working with the
Group’s representative employee
engagement network to ensure that
workforce views are considered in
Board decision-making.
Employee networks
Many of our employees are actively
engaged in at least one of our
18employee network chapters,
including WeMind, Pan-African,
parents and carers, and Pride. These
networks are supported by our
Executive Directors, who contribute
to discussions and events.
Communication updates
Employees have access to
Company-wide ‘connected’ events,
annual ‘launch’ events and ‘box’
meetings, many of which are led or
attended by our Executive Directors
to share news, align on strategy and
objectives and celebrate successes.
Partners’ meetings
Hiscox Partner is an honorary title given
to employees who make significant
contributions to the development and
profitability of the Group. Up to 5% of
the total workforce are Hiscox Partners,
and have the opportunity to influence
the direction of our business through
regular formal and informal Partners’
meetings, which of all of our Board
Directors also attend.
Employees
We want to build teams that are as
diverse as our customers and create
a vibrant work environment where all
employees feel a sense of belonging
and can thrive.
Annual Hiscox broker events
We hold an annual preferred broker
summit for our UK brokers, to share
insight and expertise, and a London
Market broker academy to educate
and inform. These events are
supported and often attended by
our Executive Directors.
Broker satisfaction survey
Each year we measure broker
satisfaction with our products and
services, including through qualitative
broker interviews, with the results
shared and discussed at Board level
and informing future plans.
Attending key industry events
We participate in key industry events in
every part of our broker-facing business,
including at Executive Director level.
This includes: BIBA, a UK insurance
and broker conference; the CIAB,
a US marketplace meeting for
commercial property and casualty
brokers and insurers; and in our
big-ticket businesses, Monte Carlo,
Baden Baden, and RIMS.
Thought leadership
We produce thought leadership that
enhances our broker relationships and
our position as experts in our chosen
areas. In 2023, this included our cyber
readiness report which examines
the cyber threat landscape, and HAT
100 which explores key trends in the
contemporary art market.
We also conduct broker briefings and
workshops for our crisis management
brokers, which this year included
‘The Control Room’ – a broker-focused
experiential event to help better
educate brokers about our malicious
attack product.
Brokers
The risks we write through brokers
account for around 85% of our
business, so we look to build strong
and lasting relationships with those
that share our values.
41Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Stakeholder
engagement
Chapter 1 6
Performance
and purpose
Customer satisfaction
We talk to thousands of customers each
year, through both quantitative surveys
and qualitative research – including
feedback after they have bought a
product or made a claim – which are
reviewed by our leadership teams and
help to continually improve our offering.
More information on our customer
satisfaction scores for 2023 can be
found on pages 7 a n d 47.
Consumer awareness
We also measure the health of our
brand through regular brand tracking
surveys which assess consumer brand
awareness and perception. These are
shared with Senior Management and
inform marketing and sales activities.
Informing our marketing
and communications
Marketing and communications activity
across our markets is informed by the
qualitative and quantitative research
we carry out with both existing and
potential customers.
Customer-focused products and tools
We use a combination of customer
insight and claims experience to develop
our risk transfer products and risk
mitigation tools. These include our cyber
exposure calculator and the Hiscox
CyberClear Academy, an NCSC-approved
cyber training programme for customers,
as well as Leakbot, an early warning leak
detection tool that we offer to all of our
UK high-value home customers to help
mitigate escape of water claims.
Regular dialogue
Our Chief Compliance Officer and
compliance teams worldwide lead
our relationships with our regulators
and maintain regular dialogue with
them, with involvement from Senior
Management and the Board when
required. This includes the annual
supervisory college, hosted by the BMA
as our Group supervisor, which gives an
important annual opportunity for us to
present a consistent message to all of our
regulators on issues of common interest,
and in 2023 was attended by members of
the Group’s Senior Management team,
including all of the Executive Directors.
Regulatory change
We contribute to the regulatory change
process, both directly and through
active membership of trade associations,
such as the ABIR and the ABI. Our
Executive Directors are important
contributors to this work.
Scenario analysis and stress testing
We maintain a regular cycle of stress
testing and scenario analysis to ensure
we manage risk well and evolve at
the same pace as the risks we cover.
Regulatory reporting
The Group and its subsidiaries met all
material regulatory reporting obligations
for 2023.
Customers
We have over 1.6 million retail
customers worldwide and providing
each of them with products they can
rely on is what we are here for.
Regulators
We are a global business with a
responsibility to engage with regulators
in all jurisdictions where we operate.
The Group is regulated in Bermuda and
has regulated subsidiaries worldwide.
Robust procurement processes
We want to work with businesses
that align with our values and support
our goals, and we reflect this in our
robust procurement processes.
These processes ensure we assess
suppliers against a wide range of
criteria, encompassing financial
stability, culture and ethics, as well
as innovation and development. For
larger contracts, these processes also
include a degree of Executive Director
involvement or oversight.
Supplier code of conduct
We expect our suppliers to adhere to
high standards in areas such as risk
management and compliance, and
to do the right thing when it comes to
issues such as DEI, progressive labour
practices and environmental practices,
in line with our regulatory requirements.
These expectations form the basis of our
supplier code of conduct, which applies
to all suppliers and subcontractors.
Measuring and monitoring
sustainable practices
During 2023, we started working with a
global provider of business sustainability
ratings to further reflect sustainability in
our procurement practices. Suppliers’
ESG ratings will become part of how we
manage the performance of our suppliers
and, over time, our decision-making.
Active dialogue
We maintain active dialogue with our
suppliers to ensure our expectations,
ambitions and ways of working remain
aligned. This dialogue is often driven by the
relationship managers for each contract
and supported or facilitated by our Group
procurement experts, and for larger
contracts will include Senior Management
or Executive Director involvement.
Suppliers
Our suppliers are an important
extension of our in-house expertise,
which is why we aim to work with
like-minded businesses that share
our purpose.
42 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Steve Parry
Group Claims Director
Claim to fame
When you’re in the business of
paying claims, having an effective
and efficient claims function, with
the right expertise, as well as a
human touch, is absolutely vital. >
Steve Parry arrived at Hiscox in
July2023 from AIG, where he had
been working as their Global Head
of Technical Claims. At Hiscox, he
is responsible for driving Hiscox’s
Group-wide claims strategy, setting
standards, performance metrics and
controls, and providing market-leading
technical expertise through a
number of centres of excellence.
43Hiscox Ltd Report and Accounts 2023
44 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Steve Parry
Group Claims Director
Q: What is it that first drew you into the
insurance world?
A: So, I’m originally from Manchester. My
dad’s a builder. He owns a construction
firm, and all my family work there –
everybody. The funny thing is, I can’t
even wire a plug, I’m just useless at
anything like that, so I applied for jobs
in banks, insurance companies and
financial institutions instead. I really
wanted something with a customer-
centric approach, and that’s what I found
with insurance. I was offered roles in
underwriting and claims, but I was most
interested in directly helping people
with their problems, so I went down
the claims route. I initially worked for
AIG as a roaming casualty investigator
around North West England, then moved
to London, where I ended up leading
property and energy clients for AIG
internationally. I left them and joined
ACE, which then became Chubb, but
AIG tempted me back five years ago into
a global role. Having held both global
and regional leadership roles gave me
a real focus on how I could provide a
global lens into claims, which will help
retain and attract customers through
our differentiated claims service.
Q: Has your experience at the
coalface, dealing directly with
customers in a crisis, informed
how you think about claims?
A: Completely. I’ve spent a lot of time in
rooms with people whose faces have
been drained of all colour, helping them
navigate some really problematic issues.
You’re saying: “Don’t worry, we’re going
to help with this. We’re going to do the
following things to help in the short
term and the long term.” It’s almost
like everybody fires back up again,
the colour comes back. That moment
of truth is really powerful. I remember
flying out to Japan after the Fukushima
earthquake. There were only two or three
flights out of London, so the plane was
full of emergency services, Red Cross
personnel, all these people who do such
important work. They were asking me:
“What do you do? Who do you work for?”
I was like: “Oh, I’m the insurance guy.” At
first, it felt really embarrassing. But then I
thought, actually I’m here to help as well,
but in a different way. The work we do
keeps people and businesses going and
gives them reassurance when they need
it most. It’s important we remember that.
Q: What have your first impressions of
the Hiscox approach to claims been?
A: In some ways, Hiscox is quite
traditional in its approach in that we like to
hold people’s hands all the way through
the claims process. My thinking is that a
lot of people like that, but not everybody
does. If I’m a high net worth customer I
might expect a concierge service, a white
glove service at every point, which is
what we offer. But if I’m a small business
owner, I might want to buy my insurance
through digital channels when it suits me,
and then expect to be able to notify my
insurer of a claim through the same route.
People’s expectations can be slightly
different, so my goal is to always exceed
those expectation levels. That’s really
good service.
Q: How does what you learn through
your interactions with customers
feed into the rest of the business?
A: Claims is basically the early warning
system for the whole organisation.
It’s really important that we take the
actionable learnings from claims and
get them into the business quickly,
so we can reflect them in reserving,
wording and pricing. I’m currently
heavily involved in a project called
‘trilogy’, which covers the relationship
between claims, underwriting and
actuarial. We’re building some real
momentum, and I think it could lead us
to some interesting places, particularly
around thought leadership with our
customer base.
Q: How do you see the evolution of
technology impacting on the claims
process in the coming years?
A: Look, there’s no doubt there is some
real potential out there, especially when
it comes to AI. Firstly, it’s helping us
with our data – having AI pointing to the
golden nuggets in our dataset is really,
really powerful. And then there’s the
customer journey piece. Any AI that
will enhance the customer journey is
something I’m really interested in – and
I don’t mean a bot asking you pre-set
questions and then exploding because it
doesn’t understand your answers. I’ll give
you an example: you ring to make a claim
on your mobile phone, and because
we have your number in our dataset,
it already knows all your customer
details and what cover you have, so it
can enhance your claims journey from
acknowledgment to resolution using
technology-based adjudication or,
where needed, referral to a Hiscox
claims professional who can provide
that technical help and support to our
customers. Technology can be a real
accelerator and enabler, but it has
to come at the right time and for the
right customers.
Q: In claims, what are you looking for
in your people?
A: Basically, we employ people who are
good at solving problems for customers.
That means we need to employ experts
who know their fields inside out: the
energy claim, the art theft, the house fire,
the intellectual property issue, whatever
it is. Customers buy that deep expertise
from us: that’s why they come to Hiscox.
45Hiscox Ltd Report and Accounts 2023
We employ people who are good at
solving problems for customers. That
means we need to employ experts
who know their fields inside out: the
energy claim, the art theft, the house
fire, the intellectual property issue,
whatever it is. Customers buy that
deep expertise from us: that’s why
they come to Hiscox.”
We need claims professionals who can
really help sort that tricky problem out for
them, but also hold their hand through
the journey – people who are good with
customer interactions, and don’t just
talk in insurance language. That industry
expertise is so important, because the
knowledge base needs to be there, but
so too is the communication part. So
when you have a team of people that
can do both, that’s pretty special.
Q: Looking ahead to next year, what
do you expect your focus to be?
A: A lot of it is about sharing learnings
across the Group, looking for
consistency in the way we run claims,
whether you’re in London, the USA or
wherever. At the moment, everyone
does things slightly differently so we
can probably make better use of some
of the natural synergies where they
exist. There is also a real focus on the
customer and how we leverage the
touchpoints we have with them. My
bank, for example, will message me on
different things throughout the year,
which is something we don’t really do.
Without overdoing it, we could have far
more of a feedback loop, rather than:
“Take out your insurance, we’ll see you
in a year’s time.” The only potential
break in the cycle is if you have a claim.
I touched upon ‘trilogy’ earlier and
it’s something I’m passionate about
embedding across the whole business.
It has the ability to help accelerate
our growth plans and learnings with
claims, underwriting and actuarial
working together as a constant learning,
feedback and business barometer.
And the last thing is our people: investing
in our people and making sure we have
the right people in the right seats, doing
the right things, thinking in much the
same way. Getting that people piece
right is really important to me.
Q: How have you felt a sense of
community since you arrived
at Hiscox?
A: Do you know, there isn’t one person
on the Group Executive Committee who
hasn’t said to me: “We really want to help
you and the claims teams be successful.”
Before I presented at the GEC for the
first time, members reached out to me
in advance to offer advice and support.
That was really powerful – they were
setting me up for success, sharing their
knowledge and experience to help me.
The other thing that almost made my
voice go croaky was when I went into a
Hiscox claims ‘townhall’ meeting, and
there were about 45 or 50 people sat
there, staring at me. I was pretty nervous,
but they seemed genuinely interested
in what I was going to say. There was a
real sense of anticipation and excitement
in the room. It was a bit overwhelming,
actually. I wish I could bottle that and
share that energy with everyone.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
46 Hiscox Ltd Report and Accounts 2023
We take our role in the world seriously
and want to play a responsible part in
society, but we are pragmatic about what
that looks like. We have established many
of the structures, policies and processes
that it takes to build a responsible business,
but the sustainability landscape is rapidly
evolving and so too must our approach.
During 2023, we reviewed our sustainability
strategy in the context of not only our
growing business and regulatory
requirements, but also the changing
expectations of some of our key
stakeholders including customers, brokers
and investors, as we want to understand
the areas that matter most to them.
Our five strategic pillars – people,
customers, governance, risk adaptation
and impact – each represent important
areas of focus for the Group. We want
to be a great place to work, deliver
exceptional customer experiences,
adapt effectively to the changing risk
landscape, do business in a responsible
and ethical way, and play our part in the
net-zero transition.
Activities, progress and oversight of each
pillar will continue to be driven through
our embedded sustainability governance
structures, under GEC leadership.
Sustainability
We give people and businesses the confidence to realise their ambitions.
We want to be here for the long term, for our customers, colleagues and communities, operating in a sustainable way for
the future.
We aim to be a great
place to work, attracting,
nurturing and retaining
talent through:
—
strong culture, lived
values and sense of
belonging;
—
diverse, equitable and
inclusive practices;
—
continuous learning
as a skills-based
business;
—
differentiating benefits;
— supporting our people
and communities
to thrive.
We want to give people
and businesses the
confidence to realise
their ambitions through:
—
delivery of our brand
promise across the
customer life cycle;
—
best-in-class
claims service;
—
championing SMEs;
— effective products
for risk transfer
and mitigation.
We are committed to
doing business in the
right way through:
—
robust and
embedded
structures,
policies,processes;
—
adherence to local
laws and regulation
wherever we
operate;
—
responsible
investing;
—
active risk
management.
We continually adapt
to an evolving risk
landscape through:
—
sustainable
underwriting;
—
understanding
climate impacts on
ourunderwriting;
—
effective products
andservices
for risk transfer
andmitigation;
—
use of data and
technology
for changing
underwriting needs.
We are committed
to having a positive
impact by:
—
reducing our GHG
carbonfootprint;
—
contributing tothe
net-zero transition,
includingthrough
responsible
operational
practices;
—
using robust data
todrive a sustainable
and scaleable
operating model.
People Customers Governance Risk
adaptation
Impact
Strategic pillars
Hiscox sustainability strategy
Sustainability ambition
Group purpose
47Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Sustainability
Chapter 1 6
Performance
and purpose
People
Building connected and energised
teams was a business priority for us in
2023 and we are proud of the progress
we have made. We have evolved our
employee listening strategy, as we look
to capture more real-time feedback on
what we’re getting right and what we may
need to change, replacing our annual
employee engagement survey with more
concise pulse surveys. In 2023, 80% of
our people participated in our first pulse
survey, in which 83% told us they would
recommend Hiscox as a great place to
work and 83% said they felt proud to
work for Hiscox. We also maintained
our overall engagement score of 82%,
the same as 2022, which at that stage
represented a ten-year high.
Providing continuous learning
opportunities for our people also
remained a significant focus in 2023
with 66 of our colleagues enrolling
in the Hiscox Data Academy, an
apprenticeship programme focused
on increasing the data literacy of
employees, and seven benefitting from
our finance apprenticeship programme
to support them in achieving their ACA
qualification. All of our people have
access to our learning management
system for personal development and
technical training, and in 2023, our
people completed over 44,000 hours
of training worldwide – that’s almost
15 hours per person. We also provide
on-the-job training, for example through
our established internship and graduate
programmes, where we continue to
target a diverse pool of students. We do
this through a range of partnerships with
organisations such as the Bright Network
and SEO London. In 2023, we provided
nine UK summer internship placements
and welcomed 20 new recruits through
our global graduate programme. We
also launched a new apprenticeship
programme in Hiscox London Market,
partnered with the London Market
Association to host work experience
students as part of VisionPath’s Futures
Academy, and ran an Insight Week in
London, offering places to students from
under-represented backgrounds.
Building a diverse and inclusive
workforce matters to us and is a
long-term priority. More information
on our focus on DEI can be found on
pages 62 to 67.
Beyond our own people, we also care
about positively contributing to the
diverse communities in which we live and
work. We donate to good causes through
the Hiscox Foundations in the UK and
USA, and we fundraise and volunteer
for the causes we care about through
Hiscox Gives. In 2023, our collective
efforts resulted in us supporting over
260 charities with donations totalling
just over $2 million and 1,400 hours of
volunteering. Find out more about our
social impact in our impact report at
hiscoxgroup.com/impactreport2022.
Customers
We are in the business of paying
claims, and during 2023 we paid out
$2 billion to customers around the
world. Delivering a best-in-class claims
service really matters to us, and this
work was recognised not only through
our customer and claims satisfaction
scores, but also through industry awards
including Insurance Post’s Counter
Fraud Team of the Year Award, Insurance
Times’ Claim Champion of the Year
Award and, most recently, Consumer
Intelligence’s Claims Satisfaction Award.
2023 also saw the introduction of the
FCA’s new Consumer Duty rules in the
UK. While we took a structured approach
to implementing the new rules, we very
much welcomed them as they not only
aligned to our new UK strategy and
overarching customer promise, but
also provided an opportunity to
strengthen our ability to deliver
good outcomes for retail customers.
Throughout 2023 we assessed and
enhanced the way we deliver for our
customers – including those with
characteristics of vulnerability – and
aligned the outputs with our own values
as well as the FCA requirements. As
a result, we have introduced a new
overarching Customer Framework,
the key features of which include:
a more insightful set of customer
metrics, outcome testing capabilities,
enhanced root cause analysis and
feedback loops, customer-driven
insights and, perhaps most importantly,
a cultural positioning of the customer
at the centre of our decision-making
and governance arrangements. This
approach will contribute to the delivery
of simplified customer journeys,
reducing friction points and improving
our ability to consistently deliver good
customer outcomes.
More information on customer
satisfaction, including some of our
2023 customer and broker satisfaction
scores, can be found on page 7.
My passion is people and
creating a framework
that allows everyone to
succeed and flourish,
which to me is part of our
sustainability narrative.”
Nicola Grant
Chief People Officer and Sustainability
Steering Committee member
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Sustainability
Chapter 1 6
Performance
and purpose
48 Hiscox Ltd Report and Accounts 2023
Governance
We continue to enhance our understanding
of the material sustainability issues facing
our business, and in 2023 we conducted
a double materiality assessment to help
us identify the most pressing sustainability
topics we need to address, as well as the
issues and opportunities of rising
importance, and in support of emerging
regulatory requirements including
CSRD and ISSB’s IFRS S1 and, to a
lesser extent, S2.
Double materiality assessments are
increasingly common practice: they
are used by companies to help shape
sustainability strategies, and by
external consumers including investors
to understand company thinking on
sustainability – including areas of
potential risk and significant opportunity.
They look both outwards at our impact on
people and the planet, such as our GHG
emissions, and inwards at the impact of
specific issues on our business, such as the
effects of climate change on the frequency
and severity of extreme weather events
and, as a result, our claims experience.
Hiscox materiality map
People
Customers
Governance
Risk adaptation
Impact
Low
Low
Ongoing importance
High
HighImpact on society and the environment
Impact on Hiscox
Monitor and manage
Priority
Digital transformation
and operational excellence
Reducing our
environmental footprint
Biodiversity and our
impact on nature
Positively contributing
to our communities
Being a great
place to work
Responsible
underwriting
Climate
change
Responsible
Investment
Data privacy and
information security
Resilience to
volatility– market,
political, economic,
social, other
Customer and
broker experience
Corporate governance
and business ethics
Key
Manage and monitor: topics of relatively lower
impact at the point of assessment, but which are
managed and monitored with a readiness to adapt
to evolving internal and external requirements.
Ongoing importance: topics of ongoing
importance due to their influence on our strategy,
performance and stakeholder relationships and so
require continuous focus and active management.
Priority: current mission-critical sustainability
topics due to their potential to impact our reputation,
financial performance, and ability to attract and
retain customers, business partners and investors.
Find out more about our double
materiality assessment process,
including more information on
the material issues it contains, at
hiscoxgroup.com/responsibility/
doublemateriality.
49Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Sustainability
Chapter 1 6
Performance
and purpose
We consider it a five-step process.
1. Planning and stakeholder identification.
2. Horizon scanning, landscape review
and issues identification.
3. Stakeholder engagement
and consultation.
4. Analysis, mapping and validation.
5. Embedding in planning and
governance structures.
The material issues mapped on page 48
were selected following a comprehensive
review of strategic documents, such as
the risk and control register; the external
reporting and regulatory landscape, such
as GRI; and through a process of media
and peer review. This created an initial
longlist of proposed material sustainability
risks and opportunities, which through a
period of internal review became a shortlist
of 13 material topics that we then used
to gain both qualitative and quantitative
insights from key stakeholders. We did this
through a range of one-to-one interviews,
focus groups and targeted online surveys
with over 200 stakeholders including top
shareholders, investment managers,
brokers, customers and representative
internal stakeholders to capture a range of
views and perspectives on the materiality
of our prescribed range of sustainability
issues. These insights were subsequently
prioritised and weighted by stakeholder
group in line with common weighting
practices, which informed the positioning
of each issue in the matrix and resulted
in the 13 proposed material topics being
distilled into the final 12material topics
mapped on page 48.
In line with our sustainability governance
structure (see page 51), our materiality
map was approved by the Sustainability
Steering Committee, and will be refreshed
periodically. The valuable insights we have
gained through our first sustainability
materiality assessment have already
informed our sustainability strategy and
2024 activity plans. During the year ahead,
we will focus on aligning our materiality
assessment with our established risk
management processes, as well as
our longer-term sustainability plans.
Risk adaptation
We are passionate about risk adaptation
in all its forms – from product innovation
to risk mitigation tools – and as the
underwriting risk landscape continues to
evolve, so too does our approach. In 2023:
• we enhanced our sustainable
underwriting strategy, with four key
areas of focus: how we articulate
our underwriting appetite and
exclusions; how we understand,
manage and seek to mitigate
sustainability-related underwriting
risks; the role of innovation and
product development in the net-zero
transition; and our data capture
and measurement capabilities;
• we set out our ambition to grow
our exposure to renewables
through our new ESG 3033
sub-syndicate, which during 2023
has written risks ranging from
offshore windfarms in Europe,
hydro in New Zealand, battery
energy storage systems in the
UK and solar in the USA;
• we continued to support
customers through the Hiscox
Risk Academy, our free online
risk management platform with
e-modules tailored to business
type, which has now been used
by over 15,000 employees at over
2,700 businesses since it was
established in 2022, with almost
36,000 courses completed;
• we provided over 1,400 Leakbot
devices to our UK home insurance
customers, giving them an early
warning leak detection system
that can help them avoid
damaging cost of water claims.
More information on climate-related risk
adaptation can be found in our TCFD
disclosure on pages 50 to 61.
Impact
We continue to enhance our
responsible operational practices in
support of our sustainability ambition
and net-zero goals.
During 2023, this included changes
in our procurement and supplier
management practices to ensure
that, over time, we are able to
consistently assess and track supplier
performance against a wide range
of sustainability issues. As such, we
have commenced a pilot with a global
provider of business sustainability
ratings, starting with our largest
suppliers. Our intention is that, over
time, these ratings will form part of
our buying decisions, as well as
how we manage the performance
of our suppliers.
In addition, we also continue to
carefully monitor our GHG emissions.
The half-year footprint process we
introduced is proving effective,
improving the quality of our data and
providing oversight beyond a single point
in time. A copy of our full GHG inventory
for 2023, along with our SECR table,
can be found in our TCFD disclosure
on pages 50 to 61.
There are many aspects
to building a sustainable
business, and the one
that I will personally be
driving in 2024 is our
customer-centricity.”
Jon Dye
Chief Executive Officer, Hiscox UK and
Sustainability Steering Committee member
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
50 Hiscox Ltd Report and Accounts 2023
Task Force on Climate-related Financial Disclosures (TCFD)
Reporting against the Financial
Stability Board’s Task Force on
Climate-related Financial Disclosures
(TCFD) is a requirement of the FCA for
all premium-listed firms on a ‘comply
or explain’ basis, and the mandatory
climate-related financial disclosures by
publicly listed companies, large private
companies and LLPs.
We have been reporting against the
TCFD-aligned ClimateWise Principles
since 2019 and are public supporters
of TCFD. Our annual climate report sets
out our approach to climate-related
matters in every part of our business,
including from a governance, risk
management, operations, underwriting,
investment, and marketing perspective.
It is our richest source of climate-related
information and expands on the
information set out in the pages that
follow, so for more information go to:
hiscoxgroup.com/2023climatereport.
Disclosures have been made against
the TCFD recommendations, taking into
account the TCFD supporting guidance,
and in consideration of the FCA listing
rules. Where additional information outside
of this report aids our TCFD disclosure,
links have been provided, and where we
have not yet disclosed fully against the
recommended TCFD disclosure, we have
flagged this and where possible outlined
current and planned actions being taken
towards full disclosure.
Governance
Board oversight
We have an established and embedded
governance structure for climate-related
matters, with robust and rigorous
processes for identifying, measuring,
monitoring, managing and reporting
climate-related matters (including
climate-related risks and opportunities)
across the Group. This spans from an
operational level up to the Sustainability
Steering Committee, the Risk Committee
of the Board, and the Board itself – see
page 51 for an overview of structure,
membership, roles and responsibilities
and frequency of meetings, including
Management’s role in assessing
and managing climate-related risks
and opportunities. Climate-related
responsibilities are embedded across
Board and Management committees,
and where appropriate within job roles.
The Board has oversight, with the Group
Chief Executive Officer holding ultimate
accountability. This ensures that climate
action and ambition are driven by the
Group’s senior leaders as well as by
individuals with day-to-day management
responsibilities.
Sustainability governance structure
We have embedded climate into our
sustainability governance structure, and
the structure on page 51 shows how
information flows between the working
group, committees and the Board.
Management responsibilities
In 2023, we created a new Sustainability
Manager role for the Group, to further
enhance our coordination of sustainability
and climate-related activities across the
business and drive progress. Embedding
this role within our business will be a key
focus for 2024 to ensure climate-related
commitments and objectives set by
the Board and SSC are integrated into
our operations.
We also reviewed our sustainability
strategy in 2023 in line with our own
ambitions and also taking into account
our most material sustainability issues
(see pages 46 to 49). The new Group
sustainability strategy, outlined on
page46, has sharpened our focus on the
areas that matter most to our business –
our people, our customers, governance,
risk adaptation and impact – but crucially
it has also enhanced Management
ownership and accountability for
sustainability issues as we now have
a member of the GEC leading each
pillar. Risk adaptation and impact are of
particular relevance to climate issues,
so while our 2024 focus will be on
embedding our new sustainability strategy
and associated ways of working, we will
also provide updates on climate-related
progress against these pillars over time.
In our UK legal entities, this structure is
bolstered by the appointment of senior
managers with overall regulatory
responsibility for managing the financial
risks from climate change, in line with
the UK’s Senior Managers Certificate
Regime (SMCR). As climate becomes
further embedded in our business,
and regulatory requirements continue
to evolve, we may consider whether a
similar approach is required in other
parts of the business in the future.
Climate-related governance discussions
While this structure also covers broader
sustainability matters, climate-related
matters are an important component
of this and as such are regularly
debated and discussed. Examples
of climate-related discussions during
2023 include:
s discussion and approval at the SSC
of the 2023/24 ambitions outlined in
our 2023 climate report;
s annual review of the ESG exclusions
policy and the responsible
investment policy, coordinated by
the sustainability working group
(and, in the case of the responsible
investment policy, the Group
Investment team) and approved
by the SSC;
51Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
Sustainability governance structure
This is how we manage and monitor sustainability issues, including climate issues, to ensure appropriate accountability and
oversight. This structure is supported by other established roles and teams, including our employee-led networks and our
green teams, our governance committees, and Management forums, such as those outlined on pages 56 and 57. While not
explicitly shown here, these also feed into elements of this structure.
Board
s Oversight of long-term sustainability vision, strategy, priorities and performance against agreed metrics and targets.
s Ensures governance and accountability in place with sufficient support.
s Meets quarterly and discusses sustainability strategy, trends, opportunities, vulnerabilities, and emerging issues
including climate issues at least annually.
Risk Committee
s Advises Board on sustainability strategy, key priorities, risk profile, risk exposures and opportunities.
s Meets quarterly and recommends proposals for consideration by the Board as required.
Group Risk and Capital Committee (GRCC)
s Quarterly reporting on sustainability and climate matters
from the SSC.
s Sets high-level Group strategy, priorities and ensures
delivery across the Group.
Group Executive Committee (GEC)
s Periodic sustainability sessions.
s Sets business unit or function sustainability-related
strategy, priorities and drives delivery through business
units and functions.
Sustainability Steering Committee (SSC)
s Sub-committee of the GRCC, responsible for execution of the agreed sustainability strategy, driving actions and delivery
at a Group level.
s Typically meets quarterly and oversees the embedding of sustainability risks and opportunities.
s Oversees effective use of resources and tracks Group and entity-level sustainability performance.
s Ensures Senior Management-level involvement and accountability for sustainability issues, with senior representation
from areas including underwriting, investments and operations.
Sustainability working group
s Operational body, providing a central point of coordination and expertise for sustainability and climate-related activity
across the Group.
s Manages sustainability-related Group reporting, disclosures and communications.
s Meets monthly and provides input and recommendations to Management on sustainability matters.
s Focuses on sustainability-related research, including external monitoring and expectations.
Environmentally focused commitments
Paris Agreement 2015
Principles for Sustainable Insurance (PSI)
Principles for Responsible Investment
(PRI)
Sustainable Markets Initiative
Task Force on Climate-related Financial
Disclosures (TCFD)
ClimateWise
Please see the glossary on page 248 for definitions of acronyms.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
52 Hiscox Ltd Report and Accounts 2023
s meetings with catastrophe
model vendors to discuss latest
modelling developments, led by
our catastrophe modelling team,
which contribute to the work of
the Natural Catastrophe Exposure
Management Group by constantly
evolving our climate modelling
approach (see page 39);
s defining the Group’s most
material sustainability risks and
opportunities, including
climate-related risks and
opportunities as part of the
development of a double
materiality assessment for the
Group, which can be found on
page 48;
s development of ‘climate action
plans’ in our UK legal entities,
which are a standing agenda
item at the SSC to ensure full
governance oversight. During
2023, these plans were the subject
of a comprehensive review and
embedded actions moved into
‘business as usual’ activities.
Training and building expertise
We also consider the training and
development requirements of those
with oversight responsibilities and
accountability for climate-related
matters to ensure we have appropriate
awareness and expertise to drive
progress. In 2023, this included an
externally facilitated climate training
session for the SSC and other
relevant leadership team members,
to explore the changing external
landscape, with a specific focus on
the evolving ESG sentiment, and the
associated risks and opportunities.
Externally facilitated climate-focused
training is now an annual feature in
our plans so we will continue to build
out our expertise in this area in 2024.
Other opportunities to further build
in-house expertise are also considered
on a team-by-team, function-by-function
basis. For example, senior members
of our in-house investment team have
gained accreditation in the form of the
CFA Certificate in ESG Investing, while
members of our central strategy and
Investor Relations teams have also
upskilled through the Sustainability in
Insurance course for senior leaders, run
by the LMA through the ESG Academy
they established during 2023.
We will consider further ESG or
climate-specific training in 2024
as appropriate.
Policies and processes
The governance structure we have
embedded for climate-related issues is
also supported by a range of relevant
policies and processes that we expect
both our staff and our third-party
providers to adhere to. These policies
are all published on hiscoxgroup.com
and include the following:
s the Hiscox Group ESG exclusions
policy, which outlines our ambition
to reduce steadily and eliminate
by 2030 our (re)insurance and
investment exposure to thermal
coal, oil sands, Arctic exploration
(beginning in the ANWR region) and
controversial weapons. Oversight
of this policy occurs at the SSC,
as well as through the relevant
underwriting and investment
committees, with implementation
of it driven at a business unit
and function level across both
underwriting and investments. The
policy is reviewed annually and its
2023 review resulted in no changes;
s the Hiscox Group responsible
investment policy, which outlines
our expectations of both our
in-house investment team and
our external asset managers. This
includes: our investment processes
and stewardship activities as we
look to invest in companies that
have sound ESG practices; how
we evaluate our managers’ ESG
integration; and our approach to
impact investing. This policy is
owned by the Group investment
team with oversight from both the
SSC and the Group Investment
Committee. The policy is reviewed
annually and its 2023 review
resulted in no changes;
s
the Hiscox Group environmental
policy, which outlines our approach
to managing the environmental
impact of our business activities
and those that arise from our
ownership and occupation of
office premises. We actively
manage and aim to minimise our
environmental impacts, due to
the resources we consume and
the amount of waste our activities
produce, as well as complying with
relevant environmental legislation
and other external requirements.
While the policy is owned by our
Chief Operations and Technology
Officer and reviewed periodically,
its effective implementation relies
on Group-wide adherence to the
environmental principles we wish to
live by. During 2023, it was reviewed
and further enhanced in line with our
evolving environmental practices;
s the Hiscox Group supplier code of
conduct, which outlines how our
corporate values and commitments
to doing business in a socially
responsible way extends to our
relationships with suppliers and
any subcontractors they may
use. It covers areas including
our commitment to fairness in
More information on our approach
to sustainability and, in particular,
climate can be found at
hiscoxgroup.com/responsibility.
53Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
Our climate-related policies can be found
at hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
the supplier selection process;
supplier diversity; engagement; our
expectations of how our suppliers
behave as well as their obligations
in adhering to laws and regulations
regarding employment, health
and safety, human rights and
labour practices, the environment,
diversity and inclusion, and
anti-bribery and corruption. It is
owned by our Group procurement
team and shared with suppliers
during our procurement and supplier
review processes. During 2023, we
continued to review our supplier
code of conduct and evolved our
procurement and supply chain
management practices with the
introduction of a new independent
ESG ratings assessment for new
and existing suppliers.
These governance policies and
processes are complemented by our
long-standing active risk management
practices, which include climate-related
stress testing and scenario analysis
(see pages 36 to 39), both through our
own established internal programme
of stress testing and scenario analysis
and also as participants in market-wide
activities when they occur, such as the
Bank of England’s Climate Biennial
Exploratory Scenario (CBES) in 2021
and the PRA’s General Insurance Stress
test (GIST) in 2022. Examples of the
outputs of our internal work include
the property extreme loss scenarios
detailed on page 38, which show the
potential financial impact to the Group of
events including Japanese earthquake,
Japanese windstorm, European
windstorm, US earthquake and US
windstorm. Our risk management
practices also include the work of our
exposure management groups, which
is outlined on pages 36 to 39.
Our governance work culminates in
regular, repeatable climate-related
public reporting and disclosures.
This includes owned reports such as
our annual climate report, as well as
global standards that provide a means
of independent peer comparison
such as CDP, ClimateWise, Dow
Jones Sustainability Index, MSCI and
Sustainalytics. An overview of our
2023 performance resulting from these
disclosures can be found on page 60.
These scores are used to inform areas
of improvement for the year ahead,
alongside our own sustainability plans,
with the resulting action plans driven
by the sustainability working group and
overseen by the SSC in line with our
established governance structure
(see page 51).
Strategy
Climate-related strategic objectives
Strategic climate-related objectives are
considered in the Board-approved Group
business plan as each business area or
function considers the climate-related
elements that affect them – for example,
from an underwriting, investment or
operational perspective. The Group
business plan outlines the strategic
priorities for the business and is used
by Senior Management to guide the
Group’s annual business strategy and
financial planning.
Specific climate-related strategic
objectives for the Group in 2023
included further thinking on the
Group’s sustainable underwriting
strategy (including the management
of climate-related underwriting risks
and how we will realise climate-related
underwriting opportunities), and the
development of a double materiality
assessment for the Group which
included identifying the most material
climate-related risks and opportunities
for the Group (see page 48).
Process for identifying climate risks
and opportunities
Climate-related risks and opportunities
are identified and either progressed
or managed and mitigated in much
the same way as any other risks and
opportunities facing the Group. The
relevant structures involved in identifying
climate-related risks and opportunities in
particular are outlined on page 54.
Climate scenario analysis
The governance and risk management
structures we have in place are critical
to the delivery of the annual Group
operating plan and ensure a coordinated
approach to climate and other issues
across the Group. These structures are
supported by investments in technology
– to ensure the right modelling and data
are available to support our pricing and
exposure – and by in-house expertise –
where we combine off-the-shelf climate
views with our own claims expertise and
insight to form a unique view (what we
call the ‘Hiscox view of risk’). Therefore,
we consider the potential impact from
climate-related issues over a range of
short-, medium- and long-term time
horizons. We consider short term to be
0-2 years, medium term to be 2-5 years,
and long term to be five years and over,
which aligns with some of our business
planning timeframes.
While in the long term as a property
casualty insurer, Hiscox is certainly
exposed to climate-related risks, we
believe our exposures can be managed
through time as a result of how we
conduct our business. For example,
through the flexibility we have in our
predominantly annual underwriting
contracts, and through the liquidity of our
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
54 Hiscox Ltd Report and Accounts 2023
Identified climate-related risks and opportunities
Risk type Time horizon Risk Risk to Hiscox Mitigation Associated metrics
and targets
Physical Short,
medium and
long term
Increased
frequency
and severity
of natural
catastrophes
including
floods and
storms.
Increased claims from
customers and changes
to current claims patterns.
These claims will not only
come from damage to
property but also from other
knock-on effects, such as
global supply chain disruption
or scarce resources.
Given the majority of the
policies we write are annual
(re)insurance policies,
we regularly consider our
exposures to physical
climate change risks which
gives us the opportunity
to adjust pricing and
appetite accordingly.
–
Transition Short,
medium and
long term
Slump in
the price
of carbon-
intensive
financial
assets.
Financial market dislocation
could have a negative
impact on our investment
portfolios if we do not
actively reduce our exposure
to carbon-intensive
financial assets.
Our ESG exclusions policy,
which will see us reduce
steadily and eliminate by
2030 our exposure to the
worst carbon emitters in
both underwriting and
investments, prepares us
for this, as do our GHG
emission reduction targets.
ESG exclusions
policy to 2030.
GHG targets
to 2050.
Litigation Medium and
long term
Increased
cases of
legal action
against those
that are seen
as being
responsible
for climate
damage.
Where such claims are
successful, those parties
against whom the claims
are made may seek to pass
on some, or all, of the cost
to insurance firms through
policies such as professional
indemnity or directors and
officers’ insurance.
Given the majority of the
policies we write are annual
(re)insurance policies,
we regularly consider
our exposures to climate
litigation risks which gives
us the opportunity to
adjust pricing and appetite
accordingly. We could also
consider specific policy
exclusions over time.
–
Opportunity
type
Time horizon Opportunity Opportunity to Hiscox Associated risk Associated metric
and target
Reducing
GHG
emissions
Short,
medium and
long term
Realise
efficiencies
through
reducing
GHG
emissions.
Reducing our GHG emissions
would reduce our exposure
to volatile carbon offset costs
and is likely to allow us to
realise operational efficiencies
across the Group, including
in our operations in terms
of what we consume and in
areas such as business travel.
Continued exposure to
volatile carbon offset costs.
GHG targets
to 2050.
Product
development
Short,
medium and
long term
Development
of climate
impact-
focused
products and
services that
effectively
address
evolving
customer
needs.
Supporting our customers
with risk adaptation products,
tools and services that meet
changing customer needs
represents a significant
growth opportunity,
particularly in the UK and
the USA where we already
serve the markets with
flood insurance products,
and in the London Market
where our ESG 3033
sub-syndicate is increasing
capacity for insurance cover
in high-growth areas such as
renewable energy.
Loss of customers as a
result of lack of relevance
in our product and
service offering.
–
55Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
investment portfolio which lends itself to
constant adjustment. This flexibility is our
key tool for managing the multi-decade
challenge of climate risks holistically.
We also conduct our own in-house
stress testing and scenario analysis
and contribute to industry events which
can help us manage the risks related to
climate impact. While there was not an
industry-wide exercise in 2023, in 2022
Hiscox Syndicate 33, Syndicate 3624
and Hiscox Insurance Company (HIC)
participated in the Bank of England’s
General Insurance Stress Test (GIST).
The objectives of the GIST 2022 exercise
were to assess resilience to severe
but plausible natural catastrophe,
as well as cyber scenarios, to gather
information about firms’ modelling and
risk management capabilities and to
enhance the PRA’s and firms’ abilities
to respond to future shocks.
While the exercise did not aim to assess
the financial impact specifically from
climate change, the climate-related
(atmospheric) scenarios it explored – US
hurricanes, European/UK windstorms and
UK flood – represented severe but plausible
realisations of current climate conditions
chosen to reflect firms’ exposures and
business models. Industry-wide stress
tests such as the GIST support our
established and embedded programme
of internal stress testing and scenario
analysis and contribute to their
continued evolution, with the risks and
opportunities identified contributing to
the table on page 54.
Climate-related product development
We are continuously developing products
that are necessary for our customers in
the short, medium and long term and
that consider changing needs including
in relation to a changing climate. What
that looks like varies by business area;
for example, through our participation
in Flood Re in the UK, we are better
positioned to provide flood insurance to
some clients that are in high-risk flood
areas, and in the USA our FloodPlus
products similarly improve market
access to affordable flood cover.
Hiscox UK flood insurance
In UK retail, where our climate-related
exposures are relatively low, we have
been supporting homeowners and small
businesses with effective flood insurance
for a number of years. As such, we are
a longstanding participant in Flood Re,
the government-backed scheme
designed to improve both the access
and affordability of flood insurance
for high-risk properties. Through our
participation in Flood Re, we also
support the ‘Build Back Better’ provision
introduced to Flood Re in 2022. This
provision enables customers to access
further funds, above reinstatement
costs, after a flood to install flood
resilience measures that are designed
to reduce the cost and impact of future
flooding. However, for our high-value
home insurance product this is an
approach we have taken for some time
because we have always believed that
prevention is better than cure.
Hiscox UK sustainability and
environmental professional indemnity
In UK retail, we offer a suite of tailored
professional indemnity (PI) products
for specific emerging professions and
sectors. Given the continued growth
in environmental and ESG-related
professions, in recent years our PI
product suite has included a bespoke
product for green consultants – designed
specifically for businesses, consultants
or freelancers who are providing
professional advice and consultancy
on environmental goals and practices
to protect them against claims arising
from any poor or negligent advice given.
During 2023, we reviewed our green
consultants product offering and have
evolved the product in line with the
changing risk landscape, consumer
expectations and feedback, and our
own claims insights. The result of
this work is our new sustainability
and environmental PI product, which
better reflects the current landscape
of climate-related, environmental and
broader sustainability professions which
are emerging. As such, it is designed
specifically for those professionals
providing advice and services in the ESG
sector, and who use their professional
expertise to help clients reach their
sustainability goals. In addition to the
standard elements of PI cover, the policy
provides more tailored elements of cover
for risks associated with sustainability
or climate-related incentives and tariffs,
or environmental certificate providers
– whether these risks relate to our
customer’s own practice, or those of
their client.
Hiscox London Market FloodPlus
We also support clients with effective
flood cover in our big-ticket London
Market business, where our
award-winning FloodPlus product
offers higher limits and wider coverage
than those provided by the National
Flood Insurance Program (NFIP), the US
government-backed scheme. Through
FloodPlus, we also offer premium
discounts for those who take steps
to minimise the risk to their property
from flood. Our pricing capabilities for
FloodPlus are significant, as we use a
combination of in-house modelling and
additional model sources to identify
location level pricing, and we work
with data providers to augment the
information we receive from vendor
flood hazard maps which enhance our
ability to view first-floor elevation data.
Hiscox London Market ESG 3033
During 2023, we launched ESG 3033 –
a sub-syndicate of our Lloyd’s Syndicate
33 – to recognise those businesses we
provide insurance for who can show they
have a positive ESG record. It is industry
agnostic and brings additional insurance
capacity to those clients to help them
cover ESG-positive risks, such as wind
and solar farms. In time, this should lead
to premium savings for those businesses
who show how their ESG performance
makes them a more attractive risk.
Climate risk exposure management
Our natural catastrophe team uses
catastrophe models, paired with
atmospheric models, that are created
with the latest IPCC science to achieve
a quarterly risk review of Hiscox ‘s
exposure to peril impacts. The team’s
work also results in a one-year
forward-looking model of relevant
natural catastrophe risks, which reflects
the fact that the majority of the policies
we write are annual in nature, and
supports our ability to rapidly respond to
emerging trends as required. The team
includes historical claims data in the
model to produce a realistic likelihood of
risk exposure to Hiscox, and alongside
other functions this work contributes
to the development of UK entity level
climate action plans which are reviewed
and approved at both entity-level and
through the SSC. One example of how
an identified risk has been managed
with the help of the natural catastrophe
team relates to Japanese typhoon risks,
where through modelling we identified
changing typhoon patterns in terms of
both size and intensity, which we were
then able to reflect in how we price this
particular business.
Decarbonisation
We are committed to reducing our
emissions to minimise our impact on the
environment and the impact of climate
on our business, and we understand that
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
56 Hiscox Ltd Report and Accounts 2023
by reducing our emissions, we
are reducing our impact to some
climate-related risks as our exposure
to some transition risks will decrease.
The business has set internal near-term
targets that are aligned with the Paris
Agreement, and our current focus
includes reducing Scope 2 emissions
by switching to renewable electricity
across our office estate. We aim to build
on this work in 2024 with the continued
development of our decarbonisation (or
low-carbon transition) plans.
Risk management
Approach to climate risk management
While there are certain nuances to
climate risk, we consider it to be a
cross-cutting risk with the potential to
impact each existing risk type rather
than a stand-alone risk. We look at how
climate interacts with different risks and
whether this may result in correlations or
concentrations of exposure that we need
to know about, monitor and manage.
Climate-related risks, among other major
exposures, are monitored and measured
both within our business units and at
Group level. By design, our Group risk
management framework provides a
controlled and consistent system for the
identification, measurement, mitigation,
monitoring and reporting of risks (both
current and emerging) and is structured
in a way that allows us to continually
and consistently manage the various
impacts of climate risk on the risk profile.
Examples of the climate-related risks
identified can be found on page54,
and for more information on the risk
management framework, see page 37.
Our risk and control register, risk and
control self-assessment process, and
risk policies include relevant climate
considerations against each of our
existing risk types, including our key risks
which can be found on pages 12 to 15.
Therefore, climate-related risk drivers are
not considered a single risk factor but are
assessed and recorded against the risks
on our risk and control register.
Climate risk appetite
In line with regulatory requirements,
we have developed a climate risk
appetite statement for the Group,
which articulates our risk appetite when
it comes to climate and guides our
approach to climate risk. The climate
risk appetite statement was formally
approved by the SSC and during 2023
we undertook further work to measure
and track our climate-associated risks
where such risks are modelled and where
the Group has the capabilities required to
manage them. This work will continue to
be a focus during 2024.
Climate risk management and oversight
Our Risk Committee is responsible
for assessing the climate-related risks
and opportunities we face. It advises
the Board on how best to manage
the Group’s risks, by reviewing the
effectiveness of risk management
activities and monitoring the Group’s
actual risk exposure. The Risk
Committee relies on frequent updates
from within the business, including
those arising from the management
committees and working groups that
report up through the Risk Committee,
and from independent risk experts for its
understanding of the risks facing both
our business and wider industry.
Group Underwriting Review (GUR)
The GUR is a Group management
committee focused on assessing progress
against the Group’s strategic underwriting
priorities, reviewing and challenging
the Group’s underwriting portfolio and
loss ratio performance, and approving
key underwriting risks. It also serves
as an escalation point for underwriting
governance and control issues. The
committee meets at least five times a year,
is chaired by the Group Chief Executive
Officer, and attended by other senior
leaders including the Group Chief Financial
Officer, Group Chief Underwriting Officer
and the Group Chief Risk Officer – with
experts invited from actuarial, claims,
underwriting risk and reinsurance.
A number of working groups feed into
the GUR, including some with particular
climate relevance such as the Natural
Catastrophe Exposure Management
Group (see below) and the Casualty
Exposure Management Group, which
considers among other things risks
associated with climate litigation.
Deep dive – the Natural Catastrophe
Exposure Management Group
The Natural Catastrophe Exposure
Management Group reviews natural
catastrophe risk at least quarterly. This
group is chaired by the Group Chief
Underwriting Officer and attended
by other Hiscox senior managers
responsible for catastrophe-exposed
business. This group looks at the risk
landscape, exposure monitoring and
capital modelling for climate-related
perils, and recommends, based on
the latest observations and scientific
knowledge, which models should be
used for each peril, and, if necessary,
how they should be adapted to reflect
our best view of the risk. They also
identify new areas of risk research.
The models are reflected with changes
to Hiscox’s modelling policy, historical
claim data and all of our research
prioritisations. The results from the
updates are signed off and authorised by
More information on our broader
risk management structures and
processes, of which climate-related
risk management is one component,
can be found in the key risks and risk
management sections.
12 36
Climate risk management and oversight
Ltd Board
Group Underwriting Review
(GUR)
Group Risk and Capital Committee
(GRCC)
Natural
Catastrophe
Exposure
Management
Group
Casualty
Exposure
Management
Group
Grey Swan
Group
Sustainability
Steering
Committee
(SSC)
Risk Committee
57Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
this group, resulting in recommendations
of changes to Hiscox’s policies to
mitigate the potential impact of
climate-related losses to the Group.
Deep dive – the Casualty Exposure
Management Group
This Group develops and manages
the systemic risk that may arise in
our casualty portfolio. Extreme loss
scenarios are run to better understand
and manage the associated risks
throughout Hiscox. The risks that the
team review include possible climate
litigation covering topics such as
greenwashing, energy litigation and
mis-statement of disclosures. There
is potential exposure in all business
units, particularly in our London Market
business in areas such as general liability,
marine and energy liability and D&O. The
team continues to track developments
in climate cases, new legislation and
corporate reporting requirements to
understand potential risks, and these are
taken into account when setting business
plans across the Group.
Group Risk and Capital Committee (GRCC)
The GRCC is a Group Management
committee focused on risk and capital
management. It covers all types and
categories of risk, including but not
limited to underwriting, reserving,
market, credit, operational and
strategic risk (see pages 12 to 15 for a
summary of our key risks), as well as
risk aggregation, concentration and
dependencies. The committee meets
four times a year, is chaired by the Group
Chief Executive Officer, and attended by
other senior leaders including the Group
Chief Financial Officer, Group Chief
Underwriting Officer, Group Chief Risk
Officer, and the Group Head of Capital
Management – with other experts invited
from across the business as required.
A number of committees feed into the
GRCC, including some with particular
climate relevance such as the SSC and
the Grey Swan Group (see below).
Deep dive – the Grey Swan Group
Grey swan risks are defined as being
those risks with a potentially large
impact, but a low perceived likelihood of
happening. Therefore, the focus of the
Grey Swan Group is to consider various
enterprise emerging risks identified
from across the business and to
provide a forum for discussion to ensure
Hiscox has the relevant ‘grey swans’
identified and the right actions in place
to address them. Several elements feed
into this process, including enterprise
emerging risk scanning; regulatory
horizon scanning; casualty exposure
management; strategic and business
planning; claims and actuarial reserving;
and any other relevant business unit
or function inputs. Rapidly evolving
expectations on company’s responses
to sustainability and climate change
are considered as part of this group, in
addition to other matters unrelated to
sustainability or climate change.
The risk management processes we
have established and embedded for
climate-related matters feed into the
annual review of the operating plan,
the long-term strategy planning
process, forward-looking assessment
scenarios, stress tests, and reverse
stress test scenarios.
Metrics and targets
Metrics
We recognise the need to establish
climate-related metrics that can inform
and incentivise the management of our
identified climate risks and opportunities.
While we have established metrics
in areas such as GHG emissions,
investments, and underwriting exposure,
we have more work to do in other
areas and as such we are committed to
expanding our disclosures in the near
future to ensure we can further quantify
our progress over time.
Climate Value-at-Risk (CVaR)
Hiscox’s investment exposure to climate
risk in different global temperature
scenarios can be analysed through
the lens of CVaR. This form of stress
and scenario testing is designed to aid
our identification, assessment, and
management of climate-related risks
as they arise and complements our
participation in market-wide activities
such as the Bank of England’s Climate
Biennial Exploratory Scenario (CBES)
in 2021 and the PRA General Insurance
Stress Test (GIST) in 2022.
Current models do not forecast any
loss in cash or government bonds, and
generally do not cover asset-backed
securities at present. Therefore the
stress impacts mainly derive from climate
risk exposure within our corporate bond
portfolio, and within our equity portfolios
to a smaller extent.
For Hiscox’s investments as a whole
the CVaR results for the different
scenarios, as of year-end 2023, are
shown in the table above.
GHG targets
Our GHG targets commit us to:
s reduce our Scope 1 and Scope 2
emissions by 50% by 2030,
against a 2020 adjusted baseline;
s reduce our Operational Scope 3
emissions by 25% per FTE by 2030,
against a 2020 adjusted baseline;
s transition our investment portfolios
to net-zero GHG emissions by 2050;
s engage with our suppliers, brokers
Climate Value-at-Risk (CVaR)
Warming scenario 1.5°C 2.0°C 3.0°C
CVaR (%) (4.6) (3.7) (3.0)
CVaR ($m) (367) (296) (244)
Data as at year-end 2023.
Percentages above are calculated as a proportion of total investable assets.
This analysis aggregates the bottom-up exposure of our investee companies to policy risk, technology
opportunities and physical climate risk to produce a holistic view of the Group’s risk exposure in different
plausible scenarios. The modelling uses the AIM CGE model for future carbon prices and assumes
aggressive physical risk scenarios.
These stress tests are updated quarterly and are run for each entity, portfolio and at Group level.
The calculated values are also compared to the outcomes for a globally diversified equity index and
are included within our internal ESG investment dashboard in order to highlight any Management
actions required.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
58 Hiscox Ltd Report and Accounts 2023
and reinsurers on our net-zero
targets and on their plans to adopt
Paris-aligned climate targets;
s
monitor emerging standards
around underwritten emissions and
collaborate across our industry on
their development, aligning with best
practice in this area as it emerges.
Our GHG targets are important as they
will help us to reduce our exposure to
volatile carbon costs in the future, for
example, the cost of offsetting, and
therefore help to mitigate the financial
risks associated with our GHGemissions.
Interim GHG targets
We recognise that achieving these
targets will take collective, consistent
effort and continue to work towards
achieving them.
s In addressing our Scope 1 and
Scope 2 targets, we continue
to produce a half-year carbon
footprint process in order to further
enhance data transparency and
accuracy and provide a midpoint
for internal tracking and review.
s We continue to review all electricity
contracts across the Group to
further improve our evidence base
and oversight as we migrate to
renewable electricity contracts
wherever possible.
s
On Scope 3, where emissions are
dominated by our investments, we
have set a number of interim targets:
s we aim for more than 25% of
our corporate bond portfolio
by invested value to have
net-zero/Paris-aligned targets
by 2025;
s we are targeting an additional
25% by AUM coverage every
five years as we aim to be on
a linear path to 100% portfolio
coverage by 2040.
We are currently making good
progress towards the first of our interim
targets, with approximately 24% of
our corporate bond portfolio having
net-zero/Paris-aligned targets as at
year end and we will continue to engage
with our managers on further net-zero
plans and action.
2023 GHG emissions
We continue to focus on managing
and reducing our carbon emissions.
We have been engaging with our
landlords to move towards renewable
electricity and other sustainable
measures, and saw a decrease in
Total GHG emissions inventory 2020-2023*
Scope
2023
(tCO
2
e)
2022
(tCO
2
e)
2021
(tCO
2
e)
2020
(tCO
2
e)
2023 vs. 2020
baseline
Scope 1 408.9 786.6 677. 5 615.2 -33.5%
Scope 2 (market-based) 1,043.1 926.1 866.2 1,110.7 -6.1%
Total Scope 1 and 2 1,452.0 1,712.8 1,543.7 1,725.9 -15.9%
Scope 3 (operational) 23,495.1 19,298.1 17,116.2 2 7,4 61. 0 -14.4%
Scope 3 (operational) per FTE 6.7 5.8 5.8 8.9 -24.7%
Total operational footprint 24,947.1 21,010.8 18,659.9 29,18 6.9 -14.5%
Scope 3 (non-operational) 14,559.3 9,862.2 8,458.0 7,0 4 6. 0 106.6%
Investments
†
129,526 127,4 97.0 125,156.0 135,275.0 -4.2%
Our Scope 1-3 emissions (excluding investments) are independently verified to a reasonable assurance
level. A limited level of assurance has been attained for Investments emissions. A copy of the verification
statement can be found at hiscoxgroup.com/responsibility/environment.
* GHG emissions are calculated according to the Greenhouse Gas Protocol: A Corporate Accounting and
Reporting Standard (revised edition). Hiscox uses market-based Scope 2 emissions for reporting in line
with its GHG reduction target. Scope 1 includes natural gas, fugitive emissions (leakage of gases from
air conditioning and refrigeration systems) and company cars, while Scope 2 includes electricity and
district heating/cooling. Operational Scope 3 includes operational suppliers (office and other related
services), capital purchases, fuel and energy-related activities, waste generated in operations, business
travel, employee commuting and remote working. Non-operational Scope 3 includes emissions that do
not directly contribute to the emissions associated with daily business activity, including non-operational
purchased goods and services, transportation and distribution and downstream leased assets.
An assessment across all categories of Scope 3 emissions has taken place and the relevant categories
are disclosed as part of our full GHG inventory (above). Note some emissions totals may not tally due to
rounding. A copy of our Streamlined Energy and Carbon Reporting (SECR) GHG emissions table can be
found on page 59.
The investment emissions are calculated using the Enterprise Value Including Cash (EVIC-based)
method of attributing financed emissions to investors, and calculations use Morgan Stanley Captial
International’s (MSCI) carbon data
†
as the ultimate source. Our 2020 operational emissions baseline for
business travel has been restated to project pre-Covid travel patterns.
†
Although Hiscox’s information providers, including without limitation, MSCI ESG Research LLC and its
affiliates (the ‘ESG Parties’), obtain information (the ‘information’) from sources they consider reliable, none
of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness, of any data herein
and expressly disclaim all express or implied warranties, including those of merchantability and fitness for
a particular purpose. The information may only be used for your internal use, may not be reproduced or
redisseminated in any form and may not be used as a basis for, or a component of, any financial instruments
or products or indices. Further, none of the information can in and of itself be used to determine which
securities to buy or sell or when to buy or sell them. None of the ESG Parties shall have any liability for any
errors or omissions in connection with any data herein, or any liability for any direct, indirect, special, punitive,
consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
Water and waste
Activity data (UoM) Emissions (tCO
2
e)
2023 2022 2023 2022
Waste (tonnes) 84.6 141.2 23.9 49.1
Waste water (m
3
) 29,002.1 37,6 4 6. 8 5.8 10.5
our Scope 1 and 2 market-based
GHGemissions in 2023 vs 2022.
With our Scope 3 operational emissions,
we have seen an increase compared to
the previous year, driven in part by an
increase in operational emissions from
purchased goods and services, in line
with heightened overall spend in this area
in 2023. There is also a corresponding
increase in upstream transport and
distribution (T&D) emissions. We will look
to further enhance our supplier emissions
data in 2024 through our partnership with
a global sustainability ratings provider.
Business travel emissions also increased
this year. This reflects our improved data
59Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
Streamlined Energy and Carbon Reporting (SECR) GHG emissions
Current reporting year (2023) Previous reporting year (2022)
% Change
in emissions
(total)UK
Global
(excluding UK) Total UK
Global
(excluding UK) Total
Fuel consumption – stationary
(Scope 1) (tCO
2
e) 269.5 45.5 315.0 3 97. 2 48.0 445.2 -29.3%
Fuel consumption – mobile
(Scope 1) (tCO
2
e) – 44.4 44.4 – 250.2 250.2 -82.3%
Fugitive emissions
(Scope 1) (tCO
2
e) 32.3 17.3 49.6 58.5 32.7 91.2 -45.6%
Scope 1 total (tCO
2
e) 301.7 107. 2 408.9 455.7 330.9 786.6 -48.0%
Electricity (Scope 2)
– location-based*
†
(tCO
2
e) 514.4 926.6 1,441.0 564.4 748.9 1,313.3 9.7%
Electricity (Scope 2)
– market-based*
‡
(tCO
2
e) 38.0 955.2 993.2 37.1 836.5 873.6 13.7%
District heating and cooling
(Scope 2) (tCO
2
e) – 49.9 49.9 – 52.5 52.5 -5.0%
Scope 2 market-based
total (tCO
2
e) 38.0 1,005.1 1,043.1 37.1 88 9.1 926.1 12.6%
TotalScope 1 and Scope 2
(location-based) 816.1 1,083.7 1,899.8 1,020.2 1,132.3 2,152.5 -11.7%
TotalScope 1 and Scope 2
(market-based) 339.7 1,112.3 1,452.0 492.8 1,220.0 1,712.8 -15.2%
Scope 1 and 2 intensity ratio
– location-based (tCO
2
e/FTE) 0.5 0.6 0.5 0.7 0.6 0.6 -16.7%
Scope 1 and 2 intensity ratio
– market-based (tCO
2
e/FTE) 0.2 0.6 0.4 0.3 0.7 0.5 -20.0%
Total energy consumption
(kWh)
§
3,956,953.3 3,033,851.5 6,990,804.8 5,094,929.5 4,011,492.1 9,10 6,421.6 -23.2%
*Includes electricity consumption from both stationary and mobile assets.
†
A location-based method reflects the average emissions intensity of grids on which energy consumption occurs.
‡
A market-based method reflects emissions from the electricity supply that the company has purchased.
§
Total energy consumption refers to all energy consumption under Hiscox’s operation control. This includes Scope 1 and Scope 2: natural gas, fuel oil, refrigerants,
stationary electricity, mobile electricity and district heating/cooling.
For the purposes of baselining and ongoing comparison, we are required to express emissions using a carbon intensity metric. The intensity metric chosen is FTE.
In line with the requirements set out in the UK Government’s guidance on streamlined energy and carbon reporting, the table
above shows Hiscox’s total annual energy use and GHG emissions associated with the consumption of electricity, natural gas
and other fuels combusted, and fuel consumed for relevant business transport purposes, for the period 1November2022 to
31October2023.
The methodology applied to the calculation of GHG emissions is the ‘GHG Protocol: Corporate Accounting and Reporting
Standard (revised edition)’. An ‘operational control’ boundary has been applied. Carbon factors from UK Government GHG
Conversion Factors for Company Reporting, and the International Energy Agency (IEA) database and, the United States
Environmental Protection Agency (US EPA) GHG Emission Factors Hub database have been used to calculate the GHG
emissions, where they are not separately provided by a supplier. Emissions are reported as tCO
2
e. Electricity emissions have
been reported as both ‘location-based’ and ‘market-based’.
This table will differ from our full GHG inventory on page 58. In our full GHG inventory you will find information on our Scope 3
emissions not required under SECR.
In 2023, the UK accounted for 23% of our global total Scope 1 and 2 of our market-based emissions, as well as 57% of our global
energy use, outlined in the table above.
In 2023 we implemented a number of energy efficiency initiatives, including an investment in smart controls for the firing of boilers
in both our York and Colchester offices. These controls lead to reduced energy and gas consumption and support our continued
progress towards decarbonisation.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
60 Hiscox Ltd Report and Accounts 2023
TCFD disclosure mapping
compliance statement
Disclosures have been made in alignment with the TCFD recommendations and in compliance with the FCA Listing Rule
LR 9.8.6R(8) on climate-related disclosure. The disclosure takes into account the TCFD supporting guidance, including the
TCFD Implementing Guidance Annex (updated October 2021) and the Supplemental Guidance for the Financial Sector.
The table below summarises where we are reporting consistently against the recommendations. Where additional information
outside of this report aids our TCFD disclosure, links to this information have been provided, and where we have not yet disclosed
fully against the recommended TCFD disclosure, we have outlined why this is and the actions already being taken towards
meeting the disclosure requirements within the timeframe given.
Theme Recommended disclosure Status Reference
Governance
Disclose the organisation’s
governance around climate-related
risks and opportunities.
Describe the Board’s oversight of climate-related
risks and opportunities.
Disclosed. 2023 climate report* pages 11 to 14.
CDP climate questionnaire 2023.
Describe Management’s role in assessing and
managing climate-related risks and opportunities.
Disclosed. 2023 climate report* pages 17 to 18.
CDP climate questionnaire 2023.
Strategy
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning
where such information is material.
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium, and long term.
Disclosed. 2023 climate report* pages 27 to 28
and 33.
CDP climate questionnaire 2023.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
Focus on developing a
low-carbon transition plan
to enhance disclosure.
CDP climate questionnaire 2023.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Focus on reviewing our most
material scenario impacts
ahead of any further disclosure.
2023 climate report* pages 12, 15 and
54 to 55.
Risk management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
Describe the organisation’s processes for identifying
and assessing climate-related risks.
Disclosed. 2023 climate report* pages 17 to 18
and 31 to 36.
CDP climate questionnaire 2023.
Describe the organisation’s processes for managing
climate-related risks.
Disclosed. 2023 climate report* pages 11 to 14
and 17 to 18.
CDP climate questionnaire 2023.
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Disclosed. 2023 climate report* pages 11 to 14
and 17 to 18.
CDP climate questionnaire 2023.
Metrics and targets
Disclose the metrics and targets
used to assess and manage relevant
climate-related risks and opportunities
where such information is material.
Disclose the metrics used by the organisation
to assess climate-related risks and opportunities in
line with its strategy and risk management process.
Additional indicators to monitor
and manage risk exposure,
including TCFD’s cross-industry
climate-related metrics, to be
considered over time.
2023 climate report* pages 23 and 43.
CDP climate questionnaire 2023.
See Hiscox Group website.
Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 GHG emissions and the related risks.
Disclosed. CDP climate questionnaire 2023.
See Hiscox Group website.
Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
Disclosed. 2023 climate report* pages 23 and 43.
CDP climate questionnaire 2023.
collection process as we implemented
a central travel booking system across
all regions, and a continued rebound in
travel-related emissions compared to
previous years.
Conversely, we saw a significant decrease
in our capital goods expenditure this year
compared to 2022, when one-off costs
related to the London office move in 2022
had a material effect.
We also report on waste and waste
water usage (see page 58), where the
year-on-year improvements we have
seen are predominantly driven by further
enhancements to our data collection
processes, including greater use of
actual, rather than estimated, data. In
relation to waste data, this has resulted in
more detail on waste types for some sites,
which in turn allows for more accurate
categorisation of emission factors.
Tracking progress against our
GHG targets
Progress against these targets is
driven by our sustainability working
group and overseen by the SSC. For
example, emissions data is discussed
at least annually at the sustainability
working group and SSC, with other
related activities discussed periodically.
This includes our progress against
targets, and any issues with progress
are escalated through the established
sustainability governance structure
(see page 51).
Progress against these targets is also
recorded through our annual carbon
reporting cycle, and we seek to remain
operationally carbon neutral through
offsetting, as we have been since
2014, while also actively reducing
our emissions over time. Our primary
and continuous goal is to improve our
emissions reporting to become more
granular in order to help us reduce
emissions efficiently and confidently.
Climate targets
Beyond our GHG targets, other
climate-related measures include:
s underwriting and investment
exposure to carbon-heavy sectors
including coal-fired power plants
and coal mines, oil sands and Arctic
energy exploration (beginning
with the Arctic National Wildlife
Refuge), in line with our Group
ESG exclusions policy;
s annual investment portfolio
sustainability reviews, taking into
account climate-related issues,
in line with our responsible
investment policy;
s the amount invested in ESG/green
bonds, which at year end stood
at $367 million, or 5.7% of the
corporate bond portfolio;
s the growth and exposure of
sustainable underwriting products
such as flood and renewable energy
products, including, but not limited
to, the business written through the
ESG sub-syndicate we launched
during 2023, ESG 3033.
Progress against climate targets
These activities are owned by the relevant
business areas, including underwriting
and investments. Given the commercial
sensitivities of these targets, progress is
monitored through internal dashboards
and reported through the embedded
sustainability governance structures as
well as other relevant committees, such
as the Investment Committee.
ESG disclosure
We recognise the importance of credible,
repeatable and comparable ESG
disclosure which is why we contribute to
a number of independent ESG standards.
2023: B grade
2022: B grade
2023: 78%
2022: 83%
2023: AA grade
2022: AA grade
2023: 43/100
2022: 45/100
2023: 28.0
2022: 28.7
61Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Task Force on
Climate-related
Financial Disclosures
(TCFD)
Chapter 1 6
Performance
and purpose
TCFD disclosure mapping
compliance statement
Disclosures have been made in alignment with the TCFD recommendations and in compliance with the FCA Listing Rule
LR 9.8.6R(8) on climate-related disclosure. The disclosure takes into account the TCFD supporting guidance, including the
TCFD Implementing Guidance Annex (updated October 2021) and the Supplemental Guidance for the Financial Sector.
The table below summarises where we are reporting consistently against the recommendations. Where additional information
outside of this report aids our TCFD disclosure, links to this information have been provided, and where we have not yet disclosed
fully against the recommended TCFD disclosure, we have outlined why this is and the actions already being taken towards
meeting the disclosure requirements within the timeframe given.
Theme Recommended disclosure Status Reference
Governance
Disclose the organisation’s
governance around climate-related
risks and opportunities.
Describe the Board’s oversight of climate-related
risks and opportunities.
Disclosed. 2023 climate report* pages 11 to 14.
CDP climate questionnaire 2023.
Describe Management’s role in assessing and
managing climate-related risks and opportunities.
Disclosed. 2023 climate report* pages 17 to 18.
CDP climate questionnaire 2023.
Strategy
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning
where such information is material.
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium, and long term.
Disclosed. 2023 climate report* pages 27 to 28
and 33.
CDP climate questionnaire 2023.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
Focus on developing a
low-carbon transition plan
to enhance disclosure.
CDP climate questionnaire 2023.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Focus on reviewing our most
material scenario impacts
ahead of any further disclosure.
2023 climate report* pages 12, 15 and
54 to 55.
Risk management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
Describe the organisation’s processes for identifying
and assessing climate-related risks.
Disclosed. 2023 climate report* pages 17 to 18
and 31 to 36.
CDP climate questionnaire 2023.
Describe the organisation’s processes for managing
climate-related risks.
Disclosed. 2023 climate report* pages 11 to 14
and 17 to 18.
CDP climate questionnaire 2023.
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Disclosed. 2023 climate report* pages 11 to 14
and 17 to 18.
CDP climate questionnaire 2023.
Metrics and targets
Disclose the metrics and targets
used to assess and manage relevant
climate-related risks and opportunities
where such information is material.
Disclose the metrics used by the organisation
to assess climate-related risks and opportunities in
line with its strategy and risk management process.
Additional indicators to monitor
and manage risk exposure,
including TCFD’s cross-industry
climate-related metrics, to be
considered over time.
2023 climate report* pages 23 and 43.
CDP climate questionnaire 2023.
See Hiscox Group website.
Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 GHG emissions and the related risks.
Disclosed. CDP climate questionnaire 2023.
See Hiscox Group website.
Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
Disclosed. 2023 climate report* pages 23 and 43.
CDP climate questionnaire 2023.
Read more about our approach to
climate change in our 2023 climate
report*, available online at
hiscoxgroup.com/2023climatereport.
* Our 2023 climate report was published in
August2023 and covers our climate-related
activities between July 2022 and July 2023.
Where we reference information from that report,
that information remains correct at 5 March 2024.
Read more in our 2023 CDP disclosure
hiscoxgroup.com/cdpdisclosure2023.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
62 Hiscox Ltd Report and Accounts 2023
Diversity, equity and inclusion (DEI)
At Hiscox, people matter. Having a
human approach to our work is really
important to us. This means we try to
be clear, fair, and inclusive, and to treat
everyone around us with the respect
they deserve. Hiscox operates in a
global market and much of the success
of our business is dependent on our
people, which is why we want to build
a workforce that reflects our customer
base, as well as the diverse communities
in which we live and work, with
employees from different backgrounds
bringing unique perspectives and
experiences. Our belief is that diverse
teams and an equitable and inclusive
workplace are important contributors
to building sustainable growth, which
is why we remain focused on nurturing
a working environment where all our
people can thrive.
It’s really important for
us to be able to attract,
develop and retain the
very best talent, and
that means creating a
culture where talented
people with different
perspectives and
experiences can thrive.”
Kate Markham
Chief Executive Officer,
Hiscox London Market and
DEI Executive Sponsor
DEI strategy
Our DEI strategy is built on four cornerstones. Together, these four cornerstones
provide the solid and sustainable foundation that we need to achieve our vision
and drive progress.
Represent, lead and guide the
DEI culture.
How we lead the way forward is critical.
Our DEI strategy is integral to our overall
business strategy and we all have a
responsibility to contribute to a diverse
and inclusive Hiscox.
Strengthen and leverage data
and insights.
We are investing in our data inputs and
outputs so we can drive deeper insights
and understanding of our workforce,
pain points and opportunities. This will
help us make better decisions and place
wiser bets to get us the results we want.
Inspire with our story.
Our stories are important. We listen
to and communicate our successes,
invest time and effort into building on
the vision, and work hard to understand
how our employees and customers
experience Hiscox so we can know
who we are, ‘see’ progress and help
our people see themselves as part of
the Hiscox success story.
Make DEI ‘business as usual’.
We continue to invest in equitable
structures, programmes, and tools
that enable our journey, so that being
diverse, equitable and inclusive is just
our everyday way of doing business.
Established our Board
diversity and inclusion policy.
In addition to our Women at Hiscox network, we launched a number of new employee networks:
Generations; WeMind (our mental health and well-being network); Parents and Caregivers;
Pan-African; Latino; and Pride (LGBT+).
Appointed a Global Head of DEI and established our Global DEI
strategy and vision.
Launched our global hybrid
working programme.
First published employee
ethnicity metrics in our
Annual Report.
Published our latest UK
gender pay report, which
for 2023 showed our UK
gender pay gap has reduced
over time and is now at 16.0%
on a mean basis.
Set our first target for ethnic
minority representation at
Senior Management level
(see page 66).
Unconscious bias
training introduced.
Published our first UK
gender pay report in 2018,
reflecting 2017 data, when
our UK gender pay gap was
31.1% on a mean basis.
First sponsored the Queer
Frontiers art exhibition.
Published our transitioning
in the workplace guide.
Launched our Global Abilities
employee network that
focuses on disabilities
and neurodiversity.
Became Founding Sponsors
of the Black Insurance
Industry Collective in the USA.
2018
2019
2021
2022
2023
63Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Diversity, equity and
inclusion (DEI)
Chapter 1 6
Performance
and purpose
Our DEI journey: steady progress over time
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Diversity, equity and
inclusion (DEI)
Chapter 1 6
Performance
and purpose
64 Hiscox Ltd Report and Accounts 2023
Structure and oversight
Our senior leadership drives sustainable
progress in diversity, equity and inclusion
across the Company. This includes our
DEI approach to building culture, the
alignment of policies and processes
with inclusion principles, building
community and belonging via employee
networks, and ensuring alignment to
credible external DEI commitments.
We are building DEI capability across the
Company and embedding DEI principles
and best practices into our processes
and structures, while translating our
global plan into local action. Plans are
monitored centrally and also via specific
local reports to subsidiary boards. This
approach is supported by an annual
report on DEI which our Nominations
and Governance Committee receives.
We also have active and passionate
employee networks, which focus on
building communities and support
around a variety of employee populations.
Our 18 employee network chapters
include Global Abilities (disabilities
and neurodiversity), Pan-African,
Generations, Latino, Parents and
Carers, Pride (LGBT+), WeMind (mental
health), and Women at Hiscox, and these
groups support our DEI strategy by
building communities, helping to drive
positive employee engagement and
promoting a culture of inclusion. During
2023, our networks delivered a series of
webinars and panel discussions ranging
from breaking bias, good coaching,
tackling progression barriers, Pride
commemorations and education around
neurodiversity to health, hormones and
happiness, as well as networking events.
DEI policies
Our efforts are guided by the Hiscox
Ltd Board DEI policy and our Group DEI
policy, which applies to all employees.
Our Board policy lays out the purpose,
scope and governance of our DEI
efforts, and the Board’s commitment
to DEI, including the Board’s and
Hiscox’s overall diversity and how DEI
is considered in appointments and
succession planning at Board level.
The Group DEI policy also lays out the
purpose, scope, governance, principles
and commitment to DEI, how we apply
the policy in all areas of our business,
and how we monitor progress.
These policies are publicly available
on our website at hiscoxgroup.com/
about-hiscox/group-policies-and-
disclosures. Both reflect the ethos of
the Company in advocating that
opportunity should be limited only by
an individual’s ability and drive. The
specific objectives of the Hiscox Ltd
Board DEI policy, as well as how they
have been implemented and the results
during the reporting period, are set out
on page 67.
DEI training and awareness
Each year we review our programmes
to identify opportunities to further
embed DEI principles and practices
into our learning and development
materials and approaches.
In addition, foundational DEI training
is available to all employees and all
new joiners are invited to complete
the training within their first month.
In the last year, we’ve also made
training available on topics such
as allyship, creating psychological
safety, building inclusive teams, and
neurodiversity in the workplace, and
have introduced guidelines to help
people managers support those
experiencing perimenopause and
the menopause.
We have also made mentoring accessible
to any employee who wants it, as we
look to improve readiness for leadership
roles at mid-manager level and ensure
equity when it comes to opportunities
to progress.
DEI projects and progress
We want to play our part in advancing
DEI across the insurance industry.
Recognising that we cannot achieve
lasting change on our own, we
participate in the Insurance Inclusion
Diversity Forum, enei Member Forum
and We Are The City, as well as
DEI-focused workstreams within the
ABI and others. We are particularly
proud to have contributed to the creation
of the ABI’s DEI Blueprint to clarify and
promote DEI best practices across the
insurance industry.
During 2023, we continued to focus
on improving our DEI data by giving
colleagues the opportunity to ‘self-ID’
(in countries where the law allows us to
do so) by providing their demographic
information across a variety of
diversity-related categories beyond
sex and ethnicity. This helps us build a
more complete picture of our workforce
(including intersectionality), understand
our progress and further evolve our DEI
strategy and approach.
We’re also empowering employees to
tell their own diversity story through
our ‘Voices’ campaign, to highlight
the unique perspectives within our
organisation and help foster an open
and inclusive working environment.
We remain committed to facilitating
healthy feedback across the Company,
and our employee engagement
network ensures employees’ views are
considered in Board decision-making.
Social commitments and partnerships
Insuring Women’s Futures UK Living Wage employer
Black Insurance Industry Collective (BIIC) SEO London
65Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Diversity, equity and
inclusion (DEI)
Chapter 1 6
Performance
and purpose
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number in
Executive
Management*
Percentage
of Executive
Management*
Percentage
of Executive
Management
and direct
reports
†
Percentage
of all
employees
Men 7 58% 4 8 62% 58% 50%
Women 5 42% – 5 38% 42% 50%
Not specified/prefer not to say – – – – – – <1%
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number in
Executive
Management*
Percentage
of Executive
Management*
Percentage
of Executive
Management
and direct
reports
†
Percentage
of all
employees
White British or other white (including minority-white groups) 11 92% 3 10 83% 82% 75%
Mixed/multiple ethnic groups – – – – – 2% 3%
Asian/Asian British 1 8% 1 2 17% 7% 9%
Black/African/Caribbean/black British – – – – – 5% 7%
Other ethnic group, including Arab – – – – – – 2%
Not specified/prefer not to say – – – – – 4% 4%
* For the purposes of the UK Listing Rules, Executive Management includes the Group Executive Committee (the most senior executive body below the Board)
and the Company Secretary, excluding administrative and support staff.
†
For the purposes of the UK Corporate Governance Code, Senior Management (which for consistency we refer to as Executive Management in the tables above)
includes the Group Executive Committee and the Company Secretary and their direct reports.
Our approach to gender/sex and ethnicity data collection and reporting is consistently applied in the countries where we collect
this data, according to local law and custom. We use the Group’s online HR management system, Workday, to collect and
securely store this data.
In all countries, employees can choose to self-report their gender/sex (male/female) or specify that they ‘prefer not to say’.
In the countries where we collect ethnicity data (currently the UK, Bermuda, USA and Guernsey), employees can choose to
self-report their ethnicity, specify that they ‘prefer not to disclose’, or not provide an answer at all (leave blank).
The self-reported ethnicity options provided in each country are aligned to the options provided in that country’s government
census, and have been collated corresponding to the UK Listing Rules’ prescribed categories by our People team. Any ethnicities
reflected in a country’s census that do not align with one of the prescribed categories in the table were included in the ‘other ethnic
group’ row data.
The data reported here includes the self-reported data provided by our employees in the countries where we collect the
data. For any data categories where an employee has not provided a response, these employees are counted in the
‘not specified/prefer not to say’ row. We do this so that, to the best of our abilities, all employees in the countries where we
collect the data are accounted for.
The data does not include employees in countries where we were unable to collect data.
Note: some totals may not tally due to rounding.
Gender/sex diversity at 31 December 2023
Ethnic diversity at 31 December 2023
Our DEI policies can be found at
hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Diversity, equity and
inclusion (DEI)
Chapter 1 6
Performance
and purpose
66 Hiscox Ltd Report and Accounts 2023
This programme involves Board
Director-facilitated discussions with
representative groups of employees
from across the business, with diversity
of gender, ethnicity, geography, tenure
and business area, as well as other
aspects of diversity. In 2023, these
Board-facilitated meetings took place
several times with different employee
populations and explored key topics
including DEI, workplace culture,
workplace planning, employee
sentiment and rewards and benefits.
DEI reporting and disclosures
We recognise that reporting and
disclosure is important for continued
DEI progress. We have fulfilled our
UK obligations to report our gender
pay gap ratios with respect to our UK
subsidiaries, and published our latest
annual gender pay report during the
year. This report sets out in detail
the gender-related programmes and
initiatives we pursued during 2023
and can be viewed at hiscoxgroup.com/
gender-pay-report-2023.
We also report our Board and Executive
Management diversity data as at
31December 2023 in accordance
with the UK Listing Rules targets and
associated disclosure requirements –
see page 65 for further details.
As at 31 December 2023, the Board
comprised 42% women and there
was one Director from an ethnic
minority background. None of the four
FCA-specified positions on the Board
(Chair, Group Chief Executive Officer,
Group Chief Financial Officer or Senior
Independent Director) was held by
a woman. However, the UK Listing
Rules targets do not consider other
executive roles in the context of these
senior Board positions and one of the
three Executive Directors on the
Board, our Chief Underwriting Officer,
is a woman.
The Board continues to work towards
building a pipeline of diverse candidates
and this, combined with the UK Listing
Rules targets, underlines the importance
of the Company’s efforts in this area.
The Company will continue to monitor
its progress against these targets over
the course of 2024 and will provide a
further update in the 2024 Annual
Report and Accounts.
We report our ethnicity representation
in Senior Management* and have set a
target for ethnic minority representation
in these ranks to be met by 2027, in
support of the updated Parker Review.
As at 31 December 2023, our Senior
Management (which consists of 88
individuals) comprises 11% ethnic
minorities
†
. Our intent is to improve
this representation to 13% by the end
of 2027.
In some of the jurisdictions in which
we operate, current laws mean it is
not possible to collect ethnicity data
from employees, but where we can we
encourage employees to self-identify.
As such, improving the volume of
voluntary disclosure from employees
remains a focus area and while that
work continues we are pleased to
be disclosing all-employee ethnicity
data, as far as we are able to currently,
for the second consecutive year in
this report.
We will look to build on this good work
in 2024 and beyond by strengthening
our ability to leverage data and insights,
building our DEI skills and capabilities,
inspiring others with our story, and
embedding DEI into business as usual.
Together, these initiatives will strengthen
the diversity measures we already have
in place and build the maturity of the DEI
landscape at Hiscox.
* For the purposes of the Parker Review, Senior
Management includes the Group Executive
Committee (the most senior executive body
below the Board) and the Company Secretary,
and their direct reports, excluding administrative
and support staff.
†
An additional 16% of our Senior Management
live in countries where we do not currently collect
ethnicity data and therefore are not reflected in our
ethnic minority metrics.
67Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Diversity, equity and
inclusion (DEI)
Chapter 1 6
Performance
and purpose
Board DEI objectives and 2023 progress
Board objective Implementation Progress
1.
Ensure a
diverse
1
and
effective Board
• Annually review the structure, size and
composition of the Board, including the
balance of skills, knowledge and experience to
assist in the development of a diverse pipeline.
• Annually review Board diversity as part of the
Board evaluation process.
• Ensure the values of the Company promote an
open and inclusive environment.
Page 75 of this Annual Report demonstrates the
diversity of our Board as at 5March2024.
Via the delivery of our Board DEI policy, we have:
• maintained a gender balance in line with the
Davies and Hampton-Alexander reviews
since 2015 and intend to work towards the
current FTSE Women Leaders Review targets
and UK Listing Rules targets for gender
balance at Board level;
• had one ethnic minority Director since 2016.
2.
Ensure that
all Board
appointments
are considered
on merit within
the context of
the strategy
requirements
and diversity
considerations
• At least annually review the succession plans
for the Board and Senior Management and
ensure the talent review process is in place for
the wider workforce.
• Gender and ethnic diversity will be taken
into consideration when evaluating the skills,
knowledge and experience desirable to fill
each role and when considering the methods
to attract diverse candidates.
• A search firm will normally be engaged to
assist in the review of the market and they
should be committed to addressing gender
and/or ethnic diversity.
• All appointments must be made on merit
as aligned to the needs of the Board, the
Company, and its strategy and values.
Each June, the Board and Committee review the
talent plans for Senior Management and, each
November, the Board succession plans. Diversity
is taken into account as part of this process. Talent
reviews are replicated throughout the business.
3.
Ensure that
the overall
workforce is
diverse and
inclusive
• Review the execution of the Group DEI policy
2
.
• Ongoing Board and Committee review of
matters relating to employee retention,
engagement and culture.
The Committee receives an annual report from the
Global Head of DEI. Our Head of DEI and DEI
Executive Sponsor for the Group drive our progress
which includes a commitment from every business
unit leader to deliver on our DEI goals. These plans
are monitored centrally and also via specific local
reports to subsidiary boards.
The tables on page 65 provide a breakdown of
diversity at Hiscox at 31 December 2023.
The Board and Committees receive reports relating to
key workforce matters on an ongoing basis, including
employee retention, engagement and culture.
1
Diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.
2
hiscoxgroup.com/diversity-and-inclusion-policy.
68 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Lisa Waters
Head of Retro, Hiscox Re & ILS
Retro perspective
The Hiscox retrocessional business has
responded well to unprecedented market
conditions, thanks in part to the vast
experience of the woman leading it. >
Lisa Waters is one of Hiscox’s
longest-serving employees, having
joined Hiscox in 1987 when the
Company consisted of three Lloyd’s
syndicates and had yet to take its
first step into the retail market.
Building on her significant experience
as an underwriter, Lisa has spent
the past nine years heading up the
retrocessional account as part of
Hiscox Re & ILS.
69Hiscox Ltd Report and Accounts 2023
70 Hiscox Ltd Report and Accounts 2023
Q: For anyone unfamiliar with the term,
what does ‘retro’ mean in the context
of insurance?
A: It’s short for retrocessional. What it
means is that I’m three steps removed
from the original risk. The insurance
companies buy reinsurance to cover
them against fire, explosion and various
types of catastrophes, and then the
reinsurance companies offset that
against what we call ‘retro cover’ for the
big bang stuff such as hurricanes and
earthquakes around the world. It’s the
end of the line as ultimately the buck
stops here. I cover big, multinational
reinsurance companies around the world,
and my book is very much natural-perils
based. So unsurprisingly, it mostly covers
the things you might end up seeing on
CNN or the BBC: hurricanes, severe
flooding, or earthquake events.
Q: What was Hiscox like back in 1987
when you first joined the business?
A: When I first started, Hiscox was a very
different world. At Lloyd’s of London
back then, people wore three-piece
suits and bowler hats, and there were no
computers. Some underwriters still wrote
with a quill pen and the waiters would
come round with blotting paper and fill up
the ink wells. It’s come a long way! Hiscox
was like a small family – I believe I was
employee number 45. I sat on the box next
to the underwriter. I did the photocopying,
I kept the aggregates by hand (which I
added up every night), to keep a running
total of our exposure in various classes
of business, and I learned on the job. We
wrote all classes of reinsurance, including
retro business, even back in the day, and
I worked with an underwriter who was
known as one of the top underwriters
writing retrocessional business. He retired
in 2015, at which point I took over that
book of business, and I’ve been running
it ever since.
Q: Presumably the gender balance
at Lloyd’s has changed a lot over the
past 27 years?
A: When I started, you could count on
one hand the number of women you’d
see, as women were only allowed into
the Lloyd’s Underwriting Room in 1973.
That’s why my father, who was a Lloyd’s
Name and knew the place well, was dead
set against me joining. But I went behind
his back, got a job, and the rest is history.
It’s changed so much since then. It used
to be a very white male-dominated area,
and as a woman you had to really shout
to be heard. The industry is now so much
more diverse. I love that when you look
around Hiscox, you see people being
recognised for the job they do, not for
the colour of their skin or whether they’re
male or female.
Q: A lot has changed, but do some
of the characteristics of today’s
business have a direct line back to
those early years?
A: Our values and our reputation
haven’t changed. Hiscox was always
reputed to be a high-performing
business and it still is today. We’ve
always been known for being one of the
more technical underwriters, and that’s
still very true too. Hiscox has grown,
obviously – we’re now a multinational
company – but I’ve been with some
of my clients for as long I can remember.
The people may have changed over
time, but the companies that are buying
remain the same, so there’s been a
consistency there.
Q: What have the market conditions
been like during the past year and how
have you responded to them?
A: We’ve been hearing the expression
‘generational shift’ a lot this year. The
insurance market has definitely seen a
change, and therefore the reinsurance
market has seen an even further change.
Everything is shifting up. Secondary
perils have been a huge problem in the
market, and not everyone has been
pricing for those perils, from wildfires and
floods to strikes and riots, to the terrible
wars we’re now seeing. Across the
industry, there is a lot of third-party
capital in the retro space and some of
that capital was trapped because of
losses in 2022 such as Hurricane Ian.
As a result, the only people in 2023 who
seemed happy to go out and quote
early were those like me who’ve been
around for a long time, seen the market,
and know where we want to position
ourselves. We took a position early, that
in 2023, we were going to cover named
natural perils only, and that we wouldn’t
be giving worldwide policies. That meant
we were able to go out there and sell our
policies within a really clear remit. That
kind of transparency has enabled us to
achieve better terms and conditions,
but you can only do that if you’re willing
to quote and stand by your quote and
if you’ve got a decent line size where
you can dictate those kinds of terms.
It’s a position that our Group Executive
Committee has supported and enabled
us to deploy more capital in what are
strong market conditions.
Q: How do you keep across all the
vast and incredibly complex global
issues that affect the pricing of your
retro book?
A: I’m a stickler for information. I’m an
avid reader of the information packs that
are sent in by each and every client. You
need to have that deep understanding
of what they’re writing, because retro
is something that you don’t want to get
wrong. It’s something I instil in the people
who work for me: read the information,
know your client, know what they’re
writing and in turn what we are giving
Q&
A:
with Lisa Waters
Head of Retro, Hiscox Re & ILS
71Hiscox Ltd Report and Accounts 2023
cover for. But it goes further than that.
When we initially get those packs, it’s
just a snapshot in time, you need to work
out what that book is going to look like
in the hurricane season, or 12 months
down the line. You need to understand
everything from the vulnerabilities of a
business, to the wind speeds expected
in a specific place and the aggregation
of risk. You have to read a lot, keep up to
date on anything newsworthy and risk
model-related, employ bright people that
will do the same and bring in new ideas.
We’ve got a very good analytics team,
and our modelling team is constantly
reviewing the models we use and
developing our own ‘view of risk’, which
helps us to avoid any nasty surprises.
Q: The scale of your book means
there’s a lot of responsibility loaded
on your shoulders. How do you cope
with that pressure?
A: I love some of the new things that
Aki has brought in – like for instance,
for every five consecutive years you’ve
worked at Hiscox, you get a 20-day
sabbatical, fully paid. I think it’s great –
a change is as good as a rest, and a
rest is as good as a change. Last year, I
backpacked around Costa Rica with my
15-year-old son and this year we went
off to Vietnam. Taking that time off and
spending quality time with my family
means I come back refreshed and ready
for anything, and Hiscox has enabled me
to do that with the sabbatical scheme.
Q: Have you never been tempted to
move to a less intense role?
A: Never. I love the work I do, and I
love the interaction with people on a
day-to-day basis. I love the relationships
I’ve built up with brokers over many
years. I always remember a very good
lesson: that even if you’re declining the
risk the brokers are bringing in, you want
to do it in such a way that they still want
to bring you in their next risk – and the
risk after that. I also love working with
my team and the wider Hiscox Re & ILS
group, teaching them, taking them to
meetings and seeing their interactions
and watching those relationships flourish.
It’s a great thing. I wouldn’t want to do
anything else.
Q: How do you experience a sense of
community at Hiscox?
A: I see it everywhere. I love the Art
Café in our London office, because
even though you’re split up around the
office you still come together as you’re
queueing for a coffee. And going over to
Lloyd’s, you still see the community over
there too. The other half of our Re & ILS
team is based in Bermuda, so we interact
with them all the time and that sense of
community between the two offices is
great. We have weekly meetings where
people will talk through the topics of the
day so you constantly see both teams,
London and Bermuda, working together.
Two different views come together as
one, and we are better for it.
We took a position early, that in 2023,
we were going to cover named natural
perils only, and that we wouldn’t be
giving worldwide policies. That meant
we were able to go out there and
sell our policies within a really clear
remit. That kind of transparency has
enabled us to achieve better terms
and conditions, but you can only do
that if you’re willing to quote and
stand by your quote and if you’ve
got a decent line size where you
can dictate those kind of terms.”
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
72 Hiscox Ltd Report and Accounts 2023
Board of Directors
Non Executive Chair
Jonathan Bloomer (Aged 69)
Appointed to the Board: June 2023
Relevant skills, experience and contribution
s Extensive experience in financial services.
s Significant experience of driving
international growth.
Jonathan was appointed Chair of Hiscox in
July 2023. Prior to Hiscox he was a partner at
Arthur Andersen before going on to become
Chief Financial Officer and then Chief Executive
Officer of FTSE 100 Prudential plc. His final
executive role, from 2006 to 2012, was as
operating partner at Cerberus, the US-based
private equity investor. Since 2012, Jonathan has
had a successful portfolio career with a range of
largely financial services companies. Previous
board roles include Chair of DWF PLC and Arrow
Global Group Plc, and senior independent
director at Hargreaves Lansdown Plc.
External board appointments
Morgan Stanley International Group;
SDL Group Limited.
Executive Director
Aki Hussain (Aged 51)
Group Chief Executive Officer
Appointed to the Board: September 2016
Relevant skills, experience and contribution
s Considerable experience of
providing strategic, financial and
commercial management and
in-depth knowledge of the regulatory
and compliance environment.
s Significant experience of driving
business change.
Aki joined Hiscox in 2016 as Group Chief Financial
Officer and became Group Chief Executive
Officer in 2022. Aki also sits on the board of a
number of Hiscox subsidiary companies. Prior to
Hiscox, Aki held a number of senior roles across
a range of sectors, including Chief Financial
Officer of Prudential’s UK and Europe business,
and Finance Director for Lloyds Banking Group’s
consumer bank division. Aki is a Chartered
Accountant, having trained with KPMG.
External board appointments
Visa Europe Limited.
Executive Director
Joanne Musselle (Aged 53)
Group Chief Underwriting Officer
Appointed to the Board: March 2020
Relevant skills, experience and contribution
s Considerable underwriting expertise,
including experience of managing
underwriting portfolios in our key markets.
s Significant knowledge of Hiscox,
particularly Hiscox Retail, having worked
for the Group for over 20 years.
Joanne joined Hiscox in 2002 and has held a
number of roles across the Group, including
Head of UK Claims, Chief Underwriting Officer
for Hiscox UK & Ireland, and Chief Underwriting
Officer for Hiscox Retail. Joanne also sits on
the board of a number of Hiscox subsidiary
companies. Prior to Hiscox, Joanne spent
almost ten years working in a variety of actuarial,
pricing and reserving roles at AXA and Aviva in
both the UK and Asian markets.
External board appointments
Realty Insurances Ltd.
Senior Independent Director
Colin Keogh (Aged 70)
Appointed to the Board: November 2015
Relevant skills, experience and contribution
s Valuable financial services experience.
s Significant knowledge of how to run an
international financial business.
Colin has spent his career in financial services,
principally at Close Brothers Group plc where
he worked for 24 years and served as Chief
Executive Officer for seven years until 2009.
Colin is Chair of the Hiscox Insurance
Company Limited board and also of the
Remuneration Committee.
External board appointments
Ninety One Plc; Ninety One Ltd.
Executive Director
Paul Cooper (Aged 51)
Group Chief Financial Officer
Appointed to the Board: May 2022
Relevant skills, experience and contribution
s Considerable experience of financial
and commercial management
within a complex regulatory and
compliance environment.
s Qualified Chartered Accountant, with
significant experience of both the retail
and Lloyd’s insurance markets.
Paul joined Hiscox in 2022 as Group Chief
Financial Officer. With over 25 years of financial
services experience, Paul has held a number
of senior roles, including Interim Group Chief
Financial Officer at M&G Plc and Chief Financial
Officer for The Prudential Assurance Company.
Paul is a qualified Chartered Accountant, having
trained with PwC, and sits on the board of a
number of Hiscox subsidiary companies.
External board appointments
None.
Independent Non Executive Director
Beth Boucher (Aged 58)
Appointed to the Board: May 2023
Relevant skills, experience and contribution
s Considerable experience leading global
teams and initiatives.
s Significant experience of cyber security,
people management and audit and
regulatory operations.
Beth is currently a partner at Fortium Partners
and a Research Fellow at Nemertes Research.
Beth has more than 25 years of professional
experience across multiple industries, as well
as strategic consulting and managed services.
Most recently, Beth was the Senior Vice President
and Chief Information Officer of Sirius Point from
2019 until 2021 and prior to that held various
executive roles at The Travelers Company. Beth
is a certified organisational change management
and international board director with experience
leading technology strategy, application
development, infrastructure and operations.
External board appointments
Coforge Ltd.
73Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Board of Directors
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Independent Non Executive Director
Michael Goodwin (Aged 65)
Appointed to the Board: November 2017
Relevant skills, experience and contribution
s Significant knowledge of the global
insurance market.
s Deep understanding of risk management
as a trained actuary.
Michael has over 25 years’ experience in the
insurance industry, having worked in Australia
and the Asia Pacific region for QBE Insurance
Group for over 20 years. Michael started
his career as an actuary, is a Fellow of the
Institute of Actuaries of Australia and served
as Vice President of the General Insurance
Association of Singapore between 2006 and
2012. During the year, Michael served on the
DirectAsia board as a Non Executive Director.
External board appointments
Partner Reinsurance Asia Pte Ltd; Steadfast
Distribution Services Pte Ltd; NCI Brokers (Asia)
Pte Ltd; Galaxy Insurance Consultants Pte Ltd;
Enya-Lea Pte Ltd; Werombi Pte Ltd.
Independent Non Executive Director
Thomas Huerlimann (Aged 60)
Appointed to the Board: November 2017
Relevant skills, experience and contribution
s Considerable experience of leading a
global business.
s Extensive knowledge of the European
insurance market.
Thomas has over 30 years’ experience in
banking, reinsurance and insurance. He was
Chief Executive Officer Global Corporate at
Zurich Insurance Group, a $9 billion business
working in over 200 countries. Prior to that,
he held senior positions at Swiss Re Group
and National Westminster Bank. Thomas
serves on the Hiscox Syndicate Ltd board
as Chair and on the Hiscox SA board as a
Non Executive Director.
External board appointments
Leadway Assurance Ltd, Nigeria.
Independent Non Executive Director
Anne MacDonald (Aged 68)
Appointed to the Board: May 2015
Relevant skills, experience and contribution
s Extensive marketing expertise,
particularly in the USA.
s Sizeable experience in developing
well-known global brands.
Anne has served as Chief Marketing Officer at
four Fortune 100 companies, and been in charge
of some of the most recognised brands in the
world, including Citigroup, Travelers, Macys and
Pizza Hut. Anne serves as the Employee Liaison
for Hiscox.
External board appointments
Boot Barn Holdings, Inc.; Visiting Nurse &
Hospice of Litchfield County.
Independent Non Executive Director
Constantinos Miranthis (Aged 60)
Appointed to the Board: November 2017
Relevant skills, experience and contribution
s Deep understanding of Bermuda’s
(re)insurance industry, as well as the
broader global (re)insurance landscape
and market cycle.
s Senior leadership experience in the
reinsurance sector including within
large publicly-listed companies.
Costas served as President and Chief Executive
Officer of PartnerRe Ltd, one of the world’s
leading reinsurers, until 2015 and prior to that
was a Principal of Tillinghast-Towers Perrin in
London, where he led its European non-life
practice. He is a Fellow of the UK Institute and
Faculty of Actuaries and a resident of Bermuda.
Costas serves on the Hiscox Insurance
Company (Bermuda) Limited board as a
Non Executive Director.
External board appointments
Argus Group Holdings Limited; Pacific Life Re;
Riverstone International Limited.
Independent Non Executive Director
Lynn Pike (Aged 67)
Appointed to the Board: May 2015
Relevant skills, experience and contribution
s Strong background in the US financial
services sector.
s Significant knowledge of providing
commercial solutions for small
businesses, particularly in the USA.
Lynn worked in the US banking industry for
nearly four decades, most recently as
President of Capital One Bank. Before that,
she was President of Bank of America’s
business banking division. Lynn is Chair of
the Risk Committee and also serves on the
Hiscox Insurance Company Inc. board as a
Non Executive Director.
External board appointments
American Express Company (NYSE: AXP);
American Express National Bank;
CareerWork$ Advisory; California State
University Channel Islands Foundation.
Member of the Audit Committee
Member of the Nominations and
Governance Committee
Member of the Remuneration Committee
Member of the Risk Committee
Member of the Investment Committee
Independent Non Executive Director
Donna DeMaio (Aged 65)
Appointed to the Board: November 2021
Relevant skills, experience and contribution
s Extensive financial services experience,
particularly in the USA.
s Proven expertise in overseeing global
auditing and operational activities.
Donna has over 35 years’ financial services
experience, gained across banking and
insurance. She was AIG’s General Insurance
Global Chief Operating Officer and also served
as their Global Chief Auditor. Donna was Chief
Executive and Chair of the Board at United
Guaranty, Chief Executive Officer and Chair
of the Board at MetLife Bank and was a PwC
Financial Services Partner. Donna serves on
the board of Hiscox Insurance Company Inc.
as a Non Executive Director and is Chair of the
Audit Committee.
External board appointments
Azure; State Street Corporation.
Chair of Committee is highlighted in solid.
Chapter 3 72
Governance
Board of Directors
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
74 Hiscox Ltd Report and Accounts 2023
Departures and appointments
Executive appointments
None.
Non Executive appointments
Jonathan Bloomer
(effective 1 June 2023)
Beth Boucher
(effective 12 May 2023)
Executive retirements
None.
Non Executive retirements
Robert Childs
(effective 1 July 2023)
Director duties
As a company incorporated under the laws
of Bermuda, Hiscox complies with Bermuda
Company Law and as such the UK Companies
Act 2006 and associated reporting regulations
do not apply. Although there is no prescription
of statutory duties in Bermuda, Directors are
bound by fiduciary duties to the Company and
statutory duties of skill and care. This includes
exercising care, diligence, and skill that a
reasonably prudent person would be expected
to exercise in a comparable circumstance.
The Directors act in a way that they consider in
good faith would be most likely to promote the
success of the Company for the benefit of its
members as a whole.
Retired Non Executive Chair
Non Executive Chair
Robert Childs (Aged 71)
Appointed Chair: February 2013
Appointed to the Board: September 2006
Robert joined Hiscox in 1986 and held a number
of senior roles across the Group, including
Active Underwriter for Syndicate 33 and Group
Chief Underwriting Officer, before becoming
Non Executive Chair in February 2013. He joined
the Council of Lloyd’s in 2012 and served as
Deputy Chairman of Lloyd’s from 2017 to 2020.
Robert stepped down from the Board and
retired from Hiscox during 2023 after 37 years
of service.
Group General Counsel and
Company Secretary
Marc Wetherhill (Aged 51)
Marc has significant legal and governance
experience, and is the Principal Representative
to the Bermuda Monetary Authority for the
Hiscox Group. He previously served as
Chief Legal Counsel and Chief Compliance
Officer at PartnerRe Ltd, having trained as a
solicitor in London, and is a member of the
Bermuda Bar.
75Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Board statistics
Gender
Female 5
Male 7
Age
46-55 3
56-65 4
66-75 5
Location
USA 4
Bermuda 1
Europe 6
Asia 1
Tenure
0-3 years 4
3-6 years 1
6-8 years 4
8+ years 3
Board statistics
Board diversity at 5 March 2024
Nationality
British 6
Bermudian* 1
American 3
Swiss 1
Australian 1
* Includes those Directors who hold
a Permanent Residency Certificate.
Read more about gender and ethnic
diversity at Hiscox.
62
Ethnicity
White British or other white
(including minority-white groups) 11
Asian/Asian British 1
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
76 Hiscox Ltd Report and Accounts 2023
Group Executive Committee (GEC)
Nicola Grant
Chief People Officer
Joined Hiscox: September 2022
Relevant skills, experience and contribution
s Deep expertise in leading HR as a global
function, scaling it through technology
and effective, integrated, global products
and services.
s Significant experience of performance
and reward management, robust
talent and succession planning and
HR transformation.
Nicola leads our global People team, driving
Group-wide people strategies to accelerate and
de-risk Hiscox’s business performance. This
includes policies, products, and services covering
workforce planning and talent acquisition to
ensure the right talent is in the right place at the
right time; learning and development experiences
that strengthen our culture and accelerate talent
development; employee listening mechanisms to
understand and communicate with colleagues;
and compensation and benefits programmes
that retain and inspire performance at all levels.
Aki Hussain
Group Chief Executive Officer
Joined Hiscox: September 2016
Relevant skills, experience and contribution
s Considerable experience of
providing strategic, financial and
commercial management and
in-depth knowledge of the regulatory
and compliance environment.
s Significant experience of driving
business change.
Aki joined Hiscox in 2016 as Group Chief Financial
Officer and became Group Chief Executive Officer
in 2022. As such, Aki leads the Group Executive
Committee in realising the strategy, delivering the
business plan, and driving the Company through
its next phase of growth. Prior to Hiscox, Aki held
a number of senior roles across a range of sectors,
including Chief Financial Officer of Prudential’s UK
and Europe business, and Finance Director for
Lloyds Banking Group’s consumer bank division.
Aki is a Chartered Accountant, having trained
with KPMG.
Kevin Kerridge
Chief Executive Officer, Hiscox USA
Joined Hiscox: December 1996
Relevant skills, experience and contribution
s Significant expertise in, and at the
forefront of, how digital is reshaping our
industry landscape.
s Multi-market, ground-up experience of
building omni-channel retail businesses.
Kevin has held a number of strategic planning,
leadership and operational roles across
the Group and was an early pioneer of our
eCommerce approach, having set up and run
our UK Direct business before relocating to
establish our digital operations in the USA.
He has led Hiscox USA since 2021, which now
spans nine offices and over 500 employees,
overseeing product and service innovations and
a programme of technology re-platforming that
can support our significant growth ambitions in
the region.
Kate Markham
Chief Executive Officer, Hiscox London Market
Joined Hiscox: June 2012
Relevant skills, experience and contribution
s Strong experience of building
customer-focused businesses.
s Track record of establishing operational
and digital infrastructures that support
profitable growth.
Kate originally joined Hiscox to run our UK
Direct business, and was promoted to Chief
Executive Officer of Hiscox London Market in
2017. She leads our team of 400 London Market
underwriters, analysts and support functions
in the UK, Guernsey, France and the USA.
In addition, Kate is the Group’s Executive
Sponsor for DEI.
Fabrice Brossart
Group Chief Risk Officer
Joined Hiscox: November 2023
Relevant skills, experience and contribution
s Extensive expertise in enterprise risk
management within the international
general insurance industry.
s Considerable experience in leading
regulator relationships around the world.
Fabrice joined Hiscox in 2023 from AIG, where
he was Chief Risk Officer for the International
General Insurance business. He continues
to evolve our risk function, leading our global
team of approximately 40 risk and compliance
experts, and is responsible for ensuring our
risk structures enable growth, as well as our
continued regulatory compliance.
Paul Cooper
Group Chief Financial Officer
Joined Hiscox: May 2022
Relevant skills, experience and contribution
s Considerable expertise of financial
and commercial management
within a complex regulatory and
compliance environment.
s Qualified Chartered Accountant, with
significant experience of both the retail
and Lloyd’s insurance markets.
Paul leads our team of 400 finance experts
around the world and is responsible for ensuring
robust financial systems and continued capital
efficiency. With over 25 years of financial services
experience, Paul has held a number of senior
roles, including Interim Group Chief Financial
Officer at M&G Plc and Chief Financial Officer
for The Prudential Assurance Company. Paul is
a qualified Chartered Accountant, having trained
with PwC.
77Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Group Executive
Committee (GEC)
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Joanne Musselle
Group Chief Underwriting Officer
Joined Hiscox: April 2002
Relevant skills, experience and contribution
s Considerable underwriting expertise,
including experience of managing
underwriting portfolios in our key markets.
s Significant knowledge of Hiscox,
particularly Hiscox Retail, having
worked for the Group for over 20 years.
Joanne joined Hiscox in 2002 and has held a
number of roles across the Group, including
Head of UK Claims, Chief Underwriting Officer
for Hiscox UK & Ireland, and Chief Underwriting
Officer for Hiscox Retail. As Group Chief
Underwriting Officer, Joanne leads our team
of around 500 underwriters around the
world, driving the continued evolution of our
underwriting practices and the development of
our underwriting talent. Prior to Hiscox, Joanne
spent almost ten years working in a variety of
actuarial, pricing and reserving roles at AXA
and Aviva in both the UK and Asian markets.
Robert Dietrich
Chief Executive Officer, Hiscox Europe
Joined Hiscox: June 1997
Relevant skills, experience and contribution
s In-depth knowledge of the European
insurance market.
s Significant experience of bringing niche
insurance products to market.
Robert served as Managing Director for Hiscox
Germany for many years, driving disciplined
expansion and building it into the flagship
European business it is today. In 2021, he took
on wider responsibility for Hiscox Europe, whose
operations span eight countries, overseeing
critical cross-country systems transformation,
redefining its long-term vision and leading its
ambitious growth plans.
Stéphane Flaquet
Group Chief Operations and Technology Officer
Joined Hiscox: March 2010
Relevant skills, experience and contribution
s Strong financial services background.
s Sizable insurance industry
experience gained within a range
of European territories.
Stéphane originally joined Hiscox as Chief
Operating Officer for Europe, and has since
held a number of other senior roles including
Group Chief Information Officer, Chief Executive
Officer of Hiscox Europe and Interim Chief
Executive Officer for Hiscox UK. In 2022, he took
on the newly created role of Chief Operations
and Technology Officer, in which he oversees
a number of critical Group functions including
technology, change, operations, data, claims,
marketing, procurement and property services,
to ensure the continued effective and efficient
delivery of core services while also driving
operational efficiency and scalability.
Kathleen Reardon
Chief Executive Officer, Hiscox Re & ILS
Joined Hiscox: January 2021
Relevant skills, experience and contribution
s Extensive experience of building
reinsurance businesses throughout
the cycle.
s In-depth knowledge of the Bermuda
reinsurance market.
Kathleen leads our reinsurance and ILS
business, which operates in London and
Bermuda. She is responsible for ensuring the
120-strong team of underwriting, analytics
and asset manager experts take advantage
of changing market conditions and seize
opportunities as they present themselves, as
we continue to build both specialist reinsurance
capability and our position as an expert
alternative capital manager in the ILS space.
Jon Dye
Chief Executive Officer, Hiscox UK
Joined Hiscox: September 2022
Relevant skills, experience and contribution
s In-depth knowledge of the UK
insurance market.
s Track record of building sustainable,
profitable retail insurance businesses.
Jon leads our UK retail insurance business,
which spans eight offices and over 800
employees, overseeing the development of
our established broker business, as well as our
partnerships division and direct-to-consumer
offerings. Jon is responsible for building on our
long-term broker relationships, distinguished
brand and deep expertise in underwriting and
digital distribution with new capabilities as we
continue to drive scale.
78 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Fiona Mayo
Chief Marketing Officer, Hiscox UK
On brand
2023 saw the launch of our new
Hiscox brand campaign in the UK,
which marks a new focus for the Group
on telling the stories of our customers –
the people behind the policy. >
Fiona Mayo joined Hiscox in the
summer of 2022, bringing with
her over 20 years of brand and
marketing experience from a range
of sectors. In 2023, she led Hiscox’s
highly acclaimed nationwide brand
campaign that brought to life with
verve and humour the real risks
faced by small business owners.
79Hiscox Ltd Report and Accounts 2023
80 Hiscox Ltd Report and Accounts 2023
Q: What’s your background and how
did you come to join Hiscox?
A: I’d describe myself as first and
foremost a brand-based marketeer, but
with a broad, generalist marketing skill
set. I started out in advertising agencies
before moving to Vodafone, where I led
their marketing communications, then
moved to the energy sector, as Brand
and Marketing Communications Director
for SSE and then OVO. Hiscox is my first
foray into insurance and my focus here
is continuing to build such a strong and
distinctive brand, so that’s a challenge
that was really attractive to me.
Q: When you arrived here, what were
your first impressions of the culture?
A: I don’t think people appreciate what a
fantastic company this is. When I joined,
I’d been looking at various opportunities
in some very different sectors. What
swung it for me were the people I met
through the interview process. Since
I’ve arrived, I’ve been so struck by how
collaborative it is here. There’s a saying
at Hiscox that we’re kind on the people,
tough on the problem, and that is
absolutely what I’ve found. I remember
one of the first big meetings I was in, I
was fascinated by how there was a lot
of really constructive challenge in the
room but no emotion or politics or
agenda. That, from my experience, is
extremely rare and something that so
many other companies would love to
bottle if they could!
Q: Have your first experiences of
marketing in the insurance sector
presented any new challenges?
A: Not really. It’s much more similar to
other industries than you might think.
The sectors I’ve worked in – mobile
phones, energy and insurance – are
all typically low-interest categories
with an annual renewal cycle. Despite
the challenges that brings, Hiscox has
historically achieved fame beyond its
scale. The approach Hiscox has taken
to marketing has enabled it to stand out
from a sea of sameness of other insurers.
In insurance you often see a reticence for
communications to show the real risks
that customers face, but we know from
customer insight, that is what consumers
want us to recognise. Hopefully we have
managed to show those real risks, telling
those stories with empathy and some
intelligent wit.
Q: What was the thinking behind the
latest brand campaign?
A: Our starting point was to capture
the real essence of Hiscox – our
‘secret sauce’. In a world of increasing
automation, Hiscox is a deeply human
insurer. We are specialist in what we
do, we deeply understand the sectors
and the people that we insure, and our
claims teams fight like lions to protect
our customers should the worst happen.
That is why our brand promise across the
globe is ‘we see the people behind the
policy’. That means we see their hopes,
their dreams, their lives, their stories. The
core idea of our campaign is: ‘Stories.
Underwritten by Hiscox’. Stories are an
incredibly potent mechanic for us, with
all sorts of fascinating scientific research
that shows the power of storytelling. To
quote Steve Jobs, “The most powerful
person in business is the storyteller”.
Q: What was your approach to telling
those stories?
A: Our aim was to tell the stories of the
very real risks faced by the different
small businesses that we insure, but
tell them with wry humour, in a brave
and inventive way. We had a lot of fun
with the campaign, creating what has
been coined by the media as ‘the most
disastrous campaign ever’.
We have played with the media formats
themselves to create real impact. For
example, we have had posters falling
down as if they’ve been incorrectly
installed, water literally pouring from
a ‘leaking’ poster, another with mud
splattered all over it, and a teeny tiny
poster, as if it was printed at the wrong
size. We’ve had radio ads ‘mis-recorded’
in Spanish and other radio ads read by
kids. We had a Metro wrap advert that
was just a blank page, as if the agency
hadn’t supplied the image. We had a
WeTransfer takeover, saying: “Oops, I just
shared confidential information”. We’ve
really looked to push the boundaries
through the creative and I’m really proud
of the final executions.
Q: The consumer element of the
campaign was the most visible, but
were you serving other audiences
as well?
A: Our broker audience is among the most
important for us so of course we targeted
them too – in the trade press, at industry
events and through broker-specific
activations. Rather than it being the story
of your business underwritten by Hiscox,
it’s the story of your business supported
by Hiscox.
Q: How do you measure the success
of a broad-ranging campaign
like that?
A: The very first read you get is the
anecdotal feedback from brokers or
customers. You then start to look at the
short-term metrics: are more people
clicking on the website, are more
people calling the phone lines? But
the real measure of success doesn’t
come for 12 to 18 months, when we do
a form of regression modelling called
econometric modelling. That’s when you
can accurately measure the return on
investment, or ROI, of the campaign.
Q&
A:
with Fiona Mayo
Chief Marketing Officer, Hiscox UK
81Hiscox Ltd Report and Accounts 2023
If you think about it, insurance is a cycle.
Renewals only come about once every
12 months so, simplistically, what we’re
trying to do with brand advertising is
create memory structures so that,
when you come to renew your insurance,
you think of Hiscox. It doesn’t stop
there either: you might remember a
poster from ages ago that made you
smile, and those memory structures
might trigger you to buy insurance from
Hiscox years down the line. That’s why
it’s always a longer-term build, why we
still benefit from the strong brand work
of old, and why we need to get back
out there to re-fuel our brand, to give it
longevity and a strong position in our
customers’ minds and in the market
for years to come.
Q: What are your main priorities for
the coming year?
A: Our brand is incredibly important
to us, so we’ll continue to invest in it.
Beyond marketing, I’m also accountable
for the direct business. We really want
to accelerate faster growth in that area,
be that direct commercial or the direct
home insurance business. We’ll be
developing new products and moving
into adjacent sectors to support our
customers with new and emerging
risks. We want to be more sophisticated
in how we talk to our existing direct
customers or our brokers. We use a
customer relationship management tool,
or CRM system, to do that, so there’s
some capability building we need to
do there. I’m also accountable for the
‘consumer understanding’ pillar of the
UK’s Consumer Duty regulation. I was
very quick to put my hand up for that – as
a brand marketeer, I always want to put
the consumer at the heart of everything
and I love the idea of a regulatory
programme that does just that. For me,
it’s like the Trojan horse to make sure
that, as an organisation, we really are
customer focused.
Q: As UK Chief Marketing Officer,
what’s your relationship like with the
other regions?
A: It’s really good, and part of that
is because we see ourselves as an
international community of marketeers.
We have a Group-wide promise that we
developed together and we’re continually
sharing knowledge and ideas and
looking for ways we can collaborate.
There are lots of pockets of opportunity
where we can work together.
Q: And finally, how have you felt a
sense of community since you arrived
at Hiscox?
A: Honestly, from the moment I arrived
here it felt different. We’re not so soft
that’s it’s just a warm bath with everyone
floating around, but nor are we so
hardcore that you’re always fighting
to be heard. We’ve somehow bottled
that perfect balance of focusing on the
problem, having robust debate about
the problem, but not being driven by
anything other than solving the problem.
It’s so refreshing.
Renewals only come about once
every 12 months so, simplistically,
what we’re trying to do with brand
advertising is create memory
structures so that, when you come
to renew your insurance, you think of
Hiscox. It doesn’t stop there either:
you might remember a poster from
ages ago that made you smile, and
those memory structures might
trigger you to buy insurance from
Hiscox years down the line.”
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
82 Hiscox Ltd Report and Accounts 2023
Chair’s letter to shareholders
Dear Shareholder
The close of 2023 marked the end of my
first six months as Chair of the Board,
and it has been a pleasure to take on the
role from Robert Childs who enjoyed
such a long and successful tenure.
In getting to know the business, I have
found a robust and resilient organisation
in the midst of an exciting evolution. The
strategic tilt introduced by Aki and the
GEC over the last two years is delivering
material results, and our future growth
opportunities remain significant. Our
big-ticket teams have performed very
well in a hard market, taking advantage
of some of the best property pricing
conditions we’ve seen in decades,
and in retail the teams are focusing on
quality growth – stepping away from
business where pricing falls below our
profitability thresholds, and leveraging
legacy portfolio transactions (or LPTs) in
the same way as our big-ticket lines to
reduce earnings volatility from business
we have now exited.
This year’s results reflect the team’s
tremendous work growing the
business over time, leading to a
record pre-tax profit of $625.9 million
for 2023. This reinforces our balance
sheet strength, with the capital generated
used to drive growth and strengthen the
risk adjustment. In addition, the Board
has also recommended a final dividend
of 25.0 cents per share and a further
return of $150 million of capital to
shareholders through the form of a
buyback. This approach to capital
management means we can invest in
the many attractive growth opportunities
ahead while maintaining balance sheet
strength and financial flexibility.
The foundations of the business are
strong, as you can see from this year’s
record results, and our unique culture –
a key asset of the organisation –
continues to evolve with the business,
while still holding true to its core tenets
of exceptional customer service,
deep specialist sector expertise,
and long-held shared values. This
is demonstrated in our employee
engagement scores, which Aki and I
were delighted to see retain its ten-year
high of 82%. In addition, 83% of our
people told us they would recommend
Hiscox as a great place to work and
similarly 83% said they felt proud to work
for Hiscox, so that gives you a sense of
the strong positive sentiment we have
from our people around the world.
I have also found an effective and
energetic Board at Hiscox. The
onboarding process has supported
me well in getting under the skin of
the business, and I have seen healthy
debate and discussion in our boards
and committees. As well as my own
appointment during the year, the Board
also welcomed Beth Boucher as an
Independent Non Executive Director,
and we are benefitting immensely from
her career as a global Chief Information
Officer and her extensive experience
across the technology sphere.
2023 also saw the completion of an
external Board review, providing a critical
fresh perspective on Board effectiveness.
In the following pages you will find further
information on this and our broader
corporate governance information,
including our established and embedded
governance arrangements.
Beyond Hiscox, 2023 saw many
events signalling the changes to the
world around us. This included the
continued and devastating escalation of
geopolitical conflict in Russia/Ukraine
The foundations of the
business are strong, as
you can see from this
year’s record results,
and our future growth
prospects remain
substantial across
all business units.”
Jonathan Bloomer
Chair
83Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chair’s letter
to shareholders
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
and Israel/Gaza, and the plethora of
natural catastrophe events that have
affected so many – from wildfires in
Hawaii and Canada to earthquakes
in Morocco, Syria and Turkey, winter
storms and hurricanes in the USA,
cyclones in New Zealand and flooding
across Europe. Where we have had
exposures to these events, we have
been there for our customers.
Against this backdrop, the role of
our industry is more important than
ever. From the way we look after our
customers, to how we help them manage
the rapidly evolving risk landscape and
build their own resilience, insurance
has a crucial role to play in our society.
During 2023, we reviewed and refreshed
our sustainability strategy, which
you’ll find on page 46. This focused on
embedding sustainability in our business
strategy, and sharpening our focus on
the areas that matter the most to our
key stakeholders, and where we believe
we can make the most impact. Through
this review we have developed a new
five-pillar approach, which you can learn
more about on pages 46 to 49.
I am pleased to have also taken on the
role of Chair of the Hiscox Foundation.
Dating back to 1987, the Foundation
focuses its work around three core
pillars: protecting and preserving
the environment, social mobility and
entrepreneurship, and causes our
people are passionate about. In
2023, our charitable giving and
volunteering around the world
resulted in us supporting over 260
good causes with just over $2 million
in donations and fundraising and
1,400 hours of volunteering, which
gives you a sense of how much this
matters to our people.
I would like to end by thanking all of our
colleagues for their work and efforts
which have led to this strong set of
results. I also thank my Board colleagues
for the warm welcome and support.
Finally, I thank you all for your ongoing
interest in Hiscox, and I look forward to
spending time with some of my fellow
shareholders over the course of 2024.
Jonathan Bloomer
Chair
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
84 Hiscox Ltd Report and Accounts 2023
Corporate governance framework
The corporate governance framework
throughout Hiscox supports the delivery
of our values, culture, strategy and
business objectives.
The Board’s formal corporate
governance framework includes the
Board, the Hiscox Group subsidiaries
and the Executive internal governance
structures, which together ensure
the governance requirements for the
Group are robust and fit for purpose.
As a company listed on the London
Stock Exchange, the UK Corporate
Governance Code (the Code) is
applicable to Hiscox, and an overview
of the Company’s compliance
with the Code is detailed on pages
90 to 94.
The Board has a formal schedule
of matters reserved for the Board’s
determination that covers areas
including: setting the Group’s purpose
and strategic vision; monitoring
performance of the delivery of the
strategy; approving major investments,
acquisitions and divestments; risk
oversight and setting the Group’s risk
appetite; and reviewing the Group’s
governance. The Group governance
manual (the Manual) details the wider
corporate governance framework
including the overall legal entity
structures and relationship with
the business units, the division of
responsibilities between Group and
principal subsidiary boards, Board
process and procedures for issues
such as Non Executive Director
appointments, diversity requirements
and Board evaluations, and the
principles to be applied to the
wider subsidiary management.
The Manual is approved by the
Board and regularly reviewed.
The Company also benefits from a strong
governance framework at a subsidiary
level. The Manual and the supporting
subsidiary governance manuals
ensure that the underlying processes
throughout the subsidiary boards follow
consistent and effective governance
practices. The division of responsibility
between the Board and the boards of
the Group’s principal subsidiaries is
understood throughout the Group
and is visually represented in the
Hiscox Group governance model
(available to view at hiscoxgroup.com/
investors/corporate-governance).
The model shows the relationship
between the Board exercising strategic
direction and oversight of the Hiscox
Group, and the subsidiary boards’
delivery of their respective entity’s
responsibilities. This is further detailed
in explicit terms of reference and
governance manuals for the principal
subsidiaries – ensuring alignment to
the overall Group approach to values,
purpose, culture of risk awareness,
ethical behaviour and Group controls.
Informal interaction, information flows
and collaboration between Group and the
principal subsidiaries are also delivered
by Board Non Executive and Executive
Director representation on the boards of
the principal insurance carrier entities.
The Executive’s internal governance
structures support decision-making at
the Executive level between the Group
Executive Committee, the business units
and the functional departments. The
Group Executive Committee members
are detailed on pages 76 to 77.
Supporting policies and processes
During the year, no corrective action
was required by Management to ensure
that policies, practices and behaviours
Corporate governance
Good governance
requires a holistic
approach, and we
work hard to make
sure our corporate
responsibilities are
lived through training
and awareness and
by fostering a culture
that surfaces the
right issues.”
Marc Wetherhill
Group General Counsel and
Company Secretary
85Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Corporate governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
in the business were aligned with the
Company’s purposes, values and
strategy, as outlined on pages 8 to 11.
The corporate governance framework
complements the Company’s internal
controls framework and its supporting
framework of policies and processes.
Key policies for the Group are
published online and available to view
at hiscoxgroup.com/about-hiscox/
group-policies-and-disclosures.
The Board is satisfied that the internal
control and risk management systems
relating to the financial reporting process
are strong, with the Audit Committee
and the Risk Committee forming the
central points of review and challenge.
Further detail can be found in the Audit
Committee report on pages 99 to 101
and in the risk management section on
pages 36 to 39.
In addition, the Board and the Audit
Committee – whose Chair also serves
as the Group’s whistleblowing champion
– have oversight of whistleblowing
matters and receive reports arising
from its operation. The Company’s
whistleblowing policy is designed
to ensure that the workforce feel
empowered to raise concerns in
confidence and without fear of unfair
treatment. The structures and
processes in place allow for the
proportionate and independent
investigation of any such matters,
and for appropriate follow-up action
to be taken where necessary.
Board composition
The Board has responsibility for the
overall leadership of the Group and its
culture. The operations of the Board
are underpinned by the collective
experience of the Directors and the
diverse skills which they bring. The
Board comprises the Independent
Non Executive Chair, three Executive
Directors, and eight Independent Non
Executive Directors including a Senior
Independent Director.
Notable changes in the reporting period
include the appointment of Jonathan
Bloomer as Independent Non Executive
Chair, effective 1 July 2023, following
the retirement of Robert Childs, and
the appointment of Beth Boucher as
Independent Non Executive Director,
effective 12 May 2023. Biographical
details for each member of the Board
are provided on pages 72 to 73.
In accordance with the Company’s
Bye-laws and the Code, all Directors will
seek appointment or re-appointment (as
applicable) at the 2024 Annual General
Meeting. This will be the last time that
Anne MacDonald and Lynn Pike will
seek re-appointment, as both will have
served on the Board for nine years in
2024. However, their experience and
diversity remain invaluable and they
continue to exercise the independent
thinking and judgement consistent
with remaining an Independent Non
Executive Director. Therefore, with the
Chair having joined midway through
2023, and with the benefit of the
outcome of an independent evaluation
that was conducted in November 2023,
the Board considers that additional time
is needed to appropriately assess the
future requirements of the Board and
identify Anne and Lynn’s successors.
This will also be the last time that Colin
Keogh will seek re-appointment as he
will have served on the Board for nine
years from November 2024. No issues
have arisen that would prevent the Chair
from recommending the re-appointment
of any individual Director.
Additional details on Board composition
and succession planning, including
the process for the appointment of
Jonathan Bloomer as Chair, can be found
in the Nominations and Governance
Committee report on pages 95 to 98.
The Board is satisfied that it has the
appropriate balance of skills, experience,
independence, and knowledge of the
Company to enable it to discharge its
duties and responsibilities effectively,
and that no individual or group dominates
the Board’s decision-making.
Board independence and
Director duties
The Nominations and Governance
Committee reviews the independence
of each Non Executive Director, taking
into account, among other things, the
circumstances set out in the Code that
are likely to impair, or could appear
to impair, their independence. The
Committee remains of the view that the
most important factor is the extent to
which they are independent of mind.
Each Director has undertaken to
allocate sufficient time to the Group in
order to discharge their responsibilities
effectively. Each Non Executive
Director’s letter of appointment outlines
the commitments expected of them
throughout the year and this is further
detailed in the Manual. Executive
Directors are prohibited from taking
more than one additional non executive
directorship in a FTSE 100 company.
Each year, as part of the Director review
process, the Directors are required to
provide a complete list of all third-party
relationships that they maintain. This
is analysed to determine if there is any
actual or potential conflict of interest
and that appropriate time continues to
be available to devote to the Company.
Chapter 3 72
Governance
Corporate governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
86 Hiscox Ltd Report and Accounts 2023
The Nominations and Governance
Committee reviews the findings and
determines if there is any conflict of
interest. The Committee determined that
there were no relationships which could
cause an actual or potential conflict.
Additionally, there were no concerns
regarding overboarding and all Directors
had adequate time available to carry out
their duties. Where Directors accepted
additional Board positions during the
year, these were reviewed as part of our
corporate governance processes and
were not deemed to be significant to the
extent that they would overburden that
Director’s time. Approval occurs prior
to a Director undertaking additional
external appointments.
Onboarding and Board training
On joining the Board, all Non Executive
Directors take part in a full, formal
induction programme which is tailored
to their specific requirements. More
information on this can be found in
the Nominations and Governance
Committee report on pages 95 to 98.
The Board also has an ongoing training
programme with regular items on
topical issues. In 2023, this included,
among other things: investor relations;
IFRS 17; cyber security, artificial
intelligence; global brand; and an
external market update. Items for training
are identified in the Board, Committee
and Director reviews, as well as through
specific requirements and individual
requests, and can be delivered via
the frequent programme of Board
informational sessions.
Board structure and decision-making
The Board operates within an
established structure which ensures
clear responsibilities at Board level,
transparent, well-informed and balanced
decision-making, and appropriate onward
delegations to effectively deliver the
Company’s purpose, values and strategy.
The Board has delegated a number of its
responsibilities to its Audit, Nominations
and Governance, Remuneration and Risk
Committees. Each Board Committee
operates within established written terms
of reference and each Committee Chair
reports directly to the Board. The formal
schedule of matters reserved for Board
decision and the Committee terms of
reference were reviewed in late 2023
as part of the annual review of terms of
reference, and copies of each can be
found at hiscoxgroup.com/investors/
corporate-governance. To ensure
that the Board operates efficiently, the
role of the Chair, Senior Independent
Director and Chief Executive are
distinct to demonstrate the segregation
of responsibilities.
Board cycle
The Board receives appropriate and
timely information to enable Directors
to review business strategy, trading
performance, business risks and
opportunities. Executive Directors and
Senior Management from the business
are invited to present on key items,
allowing the Board the opportunity to
debate and challenge initiatives and
proposals directly.
The Board agenda is set by the Chair
following discussion with the Group
Chief Executive Officer and Company
Secretary, and taking into consideration
feedback from the individual Directors.
Board agendas focus on strategically
important issues, key regulatory items
and regular reports from key business
areas. Board papers are circulated in
advance of each meeting to ensure
Directors have appropriate time to
review them, and to seek clarification
where necessary. The Management
reports follow a short standard
format which aids discussion and
understanding. The quality of Board
papers is kept under regular review.
At each meeting, the Board receives
an update from the Committee Chairs
to keep them abreast of the items
discussed, the outcomes agreed,
and to summarise recommendations for
Board approval from the Committees.
The scheduled meetings follow an
agreed format; agendas are developed
from the Board’s annual plan of business,
with flexibility built in to ensure the
agendas can accommodate relevant
upcoming issues. Each quarterly cycle
typically covers a series of decisions,
discussions and regulatory items
either at the Board, during Committee
discussions, or during informal
informational sessions, depending
on the nature of the matter. Items for
discussion may be identified from
actions from previous meetings, issues
escalated from Management, items
requested either formally or informally
by Non Executive Directors, ongoing
regulatory topics throughout the
Group, and horizon scanning including
a review of the competitive landscape.
Agendas are built to ensure that
the most appropriate method of
progressing an item is utilised. The
Chair and Non Executive Directors
usually meet at the start or end of each
Board meeting without the Executive
Directors, creating an opportunity for
Non Executive Directors to raise any
issues privately. Owing to this system,
the Group has an effective Board which
supports a culture of accountability,
transparency and openness. Executive
and Non Executive Directors continue
87Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Corporate governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
to work well together as a unitary Board
and debate issues freely. The Board
culture is congenial; however, both
Non Executive Directors and Executive
Directors continually challenge each
other in order to deliver our shared aim.
In the context of unitary Boards, Non
Executive Directors provide Executive
Directors with support and guidance, not
just challenge, and our Non Executive
Directors are close enough to the
business to do this.
Board and Committee attendance
in 2023
In line with the agreed meeting
schedule, the Board and each of the
Committees of the Board held four
comprehensive meetings in 2023.
There were an additional seven
informational calls between Board
meetings. These informational calls
provided an opportunity to ensure the
Board was kept informed of any business
developments and allowed the Directors
to monitor exposures, emerging issues
and opportunities.
The Company’s Bye-laws prohibit any
Director who is in the UK or the USA from
counting towards the quorum necessary
for the transaction of business at a Board
meeting. This restricts the ability of the
Company’s Directors based in the UK or
USA to participate in Board meetings by
telephone or other electronic means.
All Directors were able to fulfil their
fiduciary responsibilities during 2023
and attended all Board and Committee
meetings that they were eligible to attend
(that is, those Board and Committee
meetings that they were not precluded
from attending as a result of the
Company’s Bye-laws). With respect to
the four comprehensive Board meetings
in 2023, the Directors’ attendance
(and the number of meetings that they
were eligible to attend) was as follows:
Donna DeMaio, Michael Goodwin,
Thomas Huerlimann, Colin Keogh,
Anne MacDonald, Costas Miranthis,
Lynn Pike, Joanne Musselle, Aki Hussain,
Paul Cooper (4/4); Jonathan Bloomer,
Beth Boucher, Robert Childs (2/2).
There were also four meetings of each
of the Committees of the Board during
2023. All of the Company’s Independent
Non Executive Directors are members of
the Audit Committee, Nominations and
Governance Committee, Remuneration
Committee, Risk Committee and
Investment Committee and their
attendance (and the number of meetings
that they were eligible to attend) was
as follows: Donna DeMaio, Michael
Goodwin, Thomas Huerlimann, Colin
Keogh, Anne MacDonald, Costas
Miranthis, Lynn Pike (4/4); Jonathan
Bloomer, Beth Boucher (2/2). Robert
Childs was a member of the Nominations
and Governance Committee, Risk
Committee and Investment Committee
and he attended both of the meetings that
he was eligible to attend. Aki Hussain,
Paul Cooper and Joanne Musselle are
members of the Investment Committee
and attended all four meetings.
Outside of the formal Board and
Committee meetings and informational
calls, Non Executive Directors have
unfettered access to employees at all
levels of the business, regularly liaise
with Management on activities aligned
to their key skills, and attend appropriate
management strategy and training
events. They also have the opportunity
to attend briefings with Group Executive
Committee members and Senior
Management, to understand key
issues and conduct deep dives on
specialist subjects.
Chapter 3 72
Governance
Corporate governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
88 Hiscox Ltd Report and Accounts 2023
Board activity in 2023
Board activity in 2023 was suitably
focused to ensure it covered the
appropriate strategy, performance
and governance items and considered
the needs and concerns of our key
stakeholders. This included:
• strategy and business
performance, including
approval of the 2024 business
plan, the agreement of business
priorities for the year ahead,
oversight of capital management
measures taken (including
legacy portfolio transactions),
embedding the Group’s strategic
evolution, and further optimising
operational effectiveness;
• culture and engagement,
including reviewing the annual
employee engagement survey,
oversight of the employee
proposition work done to date,
and gaining new insights from the
Employee Engagement Network
facilitated by the Board’s
Employee Liaison;
• governance, including updates
on key underwriting exposures,
and approval of the updated risk
limits framework;
• oversight of all key risks,
compliance, internal controls
and governance matters, as
outlined on pages 12 to 15,
36 to 39 and 99 to 101.
More information on Board activities
is covered as part of the annual
Board evaluation process outlined
on pages 97 to 98.
Board engagement with stakeholders
A key element of the corporate governance
framework is open and transparent
communication with stakeholders at
all levels including Board level.
As such, the Board regularly discusses
stakeholder matters including shareholder
matters, employee engagement,
customers, and the Group’s impact on,
and relationship with, wider society.
The Board is kept abreast of
stakeholder feedback and issues
through reports from a variety of
sources, including the Chair, Group
Chief Executive Officer, Group Chief
Financial Officer, Employee Liaison,
Senior Management and external
consultants. This feedback loop
is complemented by the regular
dialogue that the Board maintains
with the Group’s key stakeholders,
with the support of Executives and
Senior Management.
The Chair of each Committee of the
Board is available for engagement with
shareholders when required and an
example of this during 2023, in relation
to the appointment of our Chair, can be
found on page 97.
More information on how the Board
engages with key stakeholders can
be found on pages 40 to 41.
Board evaluation 2023
The Board encourages a culture of
continuous improvement, and an
important part of this is the annual review
of the Board, its Committees and each
Director. The Board evaluation in 2023
was externally facilitated, the details of
which can be found in the Nominations
and Governance Committee report on
pages 95 to 98.
Board remuneration
The remuneration of Independent
NonExecutive Directors is determined
by the Chair in conjunction with
the Nominations and Governance
Committee and is regularly benchmarked
to ensure it reflects the time commitment
and responsibilities of each role; there
are no performance-related elements.
The Chair’s remuneration is determined
pursuant to the remuneration policy.
More information on Board remuneration
can be found in the remuneration section
on pages 106 to 143.
89Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Corporate governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
The role of the Board
The Board as a whole is collectively responsible for the success of Hiscox Ltd and the Group. Its duties are to:
• set the Group’s strategic direction, purpose and values and align these with its culture;
• oversee competent and prudent management of internal control, corporate governance and risk management;
• determine the sufficiency of capital in light of the Group’s risk profile and business plans;
• approve the business plans and budgets.
This structure is supported by the Group Executive Committee, Investment Committee and a number of other
management committees.
Certain administrative matters have been delegated to a committee comprising any Director and the Company Secretary.
Audit Committee Nominations and
Governance Committee
Remuneration Committee Risk Committee
• Advises the Board on
financial reporting.
• Oversees the
relationship with internal
and external audit.
• Oversees internal
controls including
reserving and claims.
The Audit Committee report
can be found on pages
99 to 101.
• Recommends Board
appointments.
• Succession planning.
• Ensures an appropriate
mix of skills and
experience on
the Board.
• Promotes diversity.
• Manages any potential
conflicts of interests.
The Nominations and
Governance Committee
report can be found on
pages 95 to 98.
• Establishes
remuneration policy.
• Oversees alignment
of rewards, incentives
and culture.
• Sets Chair, Executive
Director and Senior
Management
remuneration.
• Oversees workforce
remuneration-related
policies and practices
across the Group.
The remuneration report
can be found on pages
112 to 133.
• Advises the Board on
the Group’s overall risk
appetite, tolerance
and strategy.
• Provides advice,
oversight and challenge
to embed and maintain
a supportive risk culture
throughout the Group.
More information on risk
management can be found on
pages 12 to 15 and 36 to 39.
To ensure that the Board operates efficiently, each Director has distinct role responsibilities.
Chair Senior Independent
Director (SID)
Chief Executive Independent
Non Executive Directors
• Leadership of the Board.
• Ensuring effective
relationships exist
between the Non
Executive and
Executive Directors.
• Ensuring that the views
of all stakeholders
are understood
and considered
appropriately in
Board discussions.
• Overseeing the annual
performance evaluation
and identifying any
action required.
• Leading initiatives to
assess the culture of the
Company and ensure
that the Board leads
by example.
• Advisor to the Chair.
• Leading the Chair’s
performance evaluation.
• Serving as an
intermediary to
other Directors
when necessary.
• Being available to
shareholders and
other stakeholders if
they have any concerns
which are unable to
be resolved through
normal channels,
or if contact through
these channels is
deemed inappropriate.
• Proposing and delivering
the strategy as set by
the Board.
• Facilitating an effective
link between the
business and the Board
in support of effective
communication.
• Leading the Group
Executive Committee,
which delivers
operational and
financial performance.
• Representing Hiscox
internally and externally
to stakeholders,
including shareholders,
employees, government
and regulators, suppliers
and contractors.
• Active participation in
Board decision-making.
• Advising on key
strategic matters.
• Critiquing and
challenging proposals
and activities, and
approving plans
where appropriate.
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
90 Hiscox Ltd Report and Accounts 2023
Compliance with the UK Corporate Governance Code 2018
Requirements Operation and practices Additional detail on provisions: Compliance
1
Section 1
of the Code:
Board leadership
and Company
purpose
A: Board’s role
Code: A successful company is led by an effective and entrepreneurial
board, whose role is to promote the long-term sustainable success of the
company, generating value for shareholders and contributing to wider society.
Hiscox: The Board is collectively responsible for the stewardship and
long-term success of the Company. There is a robust decision-making
process in place with constructive challenge and debate. Pages 22 to31
demonstrate the Company’s strong performance and position. In the
corporate governance overview on pages 84 to 89, we detail the governance
arrangements in place which contribute to the delivery of our strategy.
Provision 1:
pages 36 to 39
(risk management),
pages 8 to 11
(business model).
Provision 2:
pages 87 to 88
(Board activity),
pages 106 to 143
(chapter 4,
remuneration).
Provision 3:
pages 40 to 41
(shareholder
engagement).
Provision 4:
No AGM votes
below 80%.
Provision 5:
pages 40 to 41
(stakeholder
engagement),
pages 87 to 88
(Board activity).
Provision 6:
page 84
(corporate
governance
framework).
Provision 7:
pages 84 to 88
(Non Executive
Director time,
corporate
governance
framework).
Provision 8:
Group governance
manual and Director
appointment letters.
The Company
applied all of the
principles and
complied with
the provisions
of Section 1.
Provision 5 refers to
Section 172 of the UK
Companies Act which
is not applicable to
Hiscox as a Bermuda-
incorporated
company. However,
the material provisions
of Section 172 of the
UK Companies Act are
substantively covered
by the Bermuda
Companies Act, which
is the applicable
legislation that the
Company is required
to comply with
under Bermuda law.
Compliance against
Bermudian Director
duties is detailed on
page 74.
B: Purpose and culture
Code: The board should establish the company’s purpose, values and
strategy, and satisfy itself that these and its culture are aligned. All directors
must act with integrity, lead by example and promote the desired culture.
Hiscox: Having a clear purpose and strong set of values has always been
important at Hiscox as they act as a culture barometer by which the Board
and wider workforce can hold each other to account (see pages 8 to 9).
Procedures for regulation of Board conduct are detailed in the Group
governance manual and individual appointment letters, and are overseen
by the Chair of the Board.
C: Resources and controls
Code: The board should ensure that the necessary resources are in
place for the company to meet its objectives and measure performance
against them. The board should also establish a framework of prudent
and effective controls, which enable risk to be assessed and managed.
Hiscox: One of the key roles of the Board is to oversee the delivery of
strategy and annual operating plans, holding management to account on
their delivery of those plans. This is assisted by a robust internal control
and risk management framework (see pages 36 to 39). The Board and
its Committees have unfettered access to the resources they deem
necessary to fulfil their obligations.
D: Stakeholder engagement
Code: In order for the company to meet its responsibilities to shareholders
and stakeholders, the board should ensure effective engagement with,
and encourage participation from, these parties.
Hiscox: The Board regularly considers the Group’s relationship with
various stakeholder groups including shareholder matters, employee
engagement, customers, and the Group’s impact on, and relationship
with, wider society, examples of which can be found on pages 40 to 41.
The Board continues to engage with the workforce through the
pre-existing infrastructure and via the employee engagement network.
This ensures Hiscox is motivating and engaging employees in an
effective way. The Employee Liaison is responsible for providing a
summary of findings at Board meetings.
E: Workforce engagement
Code: The board should ensure that workforce policies and practices are
consistent with the company’s values and support its long-term sustainable
success. The workforce should be able to raise any matters of concern.
Hiscox: Comprehensive and robust policies and procedures are in place.
Having a supportive and inclusive culture is important to us and we track
how employees feel about working at Hiscox through our annual global
employee engagement survey. More information on our 2023 results
can be found on pages 7 and 47. The Board also engages with the
workforce through its established employee engagement network,
which supports the pre-existing engagement infrastructure.
91Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Compliance with the UK
Corporate Governance
Code 2018
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
As a company listed on the London
Stock Exchange, the UK Corporate
Governance Code (the Code) is
applicable to Hiscox. The Board is
pleased to report that the Company
has applied the principles, and
from July2023, complied with all its
provisions. Prior to July 2023, and as
noted in previous reports, the Company
was non-compliant with Provision 9 on
Chair independence, Provision 19 on
Chair tenure and part of Provision 25
regarding the Chair’s membership of
the Risk Committee. However, following
the appointment of Jonathan Bloomer
as Chair in July 2023, the Company
is compliant with these provisions.
More information on Chair succession
can be found on page 97.
The corporate governance statement
(pages 84 to 89), the remuneration
report (pages 112 to 133) and the
Directors’ report (pages 148 to 150),
together with the cross references to
other relevant sections of the Annual
Report and Accounts, explain the main
aspects of the Company’s corporate
governance framework and seek to give
a greater understanding as to how the
Company has applied the principles
and reported against the provisions of
the Code. The Code itself can be found
at frc.org.uk.
In January 2024, the FRC published
amendments to the UK Corporate
Governance Code, which will apply to
accounting periods beginning on or
after 1 January 2025, with the exception
of Provision 29, which is effective
from 1 January 2026. We are currently
assessing the impact of both the
new and revised Provisions.
Requirements Operation and practices Additional detail on provisions: Compliance
2
Section 2
of the Code:
Division of
responsibilities
F: Role of the Chair
Code: The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should demonstrate objective
judgement throughout their tenure and promote a culture of openness and
debate. In addition, the chair facilitates constructive board relations and
the effective contribution of all non-executive directors, and ensures that
directors receive accurate, timely and clear information.
Hiscox: The Chair is responsible for the leadership and overall effectiveness
of the Board. The Chair drives a boardroom culture which encourages
openness and debate and ensures constructive relations between Executive
and Non Executive Directors, see Board cycle on page 86. The Chair,
with the support of the General Counsel and Company Secretary,
delivers high-quality information to the Board to enable a strong basis
for decision-making. Pages 84 to 89 detail the corporate governance
structures in place.
Provision 9:
page 91 (Chair
independence
and tenure),
page 89
(CEO and Chair
separate roles).
Provision 10:
pages 72 to 73
(Board of Directors).
Provision 11:
pages 72 to 73
(Board of Directors).
Provision 12:
pages 72 to 73
(Board of Directors),
pages 97 to 98
(Board evaluation).
Provision 13:
page 86
(Board cycle).
Provision 14:
page 89
(structure of Board
decision-making),
pages 86 to 87
(Board attendance
in 2023).
Provisions 15 and 16:
Group governance
manual and Director
appointment letters.
The Company
applied all of the
principles and
complied with
the provisions of
Section 2 (other
than Provision 9
up until July 2023,
see above).
G: Composition of the Board
Code: The board should include an appropriate combination of executive
and non-executive (and, in particular, independent non-executive)
directors, such that no one individual or small group of individuals
dominates the board’s decision-making. There should be a clear division
of responsibilities between the leadership of the board and the executive
leadership of the company’s business.
Hiscox: There is a clear division of responsibilities between the Chair,
Chief Executive Officer and Senior Independent Director (see page 89).
No individual or small group has unfettered powers of decision. The Board
has a majority of independent Directors.
H: Role of Non Executive Directors
Code: Non-executive directors should have sufficient time to meet their
board responsibilities. They should provide constructive challenge, strategic
guidance, offer specialist advice and hold management to account.
Hiscox: The Group governance manual and the Directors’ letters of
appointment detail the requirements for the Non Executive Directors
regarding their role and time expectations. These factors are subject
to ongoing review, which is overseen by the Chair of the Board, and
is formally reviewed in the annual Director reviews conducted by the
Nominations and Governance Committee (see page 96). The duties of the
Board are detailed in our Matters reserved for the Board policy, which aligns
to the requirements of this principle and includes the key role of appointing
and removing Executive Directors. The Matters reserved for the Board is
available in the Board terms of reference at hiscoxgroup.com/investors/
corporate-governance.
I: Role of the Company Secretary
Code: The board, supported by the company secretary, should ensure
that it has the policies, processes, information, time and resources it
needs in order to function effectively and efficiently.
Hiscox: The Group General Counsel and Company Secretary acts as
a trusted advisor to the Board and its Committees, and ensures there
are appropriate interactions between Senior Management and the
Non Executive Directors. He is responsible for advising the Board on all
governance matters and all Directors have access to him for advice.
Chapter 3 72
Governance
Compliance with the UK
Corporate Governance
Code 2018
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
92 Hiscox Ltd Report and Accounts 2023
Requirements Operation and practices Additional detail on provisions: Compliance
3
Section 3
of the Code:
Composition,
succession
and evaluation
J: Appointment to the Board and succession planning
Code: Appointments to the board should be subject to a formal, rigorous
and transparent procedure, and an effective succession plan should be
maintained for board and senior management. Both appointments and
succession plans should be based on merit and objective criteria and,
within this context, should promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
Hiscox: The Group governance manual details the commitment to
a formal, rigorous and transparent procedure for appointments to
the Board and effective succession planning for Board and Senior
Management, both of which are based on merit and promote diversity.
This is also detailed within the Matters reserved for the Board as part
of the Board terms of reference and the terms of reference of the
Nominations and Governance Committee, available at
hiscoxgroup.com/investors/corporate-governance.
The Board diversity and inclusion policy is detailed on page 64. It details
the parameters for appointments and succession planning, as well as
oversight of Board and workforce diversity and inclusion policies and
programmes. The Nominations and Governance Committee leads on
the delivery of this principle on behalf of the Board as detailed on pages
95 to 98.
Provision 17:
pages 95 to 98
(key responsibilities
and membership,
Nominations
and Governance
Committee report).
Provision 18:
pages 72 to 73
(Board composition).
Provision 19:
page 91
(Chair independence
and tenure).
Provision 20:
pages 95 to 98
(talent review and
Board composition
and succession,
Nominations
and Governance
Committee report).
Provisions 21 and 22:
pages 95 to 98
(Board evaluation,
Nominations
and Governance
Committee report).
Provision 23:
pages 95 to 98
(Nominations
and Governance
Committee report).
The Company
applied all of the
principles and
complied with
the provisions of
Section 3 (other
than Provision 19
up until July 2023,
see page 91).
K: Skills, experience and knowledge of the Board
Code: The board and its committees should have a combination of skills,
experience and knowledge. Consideration should be given to the length
of service of the board as a whole and membership regularly refreshed.
Hiscox: The current composition of the Board is set out on pages 72 to 73
and is considered to be an appropriate size for the business, with the right
balance of Executive and Non Executive Directors with a wide range of
skills and experience that contribute to the Board’s performance. Length
of service is considered as part of the succession planning process and
this is delivered by the Nominations and Governance Committee on behalf
of the Board as detailed on pages 95 to 98.
L: Board evaluation
Code: Annual evaluation of the board should consider its composition,
diversity and how effectively members work together to achieve
objectives. Individual evaluation should demonstrate whether each
director continues to contribute effectively.
Hiscox: The Board, Committee and Director evaluation process is a
robust annual process which ensures that a thorough evaluation is
completed each year. This internal evaluation process is supported by
external evaluations, which are completed every three years, and most
recently during 2023 (see pages 97 to 98).
93Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Compliance with the UK
Corporate Governance
Code 2018
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Requirements Operation and practices Additional detail on provisions:
Compliance
4
Section 4
of the Code:
Audit, risk and
internal control
M: Internal and external audit
Code: The board should establish formal and transparent policies and
procedures to ensure the independence and effectiveness of internal and
external audit functions and satisfy itself on the integrity of financial and
narrative statements.
Hiscox: The Audit Committee oversees the relationships with the
internal and external audit functions ensuring their independence and
effectiveness. The Committee also has oversight of the relationship
with the actuarial function. The three parties work together to provide
assurances to the Audit Committee and Board on the integrity of the
financial statements, with external audit also providing assurances in
relation to the narrative statements. The Audit Committee report for
2023 can be found on pages 99 to 101.
The Directors’ responsibilities statement, going concern and viability
statements are set out on pages 148 to 151.
Provisions 24 and 26:
pages 99 to 101
(Audit Committee
report).
Provision 25:
Audit Committee
terms of reference
are available at
hiscoxgroup.com/
investors/corporate-
governance. Risk
Committee terms
of reference are
also available.
Provisions 27, 30
and 31:
pages 148 to 150
(going concern and
viability statements,
Directors’ report).
Provisions 28, 29
and 31:
pages 36 to 39
(risk management).
The Company
applied all of the
principles and
complied with
the provisions of
Section 4 (other
than part of
Provision 25
as the Risk
Committee
membership
included the Chair
of the Board up
until July2023,
see page 91).
N: Fair, balanced and understandable assessment
Code: The board should present a fair, balanced and understandable
assessment of the company’s position and prospects.
Hiscox: The Board is responsible for the preparation of the Annual Report
and Accounts and for stating whether it considers the Annual Report and
Accounts, taken as a whole, to be fair, balanced and understandable, and
provides information necessary for shareholders to assess the Company’s
position, performance, business model and strategy. The Audit Committee
details how this is achieved on pages 99 to 101.
O: Risk management and internal control framework
Code: The board should establish procedures to manage risk, oversee
the internal control framework, and determine the nature and extent of
the principal risks the company is willing to take in order to achieve its
long-term strategic objectives.
Hiscox: The Board is ultimately responsible for our risk management and
internal controls, and for ensuring that the systems in place are robust and
take into account the principal risks (referred to in this document as key
risks) and the emerging risks faced by the Company. An overview of risk
management can be found on pages 36 to 39. The Risk Committee leads
detailed discussions on the principal and emerging risks of the Company
on behalf of the Board, and recommends to the Board the appropriate risk
management framework including risk limits, appetite and tolerances.
The Risk Committee also oversees the independence and effectiveness
of the risk and compliance functions.
Chapter 3 72
Governance
Compliance with the UK
Corporate Governance
Code 2018
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
94 Hiscox Ltd Report and Accounts 2023
Requirements Operation and practices Additional detail on provisions: Compliance
5
Section 5
of the Code:
Remuneration
P: Remuneration policies and practices
Code: Remuneration policies and practices should be designed
to support strategy and promote long-term sustainable success.
Executive remuneration should be aligned to company purpose and
values, and be clearly linked to the successful delivery of the company’s
long-term strategy.
Hiscox: Our remuneration policy and practices are developed by the
Remuneration Committee in consultation with our shareholders. They are
designed to support the Company’s strategic aims, promote the long-term
sustainable success of the Company, and attract and retain talent,
while also being aligned with the Company’s purpose, values and vision
(see pages 8 to 9).
Provisions 32 and 33:
pages 106 to 109
(annual statement
from the Chair of
the Remuneration
Committee).
Provision 34:
pages 120 and 125
(Non Executive
Director fees,
Chair remuneration).
Provisions 35:
page 126
(consultants are
highlighted in
chapter 4:
remuneration).
Provisions 36, 37,
38, 39:
pages 134 to 143
(remuneration policy).
Provisions 40 and 41:
pages 106 to 143
(chapter 4:
remuneration).
The Company
applied all of the
principles and
complied with
the provisions
of Section 5.
Q: Executive remuneration
Code: A formal and transparent procedure for developing policy on
executive remuneration and determining director and senior management
remuneration should be established. No director should be involved in
deciding their own remuneration outcome.
Hiscox: The Remuneration Committee is responsible for setting the
remuneration for all Executive Directors and Senior Management. The
remuneration report contains details of the procedures that have been
established for developing the Company’s policy on Executive pay and
determining Director and Senior Management remuneration outcomes.
No Director is involved in deciding their own remuneration outcome.
The Remuneration Committee receives information on broader workforce
remuneration policies and practices during the year which informs its
consideration of the policy (see page 128).
The remuneration policy was reviewed during 2022/23 and the changes
proposed were supported by shareholders through a shareholder vote
at the May 2023 AGM. Changes included to reward the delivery of
Hiscox’s wider strategy by introducing a scorecard approach to the
short- and long-term incentives. Bonus deferral and post-employment
shareholding guidelines were also further aligned with market practice
and the circumstances that may trigger use of malus and clawback
were extended.
The Employee Liaison facilitates discussion with respect to the content of
the remuneration policy and how this aligns to wider Company pay policy,
and shares feedback on this with the Board.
R: Remuneration outcomes and independent judgement
Code: Directors should exercise independent judgement and discretion
when authorising remuneration outcomes, taking account of company
and individual performance, and wider circumstances.
Hiscox: The Remuneration Committee leads on this area of work on
behalf of the Board. Details of the composition and the work of the
Remuneration Committee are detailed on pages 106 to 143. The
Remuneration Committee comprises Independent Non Executive
Directors only. The remuneration of Independent Non Executive Directors
is determined by the Nominations and Governance Committee and
is regularly benchmarked to ensure it reflects the time commitment
and responsibilities of each role; there are no performance-related
elements. The Board Chair’s remuneration is determined in line with
the remuneration policy and reviewed by the Remuneration Committee.
The Remuneration Committee terms of reference can be found at
hiscoxgroup.com/remuneration-committee-tor.
A full copy of the Corporate Governance
Code 2018 can be found at frc.org.uk.
95Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Nominations and Governance Committee report
2023 was another
important year for the
Committee when it
comes to succession,
and I can personally
speak highly of the
Board induction
process in this,
my first year.”
Jonathan Bloomer
Chair of the Nominations and
Governance Committee
Key responsibilities and membership
The Nominations and Governance
Committee (the Committee) leads
in the delivery of formal, rigorous
and transparent procedures on
appointments and succession, ensuring
the development of a diverse pipeline of
Board members and senior managers.
This includes an annual review of
succession plans for Executives and Non
Executives, a process which is guided
by the appointment and succession
principles set out in the Group
governance manual for Non Executive
Directors and by our Group People
policies for Executive Directors and
Senior Management. The Committee
also reviews the Board evaluation
process, Company strategy relating to
DEI, and the diversity of both the Board
and Senior Management. In addition,
the Committee carries out several other
Group activities, including a review of
intragroup conflicts of interest and the
approval of certain Group policies.
The Committee is comprised of eight
members, being the Chair of the Board
and seven Independent Non Executive
Directors. The Chair of the Board
is the Chair of the Nominations and
Governance Committee; the Senior
Independent Director leads on matters
relating to the Chair. The Committee’s
terms of reference are reviewed and
approved annually and are available on
the Company’s website at hiscoxgroup.
com/investors/corporate-governance.
Key activities of the Committee
The Committee’s key priorities in 2023
were as follows.
• Search for and appointment of
new Chair of the Board
and new Director.
• Smooth transition of Chair of the
Board and new Director.
• Review of the Board
evaluation outcomes.
• Ongoing diversity monitoring of
the Board and Senior Management.
• Review of Committee terms
of reference.
Talent reviews
The Committee leads on Executive
succession planning via an established
and robust talent review process. As
required, the Committee reviews key
talent plans throughout the Group.
The Group review focuses on the
GEC and their direct reports, and the
Company Secretary. The outputs of
the talent review process contribute
to Senior Management performance
development plans and include relevant
diversity actions. This process is
replicated at a business unit level to
ensure a sufficient pipeline of talent in
each area. Talent plans are also reviewed
when vacancies arise.
Board composition and succession
The Committee reviewed the
independence of each of the Non
Executive Directors. There was a
particularly robust assessment of
the independence of Lynn Pike and
Anne MacDonald given their tenure
on the Board. The Board continues
to consider that they demonstrate
independent judgement and provide
robust challenge. As part of the annual
Board succession planning process, the
Committee reviewed the composition of
the Board in 2023. This included a skills
and experience review – encompassing
independence, length of service, the
balance of skills and experience, diversity,
and the capacity required to oversee the
delivery of the Company’s strategy –
and Board succession planning on an
immediate and longer-term basis for
the Chair and all members of the Board.
Chapter 3 72
Governance
Nominations and
Governance
Committee report
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
96 Hiscox Ltd Report and Accounts 2023
Chair succession process
A formal and transparent process was deployed for the appointment of the Chair.
Requirements Process Interview and appointment Induction
In 2022, as part of the orderly
succession plan for the
retirement of the Chair, it
was agreed to target an
appointment to be in place
by mid 2023.
The key requirements of the
role were agreed as being
financial services experience,
as well as recent Chair
experience, with insurance
sector expertise also being
highly regarded. It was agreed
that a diverse candidate with
these skills would also be
highly regarded.
A review was completed
by the Committee on the
geographical location of the
new Chair, assisted by an
externally delivered market
map of available Directors.
A brief was prepared for the
role specifying the above.
The Senior Independent
Director (SID), Colin Keogh,
led the search and the
process on behalf of the
Committee and established
a sub-committee comprising
two other Independent
Directors who were members
of the Committee. The former
Chair recused himself from
the process.
The process was initiated with
the appointment of an agency.
Spencer Stuart was
engaged based on its market
reputation, and alignment
to our DEI objectives. The
search firm used was deemed
to be independent as it does
not have any connection with
the Company or its individual
Directors other than in its
engagement in this capacity.
The search firm identified
potential candidates
assessed against the role
specification, based on
merit, and with due regard
for the benefits of all forms
of diversity on the Board,
including gender and
ethnicity. This produced
a long list of high-quality
candidates from a broad
range of potential sources
of talent. Candidates
were then shortlisted for
interviews, which focused on
each candidate’s skills and
experience for the role.
A formal, multi-stage
interview process was used
to assess candidates, and
included interviews with
Board members including
the Group Chief Executive
Officer. All interview
candidates were deemed
appropriate for appointment
based on their skills and
experience, and subject
to a referencing process
and review of any potential
conflicts and time availability
(assessed against significant
time commitments).
The outstanding candidate
for the role was Jonathan
Bloomer, and the Nominations
and Governance Committee,
led by the SID, agreed that
he demonstrated significant
global insurance and broader
financial services expertise,
as well as substantial previous
Chair experience. The
appointment was announced
in May 2023.
Jonathan’s induction
consisted of a tailored
induction programme which
allowed him to become more
familiar with the working of
the Board and the Group,
and to fully understand
the Company’s operating
environment (internal and
external). This included
meetings with individuals
from the Board, Senior
Management and external
auditors, and was
supported by an induction
pack. The programme
was tailored to Jonathan’s
appointment and it was
continually reviewed to
identify additional areas
where induction is required.
97Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Nominations and
Governance
Committee report
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
The review focused on Non Executive
succession and was aligned to the talent
reviews for the Executive Directors.
As part of this process, the Committee
established the need to appoint a new
Independent Non Executive Director
with a technology background. The
Committee appointed independent
executive search firm, Russell Reynolds,
to assist with the appointment. Russell
Reynolds does not have any connection
with the Company or its Directors other
than in its engagement in this capacity.
Russell Reynolds commenced a search
for candidates meeting the role criteria
outlined by the Committee. Having
undertaken an extensive mapping of
the market for candidates meeting
the key criteria outlined by the
Committee, together with personal
fit for the Board, they identified a
significant number of diverse
candidates who met the criteria
from which a long list of the most
qualified candidates was created.
These candidates were subsequently
interviewed by the Chair and the
Group’s Chief People Officer.
Following these interviews, a shortlist
of candidates went on to meet with
selected Independent Non Executive
Directors, as well as members of
Management. In considering the future
needs of the Board, as well as diversity
of gender and race, Beth Boucher was
identified as the most qualified candidate.
Beth joined the Board on 12May2023
and brings extensive experience
thanks to her career as a global Chief
Information Officer and her significant
expertise across the technology sphere.
Beth’s induction was consistent with the
process outlined for Jonathan above.
Following these formal reviews, the
Board remains confident that the
current skills and expertise are in place
to deliver value to the Company and its
shareholders. This formal annual
process is augmented by ongoing open
dialogue between the Non Executive
Directors on succession and the skills
required to deliver the strategy.
Pages 72 to 73 set out the nature
and breadth of each Director’s relevant
skills and experience. Additionally,
all Directors have demonstrated that
they have adequate capacity to fulfil
their duties.
As part of the discussions on the
requirements of new Directors, the
Committee determined that the
Company has a strong Board which
is sufficiently capable to meet the
demands of the Group and future
strategy. This was also validated
through the Board evaluation process.
Board evaluation
The Board and its Committees have a
culture of continuous improvement and
as part of this undertake a formal and
rigorous annual evaluation of Board
and Committee performance, the
results of which help to inform
action and development. Board and
Committee effectiveness evaluations
are carried out each year and the
results are reviewed and discussed
by the Board and its Committees
– specifically the Nominations and
Governance Committee, with a focus
on Board composition.
2023 Board and Committee
effectiveness review
Every third year, the Board evaluation
is undertaken by an external evaluator.
This was undertaken in 2023 by SCT
Consultants (who have no other
connection with the Company or its
Directors) and, in the interim years, an
internal evaluation is carried out which
also reviews each Committee, the
Board and individual Directors.
2023 evaluation
Building on the work of prior years, the
evaluation involved an assessment of
Board, Committee Chair and individual
Director performance. The Board and
Committee reviews and the external
evaluation focused on the composition
of the Board; the Board’s development
and oversight of business strategy; the
Board’s work on talent, succession and
culture; stakeholder engagement and
wider social impact. This review was
completed by all Directors.
The external evaluation process involved
a review of key Board documents and
a series of confidential interviews with
Board members, including the Company
Secretary, by the external evaluator.
All members of the Board completed a
confidential questionnaire. The external
evaluator also observed the November
Board meetings, and the results were the
subject of a Chair-facilitated discussion
at the Committee.
2023 Board review outcomes
The 2023 Board results demonstrated
continued strong Board, Director,
Chair, and Committee performance
and re-affirmed the independence of
the Board. The report further identified
that the Board is a capable and effective
Board made up of Directors with strong
and diverse capabilities and experience.
Directors have deep expertise in a
variety of areas relevant to the work
of the Company. The Board works
well together as a team and is open,
transparent, straightforward, and
Chapter 3 72
Governance
Nominations and
Governance
Committee report
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
98 Hiscox Ltd Report and Accounts 2023
and their impact on Hiscox,
including competitor activity in
key markets, further work on the
Company’s strategic response to
climate change and further deep
dives on social and governance
matters, as well as oversight of
the Group’s compliance with new
accounting standards (IFRS 17)
to understand the business and
financial changes required, in
addition to peer positioning;
• maintained a focus on people and
succession planning, specifically
relating to workforce DEI, employee
engagement, and long-term
succession planning for Senior
Management, Independent Non
Executive Directors and the Chair;
• continued discussions on the
Group’s strategy to further address
risk, operations and the competitor
environment in a fast-changing world;
• further focus on the development
and communication of sustainability
initiatives in line with changing
expectations and regulation; and
• continued focus on the diversity of
the Board, specifically as a number
of Directors reach the end of their
nine-year term in the coming year.
Jonathan Bloomer
Chair of the Nominations and
Governance Committee
Additional topics for review were
identified as part of the Board evaluation
which will influence the agendas and
training plans for the year.
While it was noted that the Board
continues to perform well and function
effectively, it was also noted that there
will be changes to the Board as a result
of the tenure of some Non Executive
Directors, and as such the Board will
need to consider the future-facing skills
that would be required by prospective
Board candidates. As set out in more
detail on page 67, the Board is cognisant
of its commitment to diversity in all its
forms and intends to continue to comply
with the current FTSE Women Leaders
Review target for gender diversity and
UK Listing Rules targets for gender and
ethnic diversity at Board level.
In summary, the Board welcomed the
review’s conclusions with the feedback
directly linking to ongoing Board
developments. The Chair owns the
response to the findings, and will report
on their delivery in the 2024 Annual
Report and Accounts.
2022 Board effectiveness review –
progress against identified actions
The Board and its Committees have
made tangible progress during 2023
against the action points identified in the
2022 Board effectiveness review:
• focused on the succession of the
Chair of the Board and a new Director;
• continued to drive accountability
and excellence in execution,
including the continued monitoring
of progress against the Company’s
business priorities and key projects,
and the linkage between objective
setting and monitoring;
• devoted time to considering
changes in the external environment
evidence based in its decision-making.
It is well chaired and Directors show
considerable commitment to the
success of the business and to their
responsibilities, including work
outside formal Board meetings. The
selection of and transition to the new
Chair was considered to have been
well managed.
Directors were fully engaged with
the Board, Committee, Chair and
Director evaluation process. The
recommendations presented build on
the very good work which has been done
in recent years to build the capability
and effectiveness of the leadership of
Hiscox. The Board continues to engage in
continuous improvements, with the annual
review process being an explicit point of
reflection on ongoing actions and new
areas of focus. Notable points include:
• the Directors have a clear
understanding of and support for
the business strategy. Building
on this, the Board will continue to
enhance its annual strategy review;
• continuing review of strategy
implementation and milestones,
particularly for large and
material projects;
• strengthening the Board’s existing
work on talent strategy, seeking
out the perspectives of key external
stakeholders, as well as ensuring
there is consistency in the reporting
frameworks from each of the
Group’s business areas; and
• recognising the significant benefits
to the fact that Independent Non
Executive Directors also sit on
subsidiary boards across the
Group, which provides them with
stronger insights into the wider
business, and identifying new ways
for these experiences be shared
between all Directors.
99Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Audit Committee report
In relation to financial reporting, the
primary role of the Audit Committee (the
Committee) is to monitor the integrity
of the financial statements of the Group
and any formal announcements relating
to the Group’s financial performance.
The Committee meets four times
a year to coincide with key points
in the Group’s financial calendar.
Working with both Management and
the external auditor, the Committee
reviewed the appropriateness of the
interim and annual financial statements,
concentrating on:
• the quality and acceptability of
accounting policies and practices;
• the clarity of the disclosures and
compliance with financial reporting
standards and requirements;
• material areas in which significant
judgements and estimates have
been applied, or where there
has been discussion with the
external auditor; and
• any correspondence from
third parties in relation to our
financial reporting.
The Committee is comprised of eight
independent Non Executive members
with relevant finance expertise
and competence relevant to the
insurance sector.
The significant judgements considered
by the Committee in relation to the
2023 financial statements were
as follows.
i) Reserving for insurance losses
As set out in our material accounting
policies on pages 189 to 191, the
reserving for insurance losses is the
most critical estimate in the Group’s
financial statements. The Group
adopted IFRS 17 Insurance Contracts
from 1January2023. This changed
the methodology for measuring and
presenting insurance and reinsurance
contracts in the financial statements;
however, it does not change the Group’s
conservative reserving philosophy.
The Committee received regular updates
on the Group’s IFRS 17 programme
ahead of the publication of restatements
and the interim financial statements,
and the critical estimates applied in
measuring the insurance contract
liabilities and reinsurance assets.
The Committee concluded that the
disclosures in the annual financial
statements with respect to IFRS 17
are appropriate.
The Chief Actuary presents a quarterly
report to the Committee covering Group
loss reserves which discusses both
the approach taken by Management
in arriving at the estimates and the key
judgements within those estimates.
The Committee reviewed and challenged
the key judgements and estimates
in valuing the insurance assets and
liabilities, including in relation to reserving
methods, longer-tailed casualty lines
and IFRS 17 assumptions involving
premium allocation approach eligibility
and risk adjustment.
The Committee is satisfied with both
the process that was conducted, and
the reporting and disclosure of the
resulting estimates. While there remains
uncertainty around the final cost of these
events to the Group, the Committee
notes that the Group continues to
adopt a conservative approach where
uncertainty exists as to the final cost
of settlement. As with prior years, the
Committee also considers the report
of the external auditor, following its
re-projection of reserves using its own
methodologies, and the independent
The Audit Committee
continues to foster
healthy debate and
discussion, with an
uncompromising
focus on the integrity
and robustness of our
financial disclosures.”
Donna DeMaio
Chair of the Audit Committee
Chapter 3 72
Governance
Audit Committee report
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
100 Hiscox Ltd Report and Accounts 2023
actuary who reviews the estimates
of insurance liabilities for the Hiscox
Syndicates. On the basis of this work,
it reported no material misstatements
in respect of the level of reserves held
by the Group at the balance sheet
date. The Committee is satisfied that
the valuation of insurance liabilities and
reinsurance assets at 31December 2023
is appropriate.
ii) The recoverability of
reinsurance assets
Management are not aware of any
material issues regarding concentration
risk, credit risk or default risk on the
Group’s holding of reinsurance assets.
The Committee is satisfied with the
approach taken and the recoverability
of reinsurance assets.
iii) Going concern assessment and
longer-term viability statements
The Committee noted the Group’s
going concern statements included
in the Interim Statement and in this
Annual Report and Accounts, and
the assessment reports prepared
by Management in support of such
statements. More information on the
going concern and viability statements
can be found on pages 148 to 149.
iv) Recoverability of goodwill and other
intangible assets
Judgements in relation to impairment
testing relate primarily to the assumptions
underlying the calculation of the value in
use of the Group’s businesses, being the
achievability of the long-term business
plans and the macroeconomic factors
underlying the valuation process.
The Committee received updates on
impairment testing and the analysis
performed by Management, and
assessed the appropriateness of the
assumptions made. The Committee is
satisfied with the approach taken and
the recoverability of the goodwill and
intangible assets.
v) Accounting for the defined
benefit scheme
As explained in note 2.13 to the financial
statements, the Group recognises the
present value of the defined benefit
obligation, less the fair value of plan
assets at the balance sheet date.
The Committee reviewed the key
judgements and estimates used to
measure the pension scheme and the
results of the independent pension
valuation report. The Committee is
satisfied that the assumptions used
to measure the pension scheme are
reasonable and that appropriate
disclosures are provided in the
financial statements.
vi) Valuation of the investment portfolio
The Group adopted IFRS 9 Financial
Instruments from 1 January 2023.
The new standard did not have a
significant impact on the Group and
the Committee is satisfied that the
transitional disclosures presented in the
financial statements are appropriate.
The Group continues to measure and
report its investment assets at fair value.
Due to the nature of the investments,
as disclosed in notes 14 and 17, the fair
values are based on quoted prices or
are measured using directly or indirectly
observable inputs. A small proportion of
investments rely on a higher degree of
judgement, due to the limited availability
of observable market prices, to estimate
their fair value.
The Committee, through the Investment
Committee, receives reports on the
portfolio valuation and is content
with the process and the estimates
reported. Sensitivity analysis on
valuation of assets is captured within
the financial risk section (note 3.3) of
the financial statements.
vii) The recoverability of deferred
tax assets
Following substantive enactment of
the Corporate Income Tax Act 2023
in Bermuda, the Group expects to be
subject to corporate income tax on the
profits of its Bermudian subsidiaries
with effect from 1 January 2025.
The legislation requires taxpayers
to recognise an economic transition
adjustment, which creates a temporary
difference and should be recognised
as a deferred tax asset or liability,
subject to the recognition criteria.
The estimation of the value of this
deferred tax asset requires significant
judgement. The Committee is satisfied
with Management’s approach to
valuation and recognition of the
deferred tax asset.
Controls and corporate governance
The Committee receives quarterly
updates on the effectiveness of the
financial control environment. This
includes metrics to evaluate control
effectiveness, attestations from business
unit chief financial officers and the
tracking of any control remediation
activity. The Committee receives updates
on internal controls and reporting matters
from the significant regulated entity audit
committees operating within the Group.
In addition, the Committee was updated
on potential changes to the governance
and reporting of internal controls for
UK-listed companies, and the Group’s
plans to address these new reporting
disclosures. The Committee was also
given updates on various thematic
reviews published by the FRC
in 2023 on corporate reporting.
101Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Audit Committee report
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Environmental, social and governance
(ESG) reporting
The Committee was updated on ESG
reporting matters including external
developments such as activity by the
International Sustainability Standards
Board (ISSB). As the demand for
ESG-related disclosures increases,
the Committee recognises it is
important that Hiscox demonstrates
its commitment to environmental,
social and governance factors.
Internal audit
The Group’s Chief Auditor provided
quarterly updates to the Committee
on the progress of the internal audit
plan,the outcomes of recent audits,
the progress of audit-related actions,
and any other relevant activities
including its key performance
measures and the development of
its resources. Updates on aspects
such as the assessment of internal
audit’s effectiveness and the review
of the internal audit policy are shared
annually. Detailed results of an annual
self-assessment against Internal
Audit standards and codes, and on
independence are reported annually
to the Committee. Every three years,
this assessment is carried out externally.
The internal audit plan is derived using
a risk-based approach. In 2023, key
themes included core underwriting
and claims controls, cyber security,
business and IT operations, change,
financial control, data governance and
controls, consumer duty and various
regulatory themes.
External auditor
PwC has been the Company’s external
auditor since 2016 following a tender
process. As an audit tender is required
before 2026, a tender process for
an external audit engagement was
approved in the year. The engagement
with vendors and a selection process will
commence in 2024.
PwC is invited to attend all meetings
of the Committee and it is the
responsibility of the Committee to
monitor their performance, objectivity
and independence. The Committee
discusses and agrees with PwC the
scope of its audit plan for the full-year
and the review plan for the interim
financial statements.
The Audit Committee receives reports
from PwC at each meeting which include
the progress of the audit, key matters
identified and the views of PwC on
the judgements outlined above. PwC
also reports on matters such as their
observations on the Company’s financial
control environment, developments in
the audit profession, and certain other
mandatory communications.
To provide a forum in which any matters
of concern could be raised in confidence,
the Non Executive Directors met with the
external and internal auditors throughout
the year without Management present.
To safeguard auditor independence and
objectivity, non-audit services are not
contracted with PwC unless it is clear
that there is no practical alternative
and there are no conflicts of interest
or independence considerations.
Throughout the year, the Committee
has assessed the independence,
effectiveness and quality of the external
audit process. This assessment
considers the Committee’s interactions
with the external auditors and considers
a variety of issues, including: the
external auditors’ experience and
expertise; their professional scepticism
and approach to challenging
Management where necessary; their
efficiency in completing the agreed
external audit plan; and the content,
quality and robustness of their reports.
The Committee also takes into account
the perspectives of those in Senior
Management who interact with the
external auditors on a regular basis.
This process forms the basis for the
Committee’s recommendation to
shareholders to reappoint the external
auditor and the Committee concluded
that PwC continued to perform
effectively and remains independent
and that the audit was of a sufficiently
high quality.
In planning for an audit tender process
and assessing the effectiveness of the
external auditor, the Committee has been
apprised and has taken into account the
FRC’s publication: Audit Committees and
the External Audit: Minimum Standard.
Fair, balanced and understandable
The Committee assessed whether
the Annual Report and Accounts,
taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Group’s financial position
and performance, business model and
strategy. The Committee reviewed the
processes and controls that underpin
its preparation, ensuring that all
contributors and Senior Management
are fully aware of the requirements and
their responsibilities.
Donna DeMaio
Chair of the Audit Committee
102 Hiscox Ltd Report and Accounts 2023
Q&
A:
with Sarah Bourdeau
Head of Distribution, Hiscox USA
Express delivery
Combining digital capability with
underwriting expertise, Hiscox
USA is seeking rapid growth in
commercial insurance across
multiple distribution channels. >
Sarah Bourdeau joined Hiscox USA in
October 2022 after more than 20years
in the insurance industry. She is now
using her extensive knowledge of
both digital and traditional channels
to help drive growth in the distribution
of small business insurance across
the USA as part of Hiscox USA’s
mission to be America’s leading
small business insurer.
103Hiscox Ltd Report and Accounts 2023
104 Hiscox Ltd Report and Accounts 2023
Q: When you joined in 2022, what was
it that drew you to Hiscox?
A: I’ve spent my whole career in
insurance – claims, underwriting, sales
and distribution, both on the carrier
side and the agent-broker side – and I’ve
worked for most of the leading firms in
the USA. When this position at Hiscox
became available, I was intrigued by
the opportunity to accelerate the growth
of a carrier that is still relatively new to
the USA. From a culture perspective,
Hiscox is unique. We’re very employee
centric, very customer focused,
and there’s a tremendous amount
of entrepreneurial spirit. We’ve built
tremendous capability in the digital
space and have the backing of the
Group, which is a powerful combination.
Q: Does the current scale of the
Hiscox USA operation play to
your strengths?
A: Yes, it really does. There is the
opportunity to lead, while also getting
to roll up your sleeves and really dig into
the business. I personally thrive in that
environment. I love to be hands-on in the
right way, but also sit in board meetings
having high-level strategic discussions.
Here, I can influence the business in a
way I might not be able to at some of the
larger, less entrepreneurial companies,
and that’s really exciting.
Q: As Head of Distribution, what are
your key responsibilities?
A: We have three distribution channels
in the USA: direct, traded and digital.
I’m responsible for traded and digital.
My job is to drive profitable growth
by bringing our products to the right
partners and brokers while also
ensuring we make underwriting
decisions that support the profitability
of our business. On the digital side,
having the first-mover advantage gave
us traction, but the space is competitive
and ever-evolving. To counter this, we
have built the best team in the industry
and have a strategic plan that we are
confident in. Going into 2024, we have
significant momentum and I believe
we’re executing at a level we never
have before.
On the traded side, we’re focused
on creating a broker experience that
creates the ease of doing business that
brokers expect while also maintaining
a strong market presence through
the USA. We’ve built the underwriting
expertise to deliver on this experience
and I strongly believe that distinguishes
us in a busy marketplace.
Q: In the USA, you’re covering a
vast country. How do you serve
such a disparate body of customers?
A: Our strategy is to provide solutions
at every level. Through our four
regional offices, we have underwriters
in the field who are proximate to
our broker partners and we have a
best-in-class underwriting centre that
is engineered for speed and scale. It’s
about meeting different needs: if it’s
a complex account and it takes more
underwriting, we have people who can
sit down with our brokers face to face. If
what’s needed is simple, straight-through
processing, we have a talented team
that will handle those accounts quickly
and efficiently. On the digital side, we
have skilled people to engage with our
partners, but being proximate to them
is less important. Even in our digital
space, we need that human touch –
this is still very much a relationship
business, like it always has been,
and I think that’s what we all love
about it. The job is still very much
about engagement but powered
through technology.
Q: Are you able to attract the skilled
people you need to make those
relationships work?
A: We’ve brought in some of the best
talent in the industry. We’re building a
truly dynamic team with people who
have deep expertise in small commercial
insurance, and that’s really important.
The US market is so competitive,
especially in the smaller commercial
space, so being able to draw on the best
talent is a differentiator for us. We need
people who really understand how to
manage a portfolio of small commercial
businesses and build solutions that
meet our customer’s needs. Attracting
those people is a proof point of the
organisation’s health – they’re choosing
Hiscox over other opportunities in the
marketplace because we’re best in class.
Q: The benefits of the business’s
technological investment are clear
on the digital side, but do they
also extend to the traded side of
the business?
A: Very much so. Many of our brokers
are saying: “We want a digital solution”
or “We’re building a digital solution”
so the opportunity is there for us to
plug into that. Because of our
background in digital, there’s an
opportunity for us to bring those
learnings into the broker space and
to develop industry-leading digital
solutions there as well. Through our
digital capabilities, we’re building more
of those cross-cutting relationships,
which is a great position to be in.
Q: How do you measure success?
A: There are multiple elements to
measuring success in our business.
First and foremost, it’s about our ability
to deliver on the promises we make to
our policyholders. Second, profitable
growth. To achieve our goal of being
Q&
A:
with Sarah Bourdeau
Head of Distribution, Hiscox USA
105Hiscox Ltd Report and Accounts 2023
America’s leading small business insurer,
it’s important we ask ourselves some
pretty important exam questions: are
we growing at the pace we want to and
earning market share? Is our focus on the
segments and products that will deliver a
return? Behind the scenes, we’re getting
more sophisticated in our analytics. Do
we have the necessary foundational
capabilities and can we scale our
business efficiently?
Q: You’re working in a national
market, but you’re also part of a
global business. How does that
affect your work?
A: Day to day, we all operate in our
own markets in the way we need to,
but where we benefit – and what I love
about the Group dynamic – is from the
shared knowledge. I might be the only
Head of Distribution in the USA, but I
have other local market counterparts. So
if I’m trying to solve a problem, I can pick
up the phone, call somebody elsewhere
in the Group and say: “Hey, have you
done this before? How did it go? What
resources did you bring to the table?”
I find it exciting that we get to operate
as a small, nimble, independent US
company, while being part of a bigger,
broader global organisation that has
tremendous talent and resources.
Q: What impact does the strength of
the Hiscox brand have on your work?
A: Brand is important for a number
of reasons. The small commercial
insurance space in the USA is such a
competitive landscape – even the two
largest insurers have no more than a
4-5% market share individually – so
it’s very difficult to get much market
penetration. So having such a strong
brand helps us facilitate that connection
with brokers and partners. We find that
small business customers who have
seen the Hiscox advertising have built
confidence in us as a result.
Q: In your first year there, what has
struck you most about the sense of
community at Hiscox?
A: I love the way we emphasise and live
our values, both internally and externally.
Through the Hiscox Foundation,
employees are encouraged to give back
to the community and we show up strong
in our commitment to the communities
in which we live and work. We get to
support the causes that our people are
most passionate about and we provide
multiple opportunities to teams to give
something back through volunteering,
which I’ve found brings people together
in a really unique way. I’m looking forward
to participating much more next year.
On the digital side, having the
first-mover advantage gave us
traction, but the space is competitive
and ever-evolving. To counter this, we
have built the best team in the industry
and have a strategic plan that we are
confident in. Going into 2024, we have
significant momentum and I believe
we’re executing at a level we never
have before.”
106 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Annual statement from the Chair of the
Remuneration Committee
The Committee
is excited by the
opportunities ahead
for Hiscox and
remains committed to
ensuring remuneration
structures continue
to align Executive
Directors with the
wider workforce
and shareholder
experience.”
Colin Keogh
Chair of the Remuneration Committee
Dear fellow shareholder
On behalf of the Board, I am pleased to
present Hiscox’s remuneration report
for the year ended 31 December 2023.
At Hiscox, our remuneration strategy is
designed to attract and retain talented,
ambitious people, to foster a culture of
high performance and create sustainable
long-term value for shareholders. It
was with this strategy in mind that we
reviewed our remuneration policy in
2022, and the Committee was pleased
to have received a high degree of
support (97.6%) for the policy at the
May2023 AGM. The Committee
believes that the new remuneration
policy, in its first year of implementation,
is operating effectively in respect of our
remuneration goals, demonstrating a
clear link between business performance
and remuneration outcomes.
2023 was a very strong performance
year that has laid the foundations for
continued growth. The appointment
of a new Group Chief Risk Officer in
November 2023 completes the
Group Executive Committee, and
the focus is squarely on execution
of the strategic plan in 2024 and
beyond. The Committee is excited
by the opportunities ahead for
Hiscox and remains committed to
ensuring remuneration structures
continue to align Executive Directors
with the wider workforce and
shareholder experience.
2023 performance and
remuneration outcomes
In 2023, the Executive Directors led
the business to achieve record results
against a backdrop of geopolitical and
economic uncertainty and in an active
year for claims. The Group has delivered
a record pre-tax profit of $625.9 million,
5.6% premium growth, a net combined
ratio (undiscounted) of 89.8%, and
an ROE of 21.8%* – the highest the
business has delivered in many years.
In light of the favourable market
conditions, particularly in the big-ticket
businesses, the Group has seized
the opportunities at this point in the
cycle and has pursued growth through
the additional allocation of capital to
those parts of the business expected
to generate the highest returns, while
remaining within earnings volatility
parameters consistent with the Hiscox
strategy. More information on the key
achievements of each Executive
Director for 2023 can be found on
page 116.
The ROE performance during 2023
has led to higher bonus awards than
in recent years, and the impact of
the 2023 performance year on the
three-year average growth in NAV
plus dividends long-term incentive
performance metric has also
been positive.
The ongoing impact of the change in
accounting standard from IFRS 4 to
IFRS 17 on incentive performance
metrics is described in the sub-sections
that follow and in more detail throughout
the report. The Committee maintains the
view that, in principle, plan participants
should be no better or worse off due
to this change than they would have
been without it. Where necessary
for 2023 and the following years, the
Committee will exercise discretion and
retrospectively adjust incentive targets
or outcomes to be reflective only of
underlying company performance.
* Excludes Bermuda Deferred Tax Asset (DTA).
Including Bermuda DTA, return on equity
is 27.6%.
107Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual statement
from the Chair of
the Remuneration
Committee
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
2023 annual bonus
For the 2023 annual bonus, performance
metrics consisted of: pre-tax ROE
(75%weighting), employee engagement
(5%), retail claims net promoter score (5%)
and individual strategic objectives (15%).
In 2023, pre-tax ROE of 24.5% was
achieved. In assessing Executive
Director bonuses this ROE was adjusted
downwards to reflect one-third of 2022
adjustment for unrealised investment
loss on the bond portfolio. An upward
adjustment was made last year on the
understanding that as the bonds return
to par, downward adjustments would be
made to the 2023-2025 bonus pools to
remove the impact of any future gains.
The ROE metric was adversely impacted
by the larger equity base under the new
IFRS 17 accounting standard, however,
the Committee determined that the
impact was not sufficiently material to
warrant an adjustment.
The weighted average retail claims
NPS during 2023 was 68, compared
with 66 the prior year. The 2023 bonus
target was set at a stretching level with
25% of maximum payable for each
quarterly score of 69 or more. This
was achieved in two of the four
quarters in 2023, leading to a 50%
of maximum outturn.
The Hiscox employee engagement
score for 2023 was maintained
at a nine-year high of 82, despite a
reduction in engagement seen across
the financial services sector. Hurdle
vesting for 2023 was set at 82 which
generated a 20% of maximum outturn.
The assessment of each Executive
Director’s individual strategic objectives
for 2023 is detailed on pages 116 to 117.
Having combined all these performance
metrics, the Committee determined to
award an annual bonus equivalent to
93% of the maximum bonus opportunity
to Aki Hussain (£2,200,000), 91% to
PaulCooper (£1,500.000) and 86% to
Joanne Musselle (£1,900,000).
In line with the newly implemented
policy, 40% of each Executive Director’s
bonus for 2023 will be deferred into
Hiscox shares for three years to further
align their interests with those of
our shareholders.
2021-2023 long-term incentive plan
Awards made under the Performance
Share Plan in 2021 included a 40%
weighting to relative TSR and 60% on
stretching net asset value (NAV) plus
dividends per share targets.
The 2021 award covered one year
(2023) of NAV performance that was
based on the IFRS 17 accounting
standard, while 2021 and 2022 were
both based on the IFRS 4 accounting
standard. The Committee agreed it
was appropriate to measure 2023
performance on an IFRS 4 consistent
basis. We are satisfied that this is the
most appropriate approach to remove
any variability in the 2023 result driven
by the transition between the two
standards and to align with the guiding
principle of ensuring no material benefit
or deficit relative to performance absent
the change.
The three-year average growth in NAV
of 13.3% resulted in vesting of 74.4%
of the maximum weighting for this
metric. Relative TSR performance
was below the median of the peer
group over the three-year period. This
resulted in an overall vesting of 44.6%
of awards.
108 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual statement
from the Chair of
the Remuneration
Committee
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Exercise of discretion
For both the short- and long-term
incentive plans, and consistent
with previous years, the Committee
assessed performance in the round
when determining variable pay
outcomes, including an assessment
of wider Company performance and
the employee, shareholder and wider
stakeholder experience, alongside a
consideration of risk. As mentioned
earlier, a downward adjustment was
made to the 2023 pre-tax ROE result
following the upward adjustment made
in respect of the unrealised bond
losses in 2022.
The Committee used a scoring
mechanism as a starting point to
calculate performance outcomes
against key strategic objectives for
each Executive Director. Discretion
was then exercised in determining
the final outcomes. The impact of the
Group Chief Underwriting Officer’s
higher bonus max (400% salary versus
300% salary for the other Executive
Directors) was rebalanced in order
to achieve a more equitable outcome
in the context of the overall contribution
made by the three Executive Directors.
Board changes in the year
Jonathan Bloomer was appointed
as Chair to the Hiscox Ltd Board on
1 June2023, replacing Robert Childs.
Jonathan’s fee is market aligned and
was benchmarked prior to appointment.
2024 remuneration
For 2024, Aki Hussain’s salary will
increase by 4.3%, Paul Cooper by
2.5% and Joanne Musselle by 2.5%.
These increases differ based on
external market data and are in line
with our average workforce increases
in the UK of 4.3%.
There are no proposed changes to
award levels under the annual bonus
or long-term incentive plan.
The annual bonus metrics for the
2024 plan will remain broadly similar
to those adopted in 2023, albeit with
a small change to the measurement
of the Claims NPS metric to reflect an
internal review that has been carried
out on the NPS process. The 2024
long-term incentive award will be based
on relative TSR and growth in NAV plus
dividends plus shareholder returns
measured on a per-share basis.
Wider workforce
The Committee remains focused on
ensuring Hiscox’s reward philosophy is
applied appropriately across the entire
workforce and that includes looking
after our lowest paid employees.
During 2023, we reviewed the incentive
structures for the wider workforce,
to ensure we have a consistent
methodology in our incentive
approach across Hiscox, which is
aligned to the market and enables
us to remain competitive. The new
incentive structures will be implemented
during 2024 and will provide our
wider workforce with greater visibility
of potential incentive outcomes, in
particular bonus outcomes.
The Committee also continued with
the following activities to ensure we are
appropriately rewarding and engaging
the entire workforce and reflecting this
in Board decision-making:
p
Board oversight: we are regularly
kept up to date by the Chief
People Officer on wider workforce
remuneration trends and policies
to aid our understanding of how
Executive Directors’ remuneration
aligns to that of wider employees;
During 2023, we
reviewed the incentive
structures for the wider
workforce, to ensure
we have a consistent
methodology in our
incentive approach
across Hiscox,
which is aligned to the
market and enables us
to remain competitive.”
109Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual statement
from the Chair of
the Remuneration
Committee
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
p employee engagement:
Anne McDonald, Non Executive
Director, also serves as the
Group’s Employee Liaison and,
as such, continues to facilitate
engagement sessions through
the established representative
employee engagement network to
better understand employee views
on issues, including but not limited
to remuneration, and provides
periodic feedback on these
discussions to the Board. We are
pleased to report that, during 2023,
the feedback received showed that
Executive Director remuneration
is viewed as commensurate with
relative skills, experience and risk
and was not felt to be excessive
or disproportionate.
More broadly, we recognise the
criticality of employee engagement
for our business, which is exemplified
by the inclusion of an employee
engagement metric within the annual
bonus plan for Executive Directors.
Living Wage employer
Hiscox has been an accredited Living
Wage employer in the UK since 2019.
This is an important part of our
employee value proposition and
helps ensure that Hiscox employees
receive pay that recognises the rising
cost of living in the UK.
Additional bonuses have been paid to
the most junior employees in recognition
of the strong financial performance of
the Company during 2023.
Pay reporting
We published our seventh annual UK
gender pay report in 2023 and the
gap remains broadly unchanged from
last year at 16.0% on a mean basis
(2022: 16.0%). We recognise that
there is more to do and are focused
on getting more women into senior
roles, while maintaining our principles
of recruiting based on talent alone. We
have DEI action plans in place across
our business units that are measured
and monitored, with goals related to
recruitment and career development
right through to succession planning.
Employee share ownership
We continue to grant shares to all new
permanent employees aligned with our
ownership value under the HSX:26 share
ownership scheme, to further foster
a culture of sustainable performance
and shared ownership. In addition, all
employees are able to join one of our
sharesave schemes, which run twice a
year and provide the wider workforce
with an opportunity to buy Hiscox shares
at a discounted rate after three years
of saving.
In summary
The Remuneration Committee is
satisfied that 2023 remuneration
outcomes are aligned with the
experience of shareholders and
reflective of business performance.
Colin Keogh
Chair of the Remuneration Committee
Total remuneration 2023
110 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Annual bonus
Shareholding requirement
Long-term incentive plan (LTIP) Award vesting where the performance period ends 31 December 2023
Summary of remuneration arrangements
55%
45%
55%
45%
Aki Hussain Joanne Musselle
Aki Hussain Paul Cooper
Aki Hussain Paul Cooper Joanne Musselle
233%
200%
148%
200%
224%
200%
£3,747,114
£3,070,029
£3,192,132
859,564
606,429
604,582
2,200,000
1,500,000
1,900,000
687,5 5 0
963,600
687,5 5 0
2023 award (as % of max)
Maximum opportunity (as % salary)
Fixed pay
Bonus
LTIP/buy-out
Joanne Musselle
86%
400%
91%
300%
93%
300%
Held
Requirement
2023 vested vs lapsed
Aki Hussain
Paul Cooper
Joanne Musselle
Total remuneration 2023
111Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Summary of
remuneration
arrangements
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Annual bonus
Shareholding requirement
Long-term incentive plan (LTIP) Award vesting where the performance period ends 31 December 2023
Implementation of policy
for 2023
Implementation of policy
for 2024
Award subject to three-year performance
period and two-year holding period.
Maximum opportunity: 250% of salary for
all Executive Directors.
Vesting subject to: growth in NAV
(50% weighting) and relative TSR
(50% weighting).
2023 award as percentage of salary:
AAki Hussain: 250%
APaul Cooper: 225%
AJoanne Musselle: 225%
Holding period: awards subject to a further
two-year holding period following vesting.
Vesting subject to: growth in NAV
(50% weighting) and relative TSR
(50% weighting).
Maximum opportunity, time horizon
and holding period all unchanged.
2024 award as percentage
of salary:
AAki Hussain: 250%
APaul Cooper: 200%
AJoanne Musselle: 200%
Maximum opportunity:
Aup to 300% of salary for CEO and CFO;
Aup to 400% of salary for CUO.
Over the past ten years, the average bonus
awarded to the CEO has been equivalent to
30% of the current maximum opportunity.
Performance metrics: 75% weighting on ROE
and 25% on non-financial performance metrics.
Further details are provided on page 114.
Deferral: flat rate of 40% of bonus deferred
into shares and released three years following
the end of the relevant performance year.
No changes.
Salaries for 2023:
AAki Hussain: £787,500
APaul Cooper: £551,250
AJoanne Musselle: £551,250
Salaries for 2024:
AAki Hussain: £821,500
APaul Cooper: £565,000
A Joanne Musselle: £565,000
Salary increases of 4.3% for the
CEO and 2.5% for other Executive
Directors in line with external market
data and other UK-based employees
where the average increase is 4.3%.
Share ownership guidelines of 200% of salary
for all Executive Directors, after five years in role.
2023 actual:
AAki Hussain: 233%
APaul Cooper: 148%
Paul Cooper was appointed in May 2022.
AJoanne Musselle: 224%
Post-employment shareholding requirement:
maintain the level of the in-employment
shareholding guideline (or the actual
shareholding on stepping down, if lower) for two
years following stepping down from the Board.
Share ownership
guideline unchanged.
Read our remuneration policy.
134
The Hiscox remuneration policy is
designed to drive a culture of high
performance and create sustainable
long-term value for shareholders.
The policy follows three clear principles:
A simple and results-driven, with
variable rewards if Hiscox
delivers profits and shareholder
returns in excess of specified
return thresholds;
A incentivise Executive Directors
appropriately, over the short and
long term; and
A align Executive Directors’ interests
with those of our shareholders,
focusing on effective risk
management, return on equity
(ROE) and net asset value growth,
which drives total shareholder
return over time.
Key principles underpinning
remuneration at Hiscox
£
2023 3,747,114
2022 1,390,959
2021
1,332,964
2020
717, 24 3
2019 698,196
2018 1,818,086
2017 2,394,428
2016 3,970,466
2015 3,358,894
2014 3,130,535
CEO single figure (ten-year history)
112 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Annual report on remuneration 2023
This report explains how the remuneration policy was implemented
for the financial year ended 31 December 2023.
PwC has been engaged to audit the sections in the annual report on remuneration 2023 below entitled ‘Executive Director
remuneration’ and ‘additional notes to the Executive remuneration table’, ‘annual bonus’, ‘performance outcomes for 2023’,
‘long-term incentive plan’, ‘Non Executive Director remuneration table’, ‘Directors’ shareholding and share interest’,
‘Performance Share Plan’ and ‘Sharesave Schemes’, ‘payments to past Directors’, ‘payments for loss of office’, to the extent
that would be required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2013.
Executive Director remuneration table (audited)
2023
Total split
Name
Salary
£
Benefits
£
Retirement
£
Bonus
4
£
Long-term
incentive
plan
2
£
Other
3
£
Total
£
Fixed
remuneration
£
Variable
remuneration
£
Aki Hussain 778,125 10,703 70,736 2,200,000 687,5 5 0 0 3,747,114 859,564 2,887,550
Paul Cooper 544,688 8,945 52,796 1,500,000 0 963,600 3,070,029 606,429 2,463,600
Joanne Musselle 544,688 9,349 50,546 1,900,000 6 87,5 50 0 3,192,132 604,582 2,587,550
2022
Total split
Name
Salary
£
Benefits
£
Retirement
£
Bonus
£
Long-term
incentive
plan
2
£
Other
£
Total
£
Fixed
remuneration
£
Variable
remuneration
£
Aki Hussain 750,000 10,593 67, 86 6 562,500 0 0 1,390,959 828,459 562,500
Paul Cooper
1
340,057 6,009 30,732 237,18 2 0 620,273 1,234,253 376,798 8 57, 45 5
Joanne Musselle 522,125 8,890 43,527 525,000 0 0 1,099,542 574,542 525,000
¹Paul Cooper was appointed as Group Chief Financial Officer on 9 May 2022 and appointed to the Hiscox Ltd Board as an Executive Director on 12 May 2022.
2
2023 long-term incentives for Aki Hussain and Joanne Musselle relate to performance share award granted in 2021 where the performance period ends on
31December 2023. The award is due to vest on 8 April 2024. The amount includes dividend equivalents of £42,799 accrued on the award. For the purpose of
this table, the award has been valued using the average share price during the three-month period 1 October 2023 to 31 December 2023 of £10.00. Of the vested
amount, £90,911 relates to share price appreciation over the performance period.
3
On 3 April 2023, the second tranche of the share buy-out award for Paul Cooper vested. The total vested award was 87,600 shares including dividend
equivalents accrued on the award. The award was valued at £963,600 using the middle market quotation of £11.00 on 3 April 2023, which included £112,814
share price appreciation.
4
40% of the bonus is deferred into shares for three years. No further performance conditions apply.
113Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Additional notes to the Executive Director remuneration table (audited)
Salary
Salary reviews take place in the first quarter of the year, effective from 1 April. As noted in last year’s remuneration report, salaries for all
Executive Directors were increased by 5% which was below the average UK-based employee salary increase of 6.1%.
Base salaries for Executive Directors from 1 April 2023 were as follows:
April 2023
£
Aki Hussain 787,50 0
Paul Cooper 551,250
Joanne Musselle 551,250
Benefits
For 2023, benefits provided for Executive Directors included the healthcare scheme, life insurance, income protection insurance
and critical illness policies, as well as a Christmas gift and fitness cash allowance.
Retirement benefits
Aki Hussain and Paul Cooper received a 10% of salary cash allowance in the year (less an offset for the employer’s UK National
Insurance liability) in lieu of the standard employer pension contribution. Joanne Musselle receives a combination of cash allowance
and employer pension contribution (£8,500 for 2023) totalling 10% of salary (less an offset for employer’s UK National Insurance
on the cash allowance). The value of these retirement benefits are shown in the Executive Director remuneration table on page 112.
Executive Director retirement benefits are consistent with those offered to the majority of UK employees. This has been the policy
at Hiscox for a number of years.
Variable pay
To ensure that remuneration is aligned with Company performance and the shareholder experience, a significant proportion of pay
is delivered through incentive awards, consisting of an annual bonus and share awards under the Performance Share Plan, which
can vary significantly based on the level of performance achieved. Although the remuneration structure has naturally evolved over
time to reflect market and best practice, the framework has been in place for more than 15 years.
114 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Annual bonus (audited)
The Executive Directors, along with other employees across the Group, participate in profit-related bonus pools, which are
calculated at a business unit level and for the Group as a whole. The Remuneration Committee believes that the most appropriate
measure for the calculation of the bonus pool is pre-tax return on equity (ROE), as this aligns Management’s interests with those
of shareholders, minimises the possibility of anomalous results, and ensures that incentives for Executive Directors and other
employees are tied to the Company’s profit performance. When setting targets, the Committee seeks to motivate strong
performance while also encouraging sustainable behaviours, in line with the defined risk appetite of the business.
In determining the bonuses to be paid to Executive Directors for 2023, the Committee based its judgement on the scorecard
shown below. Assessment of claims transactional NPS and employee engagement was undertaken by external third parties.
Metric Weighting
of maximum
opportunity
Performance criteria
Financial Pre-tax ROE 75%
The pre-tax ROE threshold is set annually using an investment
benchmark rate and for 2023 was set at a pre-tax ROE of 5%.
To aid the Committee’s assessment of bonus outcomes, the
following framework was in place for 2023.
Pre-tax ROE Bonus % max
< 5% 0%
5%-12% 0-30%
11%-16% 25-55%
15%-20% 45-75%
18%-23% 65-90%
>21% 80-100%
Non-financial Strategic personal
objectives
15% The Committee undertakes a robust assessment of individual
achievements by the Executive Directors. See page 116 for
further details.
Retail claims
transactional NPS
5% Weighted average quarterly score is derived by an external
third party. Bonus vesting is reduced if the quarterly score falls
below 69.
Global employee
engagement score
5% Engagement is measured through the annual employee
engagement survey run by an external third-party provider.
Performance threshold of 82% engagement below which
bonus payment for this metric is zero with a stretch score
of 90% or above for 5% vesting. Straight-line vesting profile
between hurdle and max.
Maximum bonus opportunities for 2023 remained unchanged from 2022, being 300% of salary for both the Group Chief Executive
Officer and Group Chief Financial Officer and 400% of salary for the Group Chief Underwriting Officer. 40% of annual bonuses are
deferred into Hiscox shares for a period of three years. The release of these shares and the associated accrued dividend shares are
generally subject to continued employment but are not subject to any further performance conditions. The remaining 60% of annual
bonus is paid in cash in March 2024. Malus and clawback provisions apply (see page 141 for more details).
115Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Pay for performance – track record
The chart above shows the relationship between the Group ROE performance and bonus awards for Executive Directors over an
extended period. It demonstrates the strong link between Company performance and bonus outcomes.
Performance outcomes for 2023 (audited)
Pre-tax ROE
The Executive Directors led the business to achieve record results against a backdrop of geopolitical and economic instability
and in an active year for claims. The Group has delivered a pre-tax ROE result of 24.5%.
As explained in last year’s remuneration report, ROE in 2022 was materially impacted by unrealised investment losses on the
bond portfolio. The Committee agreed last year that the fairest treatment was to pay bonuses to Executive Directors and the wider
workforce on an adjusted profit basis, recognising the impact of unrealised investment losses on bonds. It was further agreed that
as the bonds return to par, adjustments would be made to the 2023-2025 bonus pools to remove the impact of any future gains.
This year, the Committee has therefore deducted one-third of the profit adjustment made last year, from this years ROE results.
For the Executive Directors, the profit adjustment of $35.8 million results in an adjusted pre-tax ROE of 23.1% for bonus purposes.
The Committee is of the view that paying 100% of the maximum bonus opportunity weighted to ROE performance is a fair
outcome for the Executive Directors and that payment of this level is aligned with the shareholder experience.
Executive Directors’ cash incentives and return on equity
0510 15 20 25 30 35 40
0
50
100
150
200
250
300
350
400
0% 5% 10%15% 20%25% 30%35% 40
%
40
0
35
0
30
0
25
0
20
0
15
0
10
0
50
0
Return on equity
2001
2020
2011 2017
2018
2002
2008
2005
2010
2007
2009
2006
2003
2016
2004
2013
2015
2012
2014
Below zero
Bonu
s as a percentage of salary
2019
2021
2022
2023
116 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
2023 key objectives and individual achievements by the Executive Directors (audited)
Key objectives Achievements
Aki Hussain
Deliver the 2023
business plan
During 2023, Aki has led the business to achieve record results against a backdrop of geopolitical and
economic instability and in an active year for claims. The Group has delivered a record pre-tax profit of
$625.9 million, 5.6% growth in ICWP, a net combined ratio (undiscounted) of 89.8%, and an ROE of
21.8%*. This record result was underpinned by an additional allocation of capital to those parts of the
business expected to generate the highest returns in the favourable hard market conditions, while
remaining within the Group’s earnings volatility parameters.
Lead an effective
Group Executive
Committee (GEC)
Aki has established a high performing GEC and has been focused on clarifying its role and behaviours,
in the context of delivering the Hiscox Group 2025 ambition. Aki has driven further alignment between
the individual objectives of GEC members and the overall strategy. Excellent progress has been made,
and the record employee engagement score of 82% which was achieved in 2022 was maintained in 2023.
Oversee a risk
aware culture
Aki has strengthened and embedded the Group’s risk aware culture, while also more generally enhancing
its risk management framework. This has been achieved through delivering regular mandatory training
to our people and implementing a new risk and compliance operating model. Aki also appointed Fabrice
Brossart this year as our new Chief Risk Officer, thus completing the membership of the GEC.
Paul Cooper
Deliver the
expense ratio plan
Expense efficiency has been a key priority for Paul this year, and he has led the business to achieve an
expense ratio of 48.1% which represents a 1.5 point improvement year on year. Furthermore, Paul has
formalised a detailed roadmap to continue to maximise operating leverage as we grow the business and
embedded this into the business planning process to the end of 2026.
Implement and
embed IFRS 17
Paul has delivered a smooth implementation of IFRS 17 globally across the business with minimal
disruption. This was achieved through a multi-year programme addressing systems and process changes
and realising efficiencies in the IFRS 17 reporting timetable. This has enabled continued successful and
timely reporting of our results, with clear commentary outlining the impact on our numbers. An extensive
communication schedule was also conducted, including two specific market briefing sessions to sell-side
analysts and an extensive internal training and education programme covering the Board, Management
and staff. This has been recognised and positively received both internally and externally – particularly by
industry analysts and investors.
Build a first class
finance function
Paul has continued to focus on building a first class finance function, which in 2023 included enhancing
the financial risk and control framework to reflect the evolving regulatory landscape, and addressing
changes to the UK Corporate Governance Code with the formation of a dedicated programme to drive
progress. Paul has also embedded a new vision for finance as a trusted business partner and a destination
for talent, completing his Finance Leadership Team during the year with a number of key appointments
including Todd Isaac as our new Chief Investment and Treasury Officer.
Joanne Musselle
Deliver the 2023
business plan
Joanne has successfully overseen our underwriting teams around the world as they maximised
the opportunities in each of our chosen markets, resulting in an insurance service result for 2023 of
$492.3million, up 36.4% year-on-year, despite an active year for claims. Our big-ticket businesses
successfully leaned into the hard market, growing net ICWP in Hiscox London Market by 15.1% and
in Hiscox Re & ILS by 23.2%.
Technical
excellence
Joanne has continued to boost our technical capabilities, with a particular focus on further enhancing
the alignment between underwriting, claims, reserving and pricing. Strong progress has been made,
with minimum standards established and the appointment of a dedicated lead to drive this critical
workstream. In addition, the Faculty of Underwriting, established under Joanne’s leadership to enhance
technical and behavioural skills and capabilities across the underwriting community at Hiscox, continues
to develop the underwriters of the future and ultimately enhance the robustness of the underwriting risk
and control framework across the Group.
Active portfolio
management
Active portfolio management continues to be a key priority for Joanne, and under her leadership our
big-ticket teams have made the most of the cyclical market opportunities, maximising growth in areas
such as property (re)insurance and renewables, while our retail teams have continued to focus on the
structural growth opportunity, investing in tools and capabilities to pro-actively manage emerging trends
and opportunities. Joanne has also overseen the ongoing execution of legacy portfolio transactions
(LPTs) for exited lines of business to effectively minimise earnings volatility. In addition, Joanne has led
the development of a sustainable underwriting strategy for the Group, designed to enable the business
to balance the requirements of the transitioning economy and realise new and growing underwriting
opportunities, including through the ESG 3033 sub-syndicate launched during 2023.
*Excludes Bermuda Deferred Tax Asset (DTA). Including Bermuda DTA, return on equity is 27.6%.
117Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
The Committee used a scoring mechanism as a starting point to calculate performance outcomes against key strategic objectives
for each Executive Director. Discretion was then exercised in determining the final outcomes. The impact of the Group Chief
Underwriting Officer’s higher bonus max (400% salary versus 300% salary for the other Executive Directors) was rebalanced
in order to achieve a more equitable outcome in the context of the overall contribution made by the three Executive Directors.
The Committee judged that Aki Hussain should receive 44% salary for achievement of his objectives, 37% for Paul Cooper and
31% for Joanne Musselle.
Retail claims transactional NPS (audited)
Our customers are at the heart of what we do and their experience of dealing with us is intrinsically linked to our brand value.
Claims transactional net promoter score was measured by an external third party across our retail operations in Europe, the UK
and the USA. The weighted average quarterly scores are shown below.
Q1 66
Q2 69
Q3 69
Q4 68
There were two quarters when the score fell below the performance threshold score of 69 and therefore 50% of the weighting
attributed to this metric will vest.
Global employee engagement score (audited)
Employee engagement has proven to be strongly correlated with overall Company performance and we regard it as an important
forward-looking leading measure of our success. We also believe it is largely a function of good leadership. Engagement was
measured during 2023 through an annual global employee engagement survey run by an external third-party provider. The score
was 82% and therefore 20% of the weighting attributed to this metric will vest.
Summary of annual bonus performance outcomes (audited)
The maximum bonus opportunity for both the Group Chief Executive Officer and Group Chief Financial Officer is 300% salary and
400% of salary for the Group Chief Underwriting Officer. Having assessed the scorecard outturns and aggregate performance,
the Committee is of the view that paying 93% of the maximum bonus opportunity to Aki Hussain (£2,200,000), 91% to Paul Cooper
(£1,500.000) and 86% to Joanne Musselle (£1,900,000) are fair outcomes for the Executive Directors, reflective of the excellent
business results and aligned with the shareholder experience.
Long-term incentive plan (audited)
Share buy-out arrangements for Paul Cooper
As disclosed in the 2022 remuneration report, in lieu of forfeited long-term incentive plan awards with his previous employer,
PaulCooper was compensated with awards of an equivalent face value and all vesting terms were mirrored. The Hiscox malus
and clawback provisions apply. Vesting is subject to continued employment.
On 3 April 2023, the second tranche of the buy-out award vested. Paul Cooper received an additional 820 shares equivalent to
the dividends payable with a record date between 16 May 2022 and 2 April 2023. The total vested award was 87,600 shares.
118 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Performance Share Plan (PSP) awards where the performance period ends with the 2023 financial year (audited)
Aki Hussain and Joanne Musselle were each granted 144,436 nil-cost options under the PSP on 8 April 2021 for the three-year
performance period 1 January 2021 to 31 December 2023.
The performance conditions for this award were set at the start of the performance period and are as follows.
60% of awards are based on three-year average growth in NAV per share, plus dividends:
Award vesting (% of maximum)
Less than RFR + 6% p.a. 0
RFR + 6% p.a. 16
RFR + 14% p.a. 80
Equal to or greater than RFR +17% p.a. 100
Straight-line vesting in between each point.
The risk-free rate (RFR) for the awards granted in 2021 was set at 0%.
40% of awards are based on relative total shareholder return measured against a group of global insurance peers:
Relative TSR Award vesting (% of maximum)
Below median 0
Median 20
Upper quartile 100
Straight-line vesting in between each point.
The peer group consists of the following 24 companies: Admiral Group, Alleghany, American Financial Group, Arch Capital, Argo, Axis Capital, Beazley,
CincinnatiFinancial, Conduit, CNA Financial, Direct Line Insurance Group, Everest Re, Fairfax Financial Holdings, Hanover Insurance, James River Group,
KinsaleCapital Group, Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains Insurance Group, and WR Berkley.
Performance outcome
Following Berkshire Hathaway’s acquisition of Alleghany in 2022, Alleghany has been removed from the peer group, reducing
the number of companies to 23. Hiscox’s relative TSR performance over the three-year period was below the median of the
comparator group and therefore this component of the award will not vest.
The three year average growth in net asset value plus dividends, measured on a consistent IFRS 4 basis over the period, was
13.3%. The vesting outcome was 74.4% of the maximum award which when applied to the 60% weighting for this metric, equates
to an overall vesting of 44.6%. Executive Directors will accrue additional shares based on dividend equivalents over the three
performance years and are required to hold the vested shares (net of tax) for a further two years from the end of the three-year
vesting period.
119Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
PSP awards granted during the 2023 financial year (audited)
PSP awards granted to the Executive Directors in 2023 were set at 250% of salary for Aki Hussain and 225% of salary for
both PaulCooper and Joanne Musselle. Awards are based on a three-year performance period and will vest on 15 May 2026
followed by a two-year holding period. 50% of awards are based on stretching growth in net asset value (NAV) plus dividends
targets, measured on a per share basis, with 50% based on relative total shareholder return (TSR) against a group of global
insurance peers.
Executive Directors were granted nil-cost options under the PSP as shown below. Grants were made on 23 May 2023.
Number of
awards granted
Market price
at date of grant
£
Market value
at date of grant
£
Aki Hussain 168,269 11.74 1,975,478
Paul Cooper 106,009 11.74 1,244,546
Joanne Musselle 106,009 11.74 1,244,546
The performance condition for these awards, measured over the period 1 January 2023 to 31 December 2025, is as follows:
Growth in NAV per share plus dividends Award vesting (% of maximum)*
< $0.43 p.a. 0
$0.43 p.a. 20
$1.28 p.a. 100
*Applies to 50% of awards. Straight-line vesting in between each point.
These numbers were set on an IFRS 4 basis. The performance years 2023, 2024 and 2025 will be measured on an IFRS 17 basis and so these IFRS 4 targets will be
converted to equivalent IFRS17 numbers and restated prior to vesting.
Relative TSR Award vesting (% of maximum)*
Below median 0
Median 20
Upper quartile 100
*Applies to 50% of awards. Straight-line vesting in between each point.
The peer group consists of the following 23 companies: Admiral Group, American Financial Group, Arch Capital, Argo, Axis Capital, Beazley, Cincinnati Financial,
CNA Financial, Conduit, Direct Line Insurance Group, Everest Re, Fairfax Financial Holdings, Hanover Insurance, James River Group, Kinsale Capital Group,
Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains Insurance Group, and WR Berkley.
Executive Directors will be required to retain any shares post vest (net of tax charges) for a further two years.
120 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Non Executive Director remuneration (audited)
The table below sets out the remuneration received by the Non Executive Directors for the financial years ending 31 December 2023
and 31 December 2022.
2023
Ltd Board
fee
£
Subsidiary board
fee
£
Benefits
6
£
Total Hiscox
fees
£
Jonathan Bloomer (Chair)
1
195,417 – – 195,417
Robert Childs
2
147, 50 0 – 7,041 154,541
Beth Boucher
3
64,213 – – 64,213
Donna DeMaio 108,871 62,903 – 171,774
Michael Goodwin 100,806 36,290 – 137,096
Thomas Huerlimann
4
100,806 119,804 – 220,610
Colin Keogh 121,774 106,000 – 227,7 74
Anne MacDonald 108,871 – – 108,871
Constantinos Miranthis 108,871 39,516 – 148,387
Lynn Pike 106,452 62,903 – 169,355
2022
Ltd Board
fee
£
Subsidiary board
fee
£
Benefits
1
£
Total Hiscox
fees
£
Robert Childs (Chair) 295,000 – 13,987 308,987
Donna DeMaio 116,379 39,224 – 155,603
Caroline Foulger
5
45,634 43,971 – 89,605
Michael Goodwin 107,75 9 38,793 – 146,552
Thomas Huerlimann 107,75 9 51,304 – 159,063
Colin Keogh 130,172 106,000 – 236,172
Anne MacDonald 116,379 – – 116,379
Constantinos Miranthis 116,379 42,241 – 158,620
Lynn Pike 113,79 3 67, 241 – 181,034
1Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023. Board fees are pro-rated from this date.
2
Robert Childs retired from the Hiscox Ltd Board on 30 June 2023. Ltd Board fees and benefits are pro-rated to this date.
3
Beth Boucher was appointed to the Hiscox Ltd Board on 12 May 2023.
4
Thomas Huerlimann took over as Chair of a subsidiary board in Q4 2023.
5
Caroline Foulger retired from the Hiscox Ltd Board on 12 May 2022.
6
Benefits include life assurance and healthcare.
Fees are paid in multiple currencies – 2023 fees were converted using £1: €1.15 and £1: $1.24. 2022 fees were converted using £1: €1.15 and £1: $1.16.
121Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Membership of the Remuneration Committee
The Remuneration Committee members during the year were Beth Boucher, Donna DeMaio, Michael Goodwin,
Thomas Huerlimann, ColinKeogh (Chair), Anne MacDonald, Constantinos Miranthis and Lynn Pike.
Directors’ shareholding and share interests (audited)
To align their interests with those of Hiscox shareholders, senior managers are expected to own a minimum number of Hiscox
shares. Executive Directors are required to hold Hiscox shares valued at 200% of salary within five years of becoming an Executive
Director. Joanne Musselle and Aki Hussain have met the requirement with holdings of 224% and 233% respectively using
the closing share price on 31 December 2023. Paul Cooper was appointed to the Board in 2022 and is beginning to build his
shareholding. He currently holds shares equivalent to 148% of salary.
Details of the post-employment shareholding guideline for Executive Directors which applies for a period of two years from
stepping down from the Board can be found on page 139.
The interests of Executive and Non Executive Directors are set out below, including shares held by connected persons. There
have been no changes in the Director share interests between 31 December 2023 and 5 March 2024.
Directors
31 December
2023
6.5p ordinary
shares
number of shares
beneficial
31 December
2022
6.5p ordinary
shares
number of shares
beneficial
Executive Directors:
Aki Hussain 174,188 145,767
Paul Cooper 77,174 30,045
Joanne Musselle 117,3 09 117,3 0 9
Non Executive Directors:
Jonathan Bloomer
1
20,000 –
Robert Childs
2
1,113,162 1,213,162
Beth Boucher – –
Donna DeMaio – –
Michael Goodwin 12,678 12,678
Thomas Huerlimann 16,548 16,112
Colin Keogh 59,667 53,980
Anne MacDonald 42,629 41,504
Constantinos Miranthis 6,832 6,832
Lynn Pike 1,538 1,538
1
Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023.
2
Robert Childs retired from the Hiscox Ltd Board on 30 June 2023.
122 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Annual report on
remuneration 2023
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Performance Share Plan (PSP) (audited)
Awards in the form of nil-cost options are granted under the PSP as a percentage of salary. All awards are subject to performance
conditions, with the exception of Paul Cooper’s buy-out. The interests of Executive Directors are set out below:
Name
Number of
awards at
1 January
2023
Number of
awards granted
Number of
awards lapsed
Number of
awards exercised
Number of
awards at
31 December
2023
Mid-market price
at date of grant
£
Average market
price at date of
exercise
£
Date from
which released
Aki Hussain 120,500 – (120,500) – – 7.0 0 15-May-23
144,436 – – – 144,436 8.59 08-Apr-24
190,355 – – – 190,355 9.85 08-Apr-25
– 168,269 – – 168,269 11.74 23-May-26
Paul Cooper 86,780* 820 – ( 87, 6 0 0) – 9.70 11.0 0 03-Apr-23
42,945* – – – 42,945 9.70 01-Apr-24
11,037 * – – – 11,037 9.70 01-Apr-25
141,646 – – – 141,646 9.85 08-Apr-25
– 106,009 – – 106,009 11.74 23-May-26
Joanne Musselle 120,500 – (120,500) – – 7.0 0 15-May-23
144,436 – – – 144,436 8.59 08-Apr-24
133,248 – – – 133,248 9.85 08-Apr-25
– 106,009 – – 106,009 11.74 23-May-26
Total 1,135,883 381,107 (241,000) (86,780) 1,188,390
*Denotes buy-out award.
Sharesave Schemes (audited)
The interests of Executive Directors under the Sharesave Schemes are set out below.
The scheme offers a three-year savings contract where the exercise price of the options is calculated on an average share price
over five days prior to the invitation date, with a 20% discount. Sharesave options are not subject to performance.
Number of
options at
1 January
2023
Number of
options granted
Number of
options lapsed
Number of
options exercised
Number of
options at
31 December
2023
Exercise price
£
Market price
at date
of exercise
£
Date from which
exercisable Expiry date
Aki Hussain 2,500 – – – 2,500 7. 20 01-Jun-24 30-Nov-24
Paul Cooper 2,452 – – – 2,452 7.3 4 01-Dec-25 31-May-26
Joanne Musselle 2,380 – – – 2,380 7. 56 01-Dec-24 31-May-25
Total 7,3 3 2 – – – 7,3 32
Payments for loss of office (audited)
No payments were made during the year for loss of office.
Payments to past Directors (audited)
Following stepping down as Group Chief Executive Officer and as an Executive Director of Hiscox Ltd with effect from
31December 2021, Bronek Masojada has continued providing strategic advice as an Executive Advisor for key subsidiaries.
During 2023, Bronek received a salary of £150,000 and was covered under the health insurance and life assurance schemes.
Bronek was granted a performance share award in 2021 of 187,612 shares. As detailed on page 118, 44.6% of these awards
will vest plus Bronek will receive additional shares based on dividend equivalents over the three performance years. He will be
required to retain the shares post vest (net of tax charges) for a further two years.
123Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Implementation of remuneration policy for 2024
Salary
Annual salary reviews take effect from April each year. The Committee takes account of a number of factors, primarily the increase
applied to other UK-based employees. The Committee applies judgement when using external market data.
For 2024, salaries will be increased by 4.3% for the Group Chief Executive Officer and 2.5% for the other Executive Directors. This
is in line with external market data and other UK-based employees where the average increase is 4.3%. Salaries from April 2024
will be as follows:
2024
£
Aki Hussain 821,500
Paul Cooper 565,000
Joanne Musselle 565,000
Bonus
The annual bonus performance targets for 2024 are considered commercially sensitive. They will be disclosed in full in the 2024
annual report on remuneration including specific details of individual and strategic performance targets. The weighting of the
performance measures will remain unchanged from 2023, as detailed below.
Metric Weighting
Pre-tax ROE 75%
Strategic personal objectives 15%
Retail claims transaction NPS 5%
Global employee engagement score 5%
The maximum opportunity remains unchanged at 300% salary for the Group Chief Executive Officer and Group Chief Financial
Officer, and 400% salary for the Group Chief Underwriting Officer.
124 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Implementation of
remuneration policy
for 2024
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Long-term incentive plan: Performance Share Plan (PSP)
The maximum opportunity for the awards to be granted to the Executive Directors in 2024 will remain unchanged at 250% of
salary. Awards in the form of nil-cost options will continue to be based on a three-year performance period (1 January 2024 to
31December 2026) followed by a two-year holding period post vest. The Group Chief Executive Officer will receive an award of
250% salary and the Group Chief Financial Officer and Group Chief Underwriting Officer will each receive 200% of salary.
For 2024, 50% of awards will be based on stretching growth in NAV plus dividends plus shareholder returns, measured on a
per-share basis. The Committee considers that growth in NAV continues to be a key metric for the PSP given that our strategy
is built around the objective of generating long-term shareholder value and NAV is aligned with shareholder value creation.
The targets below represent an expected aggregate increase in shareholder value of between $433 million and $1,255 million over
three years.
Growth in NAV
plus dividends
plus shareholder
returns per share
Proportion of PSP vesting
%
Minimum threshold vesting $0.42 p.a. 20
Maximum vesting $1.21 p.a. 100
Applicable to 50% of awards. Straight-line vesting between threshold and maximum.
50% of awards will be based on relative TSR, aligned to our strategy of generating long-term value for shareholders.
Relative TSR
Proportion of PSP vesting
%
Below median 0
Median 20
Upper quartile 100
Applicable to 50% of awards. Straight-line vesting in between each point.
The peer group consists of the following 23 companies: Admiral Group, American Financial Group, Arch Capital, Argo, Axis Capital, Beazley, Conduit,
CincinnatiFinancial, CNA Financial, Direct Line Insurance Group, Everest Re, Fairfax Financial Holdings, Hanover Insurance, James River Group, Kinsale Capital
Group, Lancashire Holdings, Markel, QBE, Renaissance Re, RLI, SCOR, White Mountains Insurance Group, and WR Berkley.
125Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Implementation of
remuneration policy
for 2024
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Non Executive Director fees
The Non Executive Director fees which apply for 2024 are set out below. The Board Chair’s fee increased from £295,000 to
£335,000 during 2023, which was as the result of the appointment of Jonathan Bloomer. The Chair fees were benchmarked
and approved by the Nominations and Governance Committee.
All Board members sit on each of the Committees (Audit, Remuneration, Risk, Nominations and Governance) so the Committee
fees have been aggregated into the basic fee.
2024
fees
Board Chair and subsidiary services £335,000
Non Executive Director basic fee $125,000
Additional fees for:
Audit Committee Chair $10,000
Remuneration Committee Chair $9,000
Risk Committee Chair $7,000
Senior Independent Director $17,000
Employee Liaison $10,000
Bermuda Committee $10,000
126 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Other remuneration matters
External Non Executive Directorships
Executive Directors may not accept any external appointment that may give rise to a conflict of interest, and all external
appointments require the consent of the Chair. Aki Hussain held a directorship at VISA Europe Limited during 2023 and received
a fee of £132,500. Joanne Musselle was remunerated £40,000 for her directorship at Realty. Paul Cooper was an unremunerated
member of the board at the ABI.
External advisors
The Committee received independent advice from WTW during 2023. WTW was appointed by the Committee in June 2022,
following a competitive tender process. WTW is a signatory to the Remuneration Consultants Group Code of Conduct and, as
such, voluntarily operates under its code of conduct. During the year, the Committee received advice on developments in market
practice, corporate governance, institutional investor views, and on the design of the Company’s remuneration arrangements.
Total fees for advice provided to the Committee during the year were £173,620 based on a time and materials basis.
The Committee regularly reviews the advice it receives and is satisfied that this has been objective and independent. During the
year, WTW also provided other consulting services to the Company.
In addition to the external advisors, the Group Chief Executive Officer and Chief People Officer attend the Committee meetings by
invitation and provided material assistance to the Remuneration Committee during the year. No Director or Committee member
was involved in determining their own remuneration during the year.
Statement of shareholder voting
At the AGM on 11 May 2023, the directors remuneration report and remuneration policy received the shareholder votes shown in
the table below. The Committee was pleased with the level of support received from shareholders.
Directors remuneration report
(11 May 2023)
Remuneration policy
(11 May 2023)
For 261,629,087 274,610,137
% 93.39% 97.5 8%
Against 18,522,418 6,811,674
% 6.61% 2.42%
Withheld 1,280,608 10,302
127Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Other remuneration
matters
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Total shareholder return performance
The graph below shows the total shareholder return of the Group against the FTSE All-Share and FTSE Non-Life Insurance
indices. These reference points have been shown to assess performance against the general market and industry peers.
Between December 2013 and 2023, Hiscox delivered total shareholder return of 67.5%.
Total shareholder return
(%)
160
140
120
100
80
60
40
20
0
-20
Dec 22
Dec 23
Dec 21
Dec 20
Dec 19
Dec 18
Dec 17
Dec 16
Dec 15
Dec 14
Dec 13
Hiscox
FTSE All-Share
FTSE Non-Life Insurance
128 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Other remuneration
matters
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chief Executive historic remuneration
The table below shows the single total remuneration figure for the Group Chief Executive Officer for the past ten years. The Group
Chief Executive Officer was Bronek Masojada up to and including 2021. From 1 January 2022 the Group Chief Executive Officer
is Aki Hussain.
2014
1
2015 2016 2017 2018 2019 2020 2021 2022 2023
CEO single
figure of
remuneration (£) 3,130,535 3,358,894 3,970,466 2,394,428 1,818,086 698,196 717, 24 3 1,332,964 1,390,959 3,747,114
Annual bonus
as percentage
of current max 44 39 64 0 9 0 0 30 25 93
PSP vesting
as percentage
of maximum
opportunity 100 100 100 85 47 0 0 0 0 45
1
Prior to 2015, the annual bonus was operated on an uncapped basis. In order to facilitate comparison, a cap has been applied retrospectively.
Comparator data
Remuneration for the wider workforce
When considering the remuneration arrangements for Senior Management, the Committee takes into account remuneration
throughout the wider workforce, which is based on broadly consistent principles. The Remuneration Committee receives
information on Group-wide remuneration policies and uses internal and external measures to assess the appropriateness of the
remuneration policy and outcomes for Executive Directors. During the year, the Committee reviewed information on market levels
of pay in our peer group, bonus pools split by business area, levels of share plan participation and pay ratios between Executives
and average employees.
The Committee received employee feedback on executive remuneration during 2023 via our employee engagement network led
by Employee Liaison and Non Executive Director Anne MacDonald.
Anne directed a group of employees to the relevant sections of the Annual Report where executive remuneration was described in
detail. The group noted that there is a wider, macro question relating to companies in general around the increasing financial gap
between executives and workforce and the long-term societal, ethical and community impact this may have, but noted that market
forces are what they are. Specifically, with respect to Hiscox, it was noted that the remuneration for Senior Executives was higher,
but this was commensurate with their relative skills, experience and risk. The group did not believe that the remuneration was
excessive or that Executive Directors benefited from any arrangements that targeted Executive Management in a disproportionate
manner or were materially different than the wider workforce. It was noted that in certain situations the arrangements for Executive
Directors were more restrictive.
129Hiscox Ltd Report and Accounts 2023
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Other remuneration
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Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Group Chief Executive Officer pay ratio
The Group Chief Executive Officer’s total remuneration compared with the median (50th percentile) remuneration of the
Company’s UK employees as at 31 December 2023 is shown below, along with the 25th and 75th percentiles.
We selected calculation method ‘Option A’ as it is the more robust approach and favoured by investors. This method captures all
pay (excluding overtime due to its volatility) and benefits for the financial year to 31 December 2023 and aligns with how the ‘single
figure’ table is calculated (from which there has been no deviation). Part-time employee single figures were annualised to provide
more meaningful comparison.
Full year
Calculation
methodology
P25
(lower quartile)
P50
(median)
P75
(upper quartile)
2023 A 79:1 49:1 32:1
2022 A 31:1 20:1 13:1
2021 A 34:1 20:1 12:1
2020 A 20:1 12:1 8:1
2019 A 19:1 11:1 7:1
The table below shows the salary and total remuneration of each employee at the 2023 quartile positions.
2023
P25
£
P50
£
P75
£
Salary 37,8 09 59,305 79,298
Total remuneration 47,6 96 76,285 116,9 05
The Committee has considered the pay data for the three employees identified and believes that it fairly reflects pay at the relevant
quartiles among the UK employee population. The increase in CEO pay ratio for 2023 is a result of improved vesting of the
long-term incentive plan and higher bonus outturns. Given the greater weighting of variable remuneration versus fixed pay for
senior roles, including the Group Chief Executive Officer, these positive business outcomes translate into a significant increase
in the CEO pay ratio.
The Committee is comfortable that the pay ratio for 2023 aligns to the pay and progression policies for employees, in particular,
that pay is truly linked to performance and that individuals are appropriately motivated and rewarded according to their knowledge
and seniority within the business.
130 Hiscox Ltd Report and Accounts 2023
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Governance
Chapter 4 106
Remuneration
Other remuneration
matters
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Percentage change in remuneration of the Board Directors
The table below shows the percentage change in remuneration for each Executive and Non Executive Director, between the years
2020 and 2023. Salary and bonus are compared against all employees globally, benefits are compared against all UK-based
employees, reflecting the location of the Executive Directors.
2020
% change
2021
% change
2022
% change
2023
% change
Salary/fees Benefits Bonus Salary/fees Benefits Bonus Salary/fees Benefits Bonus Salary/fees Benefits Bonus
All employees
1
4.3 5.9 (3 6.1) 1.8 (3.7) 147 5.8 2.6 11.6 3.6 8.6 29.7
Executive Directors:
Aki Hussain 2.8 (6.9) N/A 2.2 3.3 N/A 46.8 43.3 21.7 3.8 3.8 291.1
Paul Cooper N/A N/A N/A N/A N/A N/A N/A N/A N/A 60.2 68.0 532.4
Joanne Musselle N/A N/A N/A 22.1 21.6 N/A 2.2 (6.4) (4.5) 4.3 14.3 261.9
Non Executive Directors:
2
Jonathan Bloomer
3
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Robert Childs
4
1.7 (1.7) – – 10.4 – – 8.7 – (50.0) (50.0) –
Beth Boucher N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Donna DeMaio N/A N/A N/A N/A – – 536.2 – – 10.4 – –
Michael Goodwin 4.2 – – (0.7) – – 19.0 – – (6.5) – –
Thomas Huerlimann
5
(2.0) – – (1.4) – – 12.5 – – 38.7 – –
Colin Keogh (2.5) – – 32.4 – – 9.6 – – (3.6) – –
Anne MacDonald 2.2 – – (0.7) – – 19.0 – – (6.5) – –
Constantinos Miranthis (5.2) – – 5.0 – – 19.0 – – (6.5) – –
Lynn Pike (6.3) – – (0.7) – – 19.0 – – (6.5) – –
1
Median employee salary, benefits and bonus have been calculated on a full-time equivalent basis. Salary and benefits are calculated as at 31 December 2023,
bonus is that earned during the year ending 31 December 2023.
2
Non Executive Director fees are subject to exchange rate fluctuations.
3
Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023. Board fees are pro-rated from this date.
4
Robert Childs retired from the Hiscox Ltd Board on 30 June 2023. Board fees and benefits are pro-rated to this date.
5
Thomas Huerlimann took over as Chair of a subsidiary board in Q4 2023.
131Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Other remuneration
matters
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Percentage change in remuneration of the Board Directors
The table below shows the percentage change in remuneration for each Executive and Non Executive Director, between the years
2020 and 2023. Salary and bonus are compared against all employees globally, benefits are compared against all UK-based
employees, reflecting the location of the Executive Directors.
2020
% change
2021
% change
2022
% change
2023
% change
Salary/fees Benefits Bonus Salary/fees Benefits Bonus Salary/fees Benefits Bonus Salary/fees Benefits Bonus
All employees
1
4.3 5.9 (3 6.1) 1.8 (3.7) 147 5.8 2.6 11.6 3.6 8.6 29.7
Executive Directors:
Aki Hussain 2.8 (6.9) N/A 2.2 3.3 N/A 46.8 43.3 21.7 3.8 3.8 291.1
Paul Cooper N/A N/A N/A N/A N/A N/A N/A N/A N/A 60.2 68.0 532.4
Joanne Musselle N/A N/A N/A 22.1 21.6 N/A 2.2 (6.4) (4.5) 4.3 14.3 261.9
Non Executive Directors:
2
Jonathan Bloomer
3
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Robert Childs
4
1.7 (1.7) – – 10.4 – – 8.7 – (50.0) (50.0) –
Beth Boucher N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Donna DeMaio N/A N/A N/A N/A – – 536.2 – – 10.4 – –
Michael Goodwin 4.2 – – (0.7) – – 19.0 – – (6.5) – –
Thomas Huerlimann
5
(2.0) – – (1.4) – – 12.5 – – 38.7 – –
Colin Keogh (2.5) – – 32.4 – – 9.6 – – (3.6) – –
Anne MacDonald 2.2 – – (0.7) – – 19.0 – – (6.5) – –
Constantinos Miranthis (5.2) – – 5.0 – – 19.0 – – (6.5) – –
Lynn Pike (6.3) – – (0.7) – – 19.0 – – (6.5) – –
1
Median employee salary, benefits and bonus have been calculated on a full-time equivalent basis. Salary and benefits are calculated as at 31 December 2023,
bonus is that earned during the year ending 31 December 2023.
2
Non Executive Director fees are subject to exchange rate fluctuations.
3
Jonathan Bloomer was appointed as Chair to the Hiscox Ltd Board on 1 June 2023. Board fees are pro-rated from this date.
4
Robert Childs retired from the Hiscox Ltd Board on 30 June 2023. Board fees and benefits are pro-rated to this date.
5
Thomas Huerlimann took over as Chair of a subsidiary board in Q4 2023.
132 Hiscox Ltd Report and Accounts 2023
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Remuneration
Other remuneration
matters
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Profit before tax ($m)
+127.1 (% change)
Dividend and return of
capital to shareholders
†
($m)
+4.8 (% change)
Total employee remuneration ($m)
+19. 8 (% change)
276
626
124
130
373
447
2022*
2022* 20222023 2023
2023
* Restated for the adoption of IFRS 17 and IFRS 9.
Relative importance of the spend on pay
The charts below show the relative movement in profit, shareholder returns and employee remuneration for the 2022 and 2023
financial years. Shareholder return for the year incorporates the distribution made in respect of that year. Employee remuneration
includes salary, benefits, bonus, long-term incentives and retirement benefits. Profit is the ultimate driver behind the performance
metrics of the bonus and long-term incentive schemes. See profit before tax on the consolidated income statement on page 174.
†
Shareholder return for the year incorporates
the distribution made on behalf of that year
(for example, final dividend paid in April/May the
following year) and excludes the impact of the
share buyback announced in March 2024.
133Hiscox Ltd Report and Accounts 2023
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Remuneration
Other remuneration
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Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
How we have addressed the following factors in the UK Corporate Governance Code 2018
Factor Consideration of how this is addressed for Hiscox
Clarity – remuneration arrangements
should be transparent and promote
effective engagement with shareholders
and the workforce.
A Shareholders’ views on the proposed changes to the remuneration policy were
sought during Q1 2023 and constructive feedback was received.
A In 2023, a range of people-related topics, including remuneration, were discussed
by our Employee Engagement Network, facilitated by Committee member Anne
MacDonald, who also serves as our Employee Liaison. The Committee receives
information on broader workforce remuneration policies and practices during the
year which informs its decision-making for Executive Director remuneration.
Simplicity – remuneration structures
should avoid complexity and their
rationale and operation should be easy
to understand.
A The remuneration philosophy is a simple one: to reward performance. Hiscox’s
remuneration framework is simple, comprising three main elements:
Afixed pay (base salary, benefits and pension);
Aannual bonus; and
Aperformance share awards.
Risk – remuneration arrangements
should ensure reputational and other
risks from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated.
The remuneration policy incorporates a number of design features to take account
of and minimise risk:
A the Committee has the ability to apply independent judgement and override
formulaic outcomes to ensure that incentive awards are a fair reflection of both
the Company’s performance and that of the individual over that period;
A part of the annual bonus is subject to deferral, and share awards are subject to a
post-vesting holding period and a post-employment shareholding requirement;
A all variable remuneration is subject to malus and clawback provisions.
Predictability – the range of possible
values of rewards to individual Directors
and any other limits or discretions should
be identified and explained at the time of
approving the policy.
s The range of possible values are set out in the performance scenario charts in
the remuneration policy on page 143.
s Limits and ability to exercise discretion are also set out in the notes to the policy
on page 141.
Proportionality – the link between
individual awards, the delivery of strategy
and the long-term performance of the
Company should be clear. Outcomes
should not reward poor performance.
s Variable incentive pay-outs have a strong link to Company performance. The
Committee is satisfied that the remuneration outcomes for 2023, detailed on
pages 117 and 118, are reflective of Company performance over the respective
performance periods.
Alignment to culture – incentive
schemes should drive behaviours
consistent with Company purpose,
values and strategy.
s The variable incentive schemes, including quantum, time horizons, form of
award, performance measures and targets are all designed with the Company’s
purpose, values and strategy in mind.
s Strategic non-financial measures, including retail claims NPS, are included in the
annual incentive.
s The pay arrangements for the Executive Directors are aligned with those of the
broader workforce and senior team.
134 Hiscox Ltd Report and Accounts 2023
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Remuneration
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Remuneration policy
Future policy table
Executive Director remuneration
Base salary
Purpose and link to strategy Fixed-pay elements enable the Company to be competitive in the recruitment market when
looking to employ individuals of the calibre required by the business.
Operation Base salary is normally reviewed annually, taking into account a range of factors including
inflation rate movements by country, relevant market data and the competitive position of
Hiscox salaries by role.
Individual salaries are set by taking into account the above information, as well as the
individual’s experience, performance and skills, increases to salary levels across the wider
Group, and overall business performance.
By exception, an individual’s salary may be amended outside of the annual review process.
Maximum potential value The salaries for current Executive Directors which apply for 2024 are set out on page 123.
Executive Directors’ salary increases will normally be in line with overall employee salary
increases in the relevant location.
Increases above this level may be considered in other circumstances as appropriate (for
example, to address market competitiveness, development in the role, or a change in role
size, scope or responsibility).
Performance metrics Individual and business performance are taken into account when setting salary levels.
Application to broader
employee population
Process for review of salaries is consistent for all employees.
Hiscox has a forward-looking remuneration policy for its Board members
Hiscox has a forward-looking remuneration policy for its Executive Directors. The policy was approved at the 11 May 2023 AGM
and is replicated below. The policy can be viewed in the 2022 Annual Report and Accounts at hiscoxgroup.com.
135Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Executive Director remuneration
Benefits (including retirement benefits)
Purpose and link to strategy Fixed-pay elements enable the Company to be competitive in the recruitment market when
looking to employ individuals of the calibre required by the business.
Operation Retirement benefits
These vary by local country practice, but all open Hiscox retirement schemes are based
on defined contributions or an equivalent cash allowance. This approach will be generally
maintained for any new appointments other than in specific scenarios (for example, where local
market practice dictates other terms). For current Executive Directors, a cash allowance of up
to 10% of salary is paid in lieu of the standard employer pension contribution, or a combination
of pension contributions and cash allowance, totalling 10% of salary.
Other benefits
Benefits are set within agreed principles but reflect normal practice for each country. Hiscox
benefits include, but are not limited to: health insurance, life assurance, long-term disability
schemes and participation in all-employee share plans such as the sharesave scheme.
Executive Directors are included on the directors and officers’ indemnity insurance.
The Committee may provide reasonable additional benefits based on circumstances (for
example, travel allowance and relocation expenses) for new hires and changes in role.
Maximum potential value Set at an appropriate level by reference to the local market practice and reflecting individual
and family circumstances.
Pension benefits will be in line with the standard employer contribution taking into account any
local requirements.
Performance metrics None.
Application to broader
employee population
Executive Directors’ benefits are determined on a basis consistent with all employees.
136 Hiscox Ltd Report and Accounts 2023
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Governance
Chapter 4 106
Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Executive Director remuneration
Annual bonus
Purpose and link to strategy To reward for performance against the achievement of financial results over the financial year
and key objectives linked to Company strategic priorities.
To provide a direct link between reward and performance.
To provide competitive compensation packages.
Operation Performance metrics and targets are set annually.
The payment outcome at the end of the performance period is based on an assessment of the
level of performance achieved with reference to the performance targets set at the start of the
year, including an assessment of risk factors.
Amounts are paid in accordance with the bonus deferral mechanism described on page 137.
Bonus awards are non-pensionable.
Bonus awards are subject to malus and clawback provisions as described in the notes to the
policy table on page 141.
Maximum potential value The maximum bonus opportunity for the Executive Directors will be as follows:
p
Group Chief Executive Officer and Group Chief Financial Officer – 300% of salary;
p Group Chief Underwriting Officer – up to 400% of salary.
Where performance is deemed to be below acceptable levels, pay-outs will be nil.
Performance metrics Performance is assessed against relevant financial and non-financial targets designed to
incentivise the achievement of Company strategy.
The Committee has the discretion to determine the specific performance conditions attached
to each bonus cycle and to set annual targets for these measures with reference to the
strategy approved by the Board. The financial measures used will typically include return
or profit-based targets. Up to 25% of the bonus can be based on non-financial measures
including environmental, social and governance (ESG) related measures. For the measures
and weightings to be used in a particular year, please refer to the annual report on remuneration.
The discretion available to the Committee in assessing the achievement of the performance
targets is as set out in the notes to the policy table on page 141.
Application to broader
employee population
The operation of the annual incentive is consistent for the majority of employees across
the Group.
137Hiscox Ltd Report and Accounts 2023
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Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Executive Director remuneration
Bonus deferral
Purpose and link to strategy To align with sound risk management, encourage retention of employees, share ownership and
alignment with shareholder interests.
Operation Executive Directors are required to defer a percentage (currently 40%) of their total annual bonus
into Hiscox shares for a period of three years. The release of these shares and the associated
accrued dividend shares are generally subject to continued employment but are not subject to
any further performance conditions. The remaining 60% will be paid as cash following the end of
the financial year.
The Remuneration Committee may exercise discretion and agree to early payment of deferred
bonuses to Executive Directors on an exceptional basis.
Deferred awards are subject to malus and clawback provisions as described in the notes to the
policy table on page 141.
Maximum potential value In accordance with the operation of the annual bonus plus accrued dividend shares.
Performance metrics In accordance with the operation of the annual bonus.
Application to broader
employee population
Bonus deferral is applied in line with regulatory requirements.
138 Hiscox Ltd Report and Accounts 2023
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Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Executive Director remuneration
Long-term incentive plan – Performance Share Plan (PSP)
Purpose and link to strategy To motivate and reward for the delivery of long-term objectives in line with Company strategy.
To encourage share ownership and align interests with shareholders.
To provide competitive compensation packages.
Operation Awards are granted under, and governed by, the rules of the PSP as approved by shareholders
from time to time.
Share awards are made at the discretion of the Remuneration Committee.
Awards normally vest after a three-year period subject to the achievement of performance
conditions. Dividend equivalents may accrue prior to the vesting date. An additional holding
period, which is currently two years, applies.
Awards are generally subject to continued employment, however, awards may vest to leavers in
certain scenarios.
Dividends (or equivalents) may accrue on vested shares prior to release. Awards are subject to
malus and clawback provisions as described in the notes to the policy table on page 141.
Maximum potential value PSP awards are subject to a maximum annual grant of up to 250% of salary in respect of any one
financial year plus accrued dividends (or equivalents).
Performance metrics The performance conditions for awards are set to align with the long-term objectives of
the Company.
The Committee reviews the targets prior to each grant to ensure that they remain appropriate.
The policy provides for a minimum aggregate weighting of 70% for financial metrics and for up
to 30% to be based on strategic non-financial performance metrics. For the weightings used in
a particular year, please refer to the annual remuneration report.
For delivery of threshold performance, up to 20% of the relevant portion of the award can vest.
For full vesting, the stretch hurdles need to be met in full.
The discretion available to the Committee in assessing the achievement of the performance
targets is as set out in the notes to the policy table on page 141.
Where the Committee considers it appropriate to do so, under the plan rules the Committee is
able to modify performance criteria for outstanding awards on the occurrence of certain events
(for example, a major disposal).
Application to broader
employee population
Participation in the PSP is normally restricted to senior individuals.
139Hiscox Ltd Report and Accounts 2023
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Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Executive Director remuneration
Shareholding guidelines
Purpose and link to strategy To ensure Executive Directors are aligned with shareholder interests.
Operation Within five years of becoming an Executive Director, individuals will normally be expected to have
acquired an interest in Hiscox shares valued at 200% of salary. Shares owned by the Executive
Director (and any connected person) count towards the guidelines as do shares subject to any
vested but unexercised PSP awards (net of assumed taxes).
Executive Directors are also expected to remain aligned with the interests of shareholders for
an extended period after leaving the Company. Executive Directors will typically be expected
to retain a shareholding at the level of the in-employment shareholding guideline (or the actual
shareholding on stepping down, if lower) for two years after termination unless the Committee
determines otherwise in exceptional circumstances.
Maximum potential value N/A.
Performance metrics N/A.
Application to broader
employee population
Post-employment shareholding guidelines only apply to Executive Directors.
140 Hiscox Ltd Report and Accounts 2023
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Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Future policy table
Non Executive Director remuneration
General approach The total aggregate fees payable are set within the limit specified by the Company’s Bye-laws.
The fees paid are determined by reference to the skills and experience required by the Company,
as well as the time commitment associated with the role. The decision-making process is
informed by appropriate market data. Non Executive Directors are not eligible for participation
in the Company’s incentive plans or pension arrangements. Travel and other reasonable
expenses incurred in the course of performing their duties are reimbursed to Non Executive
Directors (including any tax thereon where these are deemed to be taxable benefits).
Non Executive Directors are included on the directors and officers’ indemnity insurance.
The current fees payable to Non Executive Directors are set out on page 125.
Chair The Chair receives an all-inclusive fee in respect of the role. In addition to their fee the Chair
may be provided with incidental benefits, for example, private healthcare and life assurance
(including any tax thereon where these are deemed to be taxable benefits). The remuneration
of the Chair is determined by the Remuneration Committee.
Non Executive Directors Non Executive Directors receive an annual fee in respect of their Board and Committee
appointments together with additional compensation for further duties (for example,
chairmanship, subsidiary boards, SID fee and employee liaison fee). The fees for the
Non Executive Directors (excluding the Chair) are determined by the Nominations
and Governance Committee.
141Hiscox Ltd Report and Accounts 2023
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Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Notes to the policy table
Performance measures, target setting
and assessment
The performance targets for the annual
bonus and Performance Share Plan
(PSP) awards are closely aligned with
the Company’s short- and long-term
strategic objectives. The intention is to
provide a direct link between reward
levels and performance.
The Company operates a performance
scorecard-based approach for the
annual bonus. This ensures that both
individual bonus levels and overall
spend are commensurate with the
performance of the Company across
a number of key metrics, some
financial and some non-financial.
The Committee considers performance
metrics and targets prior to the start
of each financial year to ensure that
these remain suitable and relevant.
It is the intention of the Committee that
the bonus payments should normally
reflect the outcome of the performance
measures set, although the Committee
has the ability to apply independent
judgement to ensure that the outcome
is a fair reflection of the performance of
the Company and individual over the
performance period. When making
this judgement, the Committee has
scope to consider any such factors
as it deems relevant.
PSP performance measures are
intended to motivate and reward
delivery of long-term Company
success. The Committee considers
performance metrics and targets prior
to the grant of each award to ensure
that these remain suitable and relevant.
It is the intention of the Committee
that the vesting of PSP awards should
normally reflect the outcome of the
performance measures set, although
the Committee has the ability to apply
independent judgement to ensure
that the outcome is a fair reflection
of the performance of the Company
and individual over the performance
period. When making this judgement,
the Committee has scope to consider
any such factors as it deems relevant.
Detailed provisions
The Committee reserves the right to
use discretion within the remuneration
policy to aid in its operation or
implementation (for example, for
regulatory or administrative purposes),
provided that any such change
is not to the material advantage
of Directors.
The Committee may continue to
satisfy remuneration payments and
payments for loss of office (including
the exercise of any discretions available
to the Committee in connection with
such payments) where the terms of
the payment were: i) agreed before
15 May 2014 when the first approved
remuneration policy came into effect;
ii) agreed before the policy set out
above came into effect, provided that
the terms of the payment were consistent
with the shareholder-approved
Directors’ remuneration policy in
force at the time they were agreed;
or iii) agreed at a time when the
relevant individual was not a Director
of the Company and, in the opinion
of the Committee, the payment was
not in consideration for the individual
becoming a Director of the Company.
For these purposes, such payments
include the Committee satisfying
awards of variable remuneration.
Malus and clawback provisions
Bonus deferral applied from 2023
and PSP awards granted from 2023
are subject to malus and clawback
provisions as set out below. The
Committee may, in its absolute
discretion, determine at any time prior to
the vesting of an award to reduce, defer,
cancel or impose further conditions in
the following circumstances:
p
a retrospective material restatement
of the audited financial results of
the Group;
p
an error in assessing a performance
condition applicable to the award or
in the information or assumptions
on which the award was granted,
or vests;
p
actions of gross misconduct or
material error, including fraud, by
the participant or their team;
p
significant reputational or financial
damage to the Company as a result
of the participant’s conduct;
p
a failure of adequate risk
management and/or controls by
the participant or their team,
resulting in a material impact to
the Group;
p
a material corporate failure in
the Group;
p
a regulatory or law enforcement
investigation which results in
significant censure.
Annual bonus and PSP awards granted
to Executive Directors shall also be
subject to clawback provisions for up to
two years from the date of payment or
vesting in the above circumstances.
The malus and clawback provisions that
apply to awards made prior to 2023 are
as set out in the relevant remuneration
policy as at the date of award.
Recruitment policy
A new hire will ordinarily be remunerated
in accordance with the policy described
in the table on the previous pages. In
order to define the remuneration for
an incoming Executive Director, the
Committee will take account of:
p
prevailing competitive pay levels
for the role;
p
experience and skills of
the candidate;
p
awards (shares or earned bonuses)
and other elements which will
be forfeited by the candidate;
p
transition implications on
initial appointment;
p
the overall Hiscox approach.
A buy-out payment/award may be
necessary in respect of arrangements
forfeited on joining the Company. The
size and structure of any such buy-out
arrangement will take account of relevant
factors in respect of the forfeited terms
including potential value, time horizons
and any performance conditions which
apply. The objective of the Committee
will be to suitably limit any buy-out to
the commercial value forfeited by
the individual.
On initial appointment (including interim
Director appointments) the maximum
level of variable remuneration (excluding
any buy-outs) is capped at the maximum
level set out in the policy table on pages
133 to 139. Within these limits, and
where appropriate, the Committee
may tailor the award (for example, time
frame, form, performance criteria) based
on the commercial circumstances.
Shareholders would be informed of
the terms for any such arrangements.
Ordinarily, it would be expected that
the package on recruitment would be
consistent with the usual ongoing
Hiscox incentive arrangements.
On the appointment of a new
Non Executive Chair or Non Executive
Director, the fees will normally be
consistent with the policy. Fees to Non
Executives will not include share options
or other performance-related elements.
Service contracts
It is the Company’s policy that Executive
Directors should have service contracts
with an indefinite term which can be
terminated by the Company by giving
142 Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
notice not exceeding 12 months or the
Director by giving notice of six months.
The terms set out in the service contracts
for the current Executive Directors do
not allow for any payments that are not
in line with this policy.
Non Executive Directors are appointed
for a three-year term, which is renewable,
with three months’ notice on either side,
no contractual termination payments
being due and subject to re-election
pursuant to the Bye-laws at the Annual
General Meeting. The contract for the
Chair is subject to a six-month
notice provision on either side.
Policy on payment for loss of office
Subject to the execution of an appropriate
general release of claims an Executive
Director may receive on termination of
employment by the Company:
1. Notice period of up to 12 months
In the normal course of events, an
Executive will remain on the payroll but
may be placed on gardening leave for
the duration of the notice period (or until
they leave early by mutual agreement,
whichever is sooner). During this period
they will be paid as normal, including
base pay, pension contributions (or cash
allowance as appropriate) and other
benefits (for example, healthcare).
In the event of a termination where
Hiscox requests that the Executive
Director ceases work immediately, a
payment in lieu of notice may be made
that is equal to fixed pay, pension
entitlements and other benefits (benefits
may continue to be provided). Payments
may be made in instalments and would
ordinarily be subject to mitigation
should the individual find alternative
employment during the unexpired
notice period.
2. Bonus payment for the financial year
of exit
Bonuses will normally only be paid to
Executive Directors who are granted
‘good leaver’ status in accordance with
the bonus plan rules. The bonus amount
would normally be pro-rated depending
on the proportion of the financial year
which has been completed by the time of
the termination date and paid in line with
the normal bonus scheme timings and
performance metrics.
3. Release of any deferred bonuses
All outstanding bonuses deferred from
the annual incentive scheme will normally
be paid in full at the normal vesting date.
4. Unvested Performance Share
Plan awards
Treatment would be in accordance
with the plan rules and relevant grant
documentation. The intended approach
is summarised below.
p
Awards will vest in line with the
normal plan vesting date (unless the
Committee determines otherwise).
Awards vest to the extent that the
relevant performance targets are
considered to have been met.
p
The award will normally be
pro-rated to reflect the period
which has elapsed from the
commencement of the award to
the date of termination unless the
Committee determines otherwise.
If the departing Executive Director
does not sign a release of claims, they
would normally be entitled to payments
defined under point 1 only. In the event
that the Executive is dismissed for
gross misconduct, they would forfeit
all payments.
The Committee may also make a
payment in respect of outplacement
costs, legal fees and costs of settling
any potential claims where appropriate.
5. Change of control
In the event of a change of control,
outstanding PSP awards will normally
vest early to the extent that the
performance condition, as determined
by the Committee in its discretion, has
been satisfied and, unless the Committee
determines otherwise, would be
pro-rated to reflect the period which
has elapsed from the commencement
of the award to the date of the relevant
corporate event.
Deferred bonus awards will vest in full.
Outstanding awards under all-employee
share plans will be treated in accordance
with the relevant plan rules.
Consideration of employment
conditions elsewhere
We are proud of our reward offering
across the Company and apply principles
consistent with how we pay our Executive
Directors. We ensure employees are paid
fairly in line with their responsibilities,
experience and the market rate for the
role. Employees participate in an annual
bonus scheme and senior individuals
are eligible for awards under the
Performance Share Plan. We also
offer a generous benefit package.
Variable remuneration for the most senior
employees is more highly performance
geared towards the longer term in
order to encourage delivery of strong
returns across the insurance cycle
and create sustainable long-term
value for our shareholders.
Hiscox encourages all employees to
become shareholders through our
sharesave schemes, enabling employees
to share in the success of the Company.
While the Committee did not consult
directly with the broader workforce on
the remuneration policy for Executive
Directors, we have introduced a process
by which employee views are gathered
on a range of topics and presented
to the Board (see page 128 for further
details). The Remuneration Committee
also receives an update on the broader
workforce remuneration policies and
practices during the year, which informs
the Committee’s consideration of the
policy for Executive Directors.
Consideration of shareholder views
Hiscox regularly discusses remuneration
policy matters with a selection of
shareholders. The Remuneration
Committee takes into consideration
the range of views expressed in making
its decisions.
The Committee consulted with major
shareholders during Q1 2023 and took
shareholder feedback into account
when finalising the revised policy.
143Hiscox Ltd Report and Accounts 2023
Chapter 3 72
Governance
Chapter 4 106
Remuneration
Remuneration policy
Chapter 5 148
Shareholder
information
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
MaximumMax with
share price
appreciation
On target
100%
903
Below
target
29%
39%
38%
6,448
32%
3,162
5,421
45%
17%
14%
38%
48%
Illustration of application of the remuneration policy
(£000s)
Chief Executive Chief Financial Officer Chief Underwriting Officer
Long-term variable remuneration
Annual variable remuneration
Fixed remuneration
100%
627
29%
39%
32%
2,180
3,734
45%
17% 14%
38%
48%
MaximumMax with
share price
appreciation
On targetBelow target
4,440
38%
100%
625
25%
46%
33%
53%
4,297
45%
14%
13%
Maximum Max with
share price
appreciation
On targetBelow target
42%
5,004
29%
2,461
The charts above have been compiled using the following assumptions.
Fixed remuneration Fixed reward (base salary, benefits and retirement benefit).
p
Salary with effect from 1 April 2024.
p Benefits as received during 2023, as disclosed in the Executive Director remuneration
table on page 112.
p
Retirement benefit as received during 2023, as disclosed in the Executive Director
remuneration table on page 112.
Variable remuneration Assumptions have been made in respect of the annual incentive and the PSP for the purpose of
these illustrations.
p
Annual incentive: the amounts shown in the scenarios are for illustration only. In practice,
the award would be determined based on a range of performance factors and therefore
vary depending on the circumstances. The maximum award reflects the incentive caps
described at the beginning of this report.
p
PSP: scenario analysis assumes awards are granted at the maximum level set out in the
policy table on page 138. In practice, award levels are determined annually and are not
necessarily granted at the plan maximum every year.
Performance scenarios
Below target performance Fixed reward only.
On target performance Fixed reward plus variable pay for the purpose of illustration as follows.
p
Annual incentive: assume a bonus equivalent to 50% of the maximum opportunity.
p PSP: assume vesting of 50% of the maximum award.
Maximum performance Fixed reward plus variable pay for the purpose of illustration as follows.
p
Annual incentive: maximum bonus equivalent to 300% of salary for the Group Chief
Executive Officer and Group Chief Financial Officer and 400% of salary for the Group
Chief Underwriting Officer.
p
PSP: vesting of 100% of the maximum award.
Maximum performance with
share price appreciation
Fixed reward plus variable pay for the purpose of illustration as follows.
p
Annual incentive: maximum bonus equivalent to 300% of salary for the Group Chief
Executive Officer and Group Chief Financial Officer and 400% of salary for the Group
Chief Underwriting Officer.
p
PSP: vesting of 100% of the maximum award plus assumed share price growth of 50%.
144 Hiscox Ltd Report and Accounts 2023
Q&
A:
with David Heras
Managing Director, Hiscox Spain
Spanish lessons
Hiscox Spain is growing rapidly thanks
to its creative mindset, embracing of
technology and commitment to building
great relationships with brokers. >
David Heras joined Hiscox in 2008.
He leads the Hiscox Spain team,
which covers Spain and Portugal
and is part of the wider Hiscox
Europe operation. In recent years,
its business on the Spain Peninsula,
which is focused on the broker
channel, has been growing at pace.
145Hiscox Ltd Report and Accounts 2023
146 Hiscox Ltd Report and Accounts 2023
Q: What was Hiscox like when you
first joined?
A: It was very different. Sixteen years
ago, the Hiscox name was nothing in
Spain. No-one knew us in the broker
channel. We had just €5 million in
premiums. But for me, that challenge
is what made the job exciting. It’s why I
came. We are growing all the time and
I’ve seen us roughly double our size
every five years. Today, our premiums are
almost €100 million. For me, this is a big
achievement but of course there is still
more to do, which is great because I am
someone who is driven by a challenge,
so I am as excited and committed now
as I was on that first day.
Q: What kind of operation is Hiscox
Spain now?
A: We are a small company still, but we
make a lot of noise. To compete against
the big guys, we are creative in how we
serve our brokers and partners. We have
a plan that we are executing, and we are
exceeding expectations, but we also
have the passion and energy to try new
things. So last year we did something
very different. At the start of the year,
we came up with this idea of doing a
Hiscox tour, driving across Spain in a
bus with lots of our technological
capabilities on board: APIs, the platform,
the portal, all of these layers. We know
the brokers here: most of them are not
so good with technology, they don’t
have these capabilities. We wanted to
get closer to them, to show them what
we can do. So, to get closer to them,
we went on tour.
Q: How did that work out?
A: It was a big challenge, but our
marketing team accepted that challenge.
We painted our bus in Hiscox colours.
We took it to Madrid, Seville, Barcelona,
Valencia. Thanks to this, we have
doubled our retail sales, attracted new
partners, and seen interest from new
brokers that want to do business with
us. This is something that makes us
different. We have this capacity to take
on challenges, to do new things and to
have the courage to lead. This is the
spirit here because it’s in our company
DNA. It’s not the same as being in the
UK though, where you see the Hiscox
brand on the street. We are small, but
our mission is always to grow.
Q: Your work at Hiscox Spain is
currently devoted to the broker
channel. Do you have any
plans to broaden this by selling
insurance directly?
A: Not at the moment, no. We need to wait
for the maturity of our market, as Spain
is not currently a direct-to-consumer
insurance market, but I’m sure that time
will come. Until then, it is better to focus
on those areas of opportunities that are
in our reach now. For example, we are
still growing strongly through brokers
and partners, where our investments in
technology make us easy to do business
with and we have plenty of opportunities
to grow into.
Q: When you’re speaking to potential
new partners, what is it about Hiscox
that you think differentiates you from
your competitors?
A: It is our value proposition that
differentiates us. We aim to be best in
class – in terms of service, in terms of
product, in terms of claims. We also
have everything we need to connect
them better thanks to our continued
investment in technological capabilities
that can give us an edge. In a world of
increasing digitisation, we know we need
to be leading this movement as an insurer
and I’m proud of the progress we are
making here.
Q: What’s in store for Hiscox Spain
in 2024?
A: This year, we will be launching a new
generation of products. Let’s imagine
you are an IT consultant, or you open
a beauty salon. You’re starting a small
business and you want to buy all the
insurance you need. What we will do
for you is make it so you can buy
everything in a single pack. You will
have a product that contains a
combination of coverage specifically
designed for your profession, at a
reasonable price. For each profession,
there will be two, three versions of the
same product, with different levels of
cover, and you will pay for what you need.
That’s what we call a customer-centric
approach. But it all starts with research.
We need to understand what that
customer segment needs, so it will be
inspired directly by our customers. We
want to speak their language when it
comes to what we offer them.
Q: Hiscox Europe is currently
working through the roll-out of
a new core system, which
represents a major technological
upgrade. Where is Hiscox Spain
on that journey?
A: Having a core system that we can
scale together, and when I say together
I mean across all of our European
countries, is the right thing to do. There
are three phases to it: solution design,
then launch, then migration. Germany
was first, so in Germany we are in the
migration phase. France is currently
building the platform, and Benelux is
currently focused on the solution design.
In Spain, we will start the solution
design during 2024. We are very lucky,
as we will get to use the experiences
accumulated by other countries, so the
aim is that, by 2026, we will be operating
in this new system.
Q&
A:
with David Heras
Managing Director, Hiscox Spain
147Hiscox Ltd Report and Accounts 2023
This is just one part of the work, though.
All of the peripheral technology is also
crucial. The core system is the centre,
but we need to make sure it works well
with everything around it, and that is
perhaps the most difficult part. It’s like a
car: we are replacing the engine with a
more powerful one, but the car has many
other components, so there’s a lot of
planning we need to do.
Q: Besides the sharing of investment
and knowledge exemplified by the
core system programme, what other
benefits do you see as being part of
the wider European organisation?
A: Europe is beautiful. Different cultures,
different languages, different evolution
phases, different maturity levels. This
diversity gives us strength. This year in
Spain we have had good growth, but
maybe one year in the future we will
grow less and another country will grow
more – together, that gives us more
robustness, more stability. We’re not
dependent on the conditions in just one
place. I sit on our European leadership
team so we share those experiences
and those learnings cross-country,
which collectively make us stronger
and more resilient.
Q: Finally, do you feel a sense of
community within Hiscox?
A: I feel it in many ways, starting within
my own country. You cannot have a
community unless people feel engaged,
unless they want to be here, and in Spain
we have some of the best engagement
scores in the Group. Here in Madrid,
we are 35 people working together.
The other half of my team is in Lisbon,
but distance is something that doesn’t
affect us. We have many, many ways to
be connected. Lisbon and Madrid work
as one. We are also connected to our
colleagues all over Europe – we know we
are stronger together. And then we are
part of the whole global retail operation.
We see how we contribute to Europe,
and we see how Europe contributes
to the Group. Last year, we hosted our
annual Partners’ meeting here in Madrid,
and you could feel the connection
between people who had come here
from all over the world. I love that sense of
us as one community, and I really believe
we have a bright future together.
This year, we will be launching a new
generation of products. Let’s imagine
you are an IT consultant, or you open
a beauty salon. You’re starting a
small business and you want to buy
all the insurance you need. What we
will do for you is make it so you can
buy everything in a single pack. You
will have a product that contains a
combination of coverage specifically
designed for your profession, at a
reasonable price.”
148 Hiscox Ltd Report and Accounts 2023
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 3 72
Governance
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Directors’ report
The Directors have pleasure in
submitting their Annual Report and
consolidated financial statements for
the year ended 31December2023.
Management report
The Company is a holding company
for subsidiaries involved in the
business of insurance and reinsurance
in Bermuda, the USA, the UK,
Guernsey, Europe and Asia. The
information found on pages 22 to
31, 36 to 39, 174 to 245 and 247
fulfils the requirements of the
Management report as referred to in
Chapter 4 of the Disclosure Guidance
and Transparency Rules (DTR). This
includes additional explanation of
the figures detailed in the financial
statements and the office locations
of theGroup in different countries.
The key performance indicators are
shown on pages 6 to 7. Details of the
use of financial instruments are set out
in notes 3.3 and 17 to the consolidated
financial statements. An analysis of
the development and performance
of the business during the financial
year, its position at the end of the year,
any important events since the end
of the year and the likely future
development can be found within
the Chief Executive’s report on pages
22 to 31. The Chief Executive’s report
also describes the main trends and
factors likely to affect the future
development, performance and
position of the Company’s business.
A description of the Company’s
strategy and business model is set
out on pages 10 to 11. The Company
is not involved in any research and
development activities. A description
of the key risks and uncertainties and
how they are managed or mitigated
can be found in the key risks section
on pages 12 to 15 and the risk
management section on pages 36 to 39.
In addition, note 3 to the consolidated
financial statements provides a detailed
explanation of the key risks which are
inherent to the Group’s business and
how those risks are managed.
Compliance with the UK Corporate
Governance Code 2018 (the Code)
Details of how the Company has applied
the principles set out in the Code and
complied with the provisions of the
Code are set out on pages 90 to 94.
Emerging and principal risks
The confirmation required by Provision
28 of the Code in relation to the Board’s
robust assessment of the Company’s
emerging and principal risks (referred
to in this document as key risks) can be
found on page 38.
Corporate governance statement
The information that fulfils the
requirements of the corporate
governance statement as referred
to in DTR 7.2 can be found on pages
84 to 89 in this report.
Diversity
The diversity of the business is outlined
in the DEI section of this report on pages
62 to 67.
Financial results
The Group delivered a record pre-tax
profit for the year of $625.9 million
(2022 (restated): $275.6million).
Detailed results for the year are shown
in the consolidated income statement
on page 174.
Going concern
A review of the financial performance
of the Group is set out in the Chief
Executive’s report on pages 22 to 31.
The financial position of the Group,
its cash flows and borrowing facilities
are outlined on pages 28 to 29. The
Group has considerable financial
resources and a well-balanced book
of business.
The Board has reviewed the Group’s
current and forecast solvency and
liquidity positions for the next twelve
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. Multiple experts within the
business review the provisional results
in order to reduce individual biases and
to try and ensure all possibilities are
considered and captured.
In undertaking this analysis, no material
uncertainty in relation to going concern
has been identified. This is due to the
Group’s strong capital and liquidity
positions, which provide resilience to
shocks, underpinned by the Group’s
approach to risk management which
is described in note 3 on pages 191
to 205.
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 consolidated
financial statements.
Longer-term viability statement
The preparation of the longer-term
viability statement includes an
assessment of the Group’s long-term
prospects in addition to an assessment
149Hiscox Ltd Report and Accounts 2023
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Directors’ report
Chapter 3 72
Governance
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
of the ability to meet future commitments
and liabilities as they fall due.
It is fundamental to the Group’s
longer-termstrategy that the Directors
manage and monitor risk, taking into
account all key risks the Group faces,
including insurance risks, so that it
can continue to meet its obligations
to policyholders. The Group is also
subject to extensive regulation and
supervision including the Bermuda
Solvency Capital Requirement, which
is outlined on page 29.
Against this background, the Directors
have assessed the prospects of the
Group in accordance with Provision 31
of the UK Corporate Governance Code
2018, with reference to the Group’s
current position and prospects, its
strategy, risk appetite and key risks,
as detailed in the key risks section
on pages 12 to 15 and the risk
management section on pages
36 to 39, as well as note 3 to the
consolidated financial statements.
The assessment of the Group’s
prospects by the Directors covers the
three years to 2026 and is underpinned
by Management’s 2024-2026 business
plan. It includes projections of the
Group’s capital, liquidity and solvency
and reflects the Group’s risk profile of a
portfolio of diversified short-tailed and
medium-tailed insurance liabilities.
In making the viability statement,
the Board carried out, as part of the
Group’s solvency self-assessment
process, a robust assessment using
scenario analysis and stress testing
to consider the Group’s capacity to
respond to a series of relevant financial,
insurance-related or operational shocks
should future circumstances or events
differ from these current assumptions.
The adequacy of the liquid resources
of the Group’s parent company
has been assessed by considering
stress scenarios that would result in
additional calls on central liquidity by
the Group’s business units. A 1-in-200
climate-heavy natural catastrophic year
was assessed to be the most severe
liquidity stress. Under this scenario the
Group was shown to have access to
sufficient liquidity sources to remain
above risk appetite, after taking into
account the Group’s $600.0 million
undrawn revolving credit facility. This
analysis allows the Board to review and
challenge the risk management strategy
and consider potential mitigating actions.
Based on these assessments, the
Board confirms that it has a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the
three-year assessment period. Longer
term, the Group’s viability is underpinned
by the Group’s strategy of balancing
big-ticket with retail business, market
growth opportunities and underwriting
expertise. See pages 10 to 11 for further
details of the Group’s strategy and
business model.
Dividends
An interim dividend of 12.5cents per
share was paid on 26September2023
and, as in previous years, a Scrip
Dividend alternative was offered. The
Board is also proposing payment of a
final dividend in respect of the year
ended 31December2023 (subject
to shareholder approval) of 25.0 cents
per share, to be paid on 12June2024
to shareholders on the register at
3May2024.
Bye-laws
The Company’s Bye-laws contain no
specific provisions relating to their
amendment and any such amendments
are governed by Bermuda Company
Law and subject to the approval of
shareholders in a general meeting.
Share capital
Details of the structure of the Company’s
share capital and changes in the share
capital during the year are disclosed
in note 22 to the consolidated financial
statements. The ordinary shares of
6.5p each are the only class of shares
presently in issue and carry voting rights.
There is power under Bye-law 45 of the
Company’s Bye-laws for voting rights
to be suspended if calls on shares are
unpaid. However, there are no nil or partly
paid shares in issue on which calls
could be made. The Bye-laws also allow
the Company to investigate interests
in its shares and apply restrictions
including suspending voting rights
where information is not provided.
No such restrictions are presently in
place. The Company was authorised
by shareholders at the 2023 AGM to
purchase in the market up to 10% of the
Company’s issued ordinary shares. The
Company announced on 5 March 2024
that it would commence a buyback of its
issued ordinary shares for a maximum
aggregate consideration of $150 million.
The Company has commenced the
buyback programme and will provide
updates to the market on the amount
and price of shares repurchased. Hiscox
will cancel all the purchased shares.
Directors
The names and details of all Directors
of the Company who served during
the year and up to the date of this
report are set out on pages 72 to 73.
Details of the Chair’s professional
commitments are included in his
biography on page 72.
150 Hiscox Ltd Report and Accounts 2023
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Directors’ report
Chapter 3 72
Governance
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
The Bye-laws of the Company govern
the appointment and replacement of
Directors. In accordance with the Code,
the Directors will submit themselves for
re-election at the AGM.
Details of the Directors’ share ownership
are also set out on page 121.
Biographical details of the Directors are
set out on pages 72 to 73, as are the
reasons why the Board believes their
contribution is (and continues to be)
important to the Company’s long-term
sustainable success. This information
will also be set out in the circular which
will accompany the notice of AGM.
Major interests in shares
The Company has been notified
of the interests in voting rights in its
ordinary shares in accordance with
DTR 5, which are outlined in the table
above. Any acquisitions or disposals
of major shareholdings notified to
the Company in accordance with
DTR 5.1 are announced and those
announcements are available on the
Company’s website, hiscoxgroup.com.
Political donations and
charitable contributions
The Group made no political donations
during the year (2022: $nil). Information
concerning the Group’s charitable
activities is contained in the sustainability
section on pages 46 to 49 and in our
impact report which can be found at
hiscoxgroup.com/impactreport2022.
Climate-related matters
In preparing and authorising this
report, the Board has considered the
relevance of material climate-related
matters. Climate-related matters are
discussed at all levels of the Company,
including Board level, in line with the
sustainability governance structure
outlined on page51.
The Company also aligns its
climate-related activities to the TCFD
framework, details of which can be
found on pages 50 to 61.
Powers of Directors
The powers given to the Directors are
contained in the Company’s Bye-laws
and are subject to relevant legislation
and, in certain circumstances (including
in relation to the issuing and buying back
by the Company of its shares), approval
by shareholders in a general meeting.
At the 2023 AGM, the Directors were
granted authorities to allot and issue
shares and to make market purchases
of shares and intend to seek renewal of
these authorities in 2024.
Disclosure under LR 9.8.4 of the
Listing Rules
The information that fulfils the reporting
requirements relating to the following
matters can be found at the pages
identified in the table above.
Annual General Meeting
The notice of the AGM, to be held on
9May2024, will be sent to shareholders
alongside a copy of this report. The
deadline for submission of proxies is
48hours before the meeting.
By order of the Board
Marc Wetherhill
Company Secretary
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
5 March 2024
Major interests in shares
The Company has been notified of the following interests in voting rights in its
ordinary shares in accordance with DTR 5:
Number
of shares
% of issued
share capital
as at
31 January
2024*
Sun Life Financial Group 31,132,559 8.95
The Capital Group Companies, Inc. 28,552,549 8.21
Fidelity Management & Research Company 26,945,972 7.75
Government of Norway 17,913,616 5.15
*There were 347,766,707 shares in issue (excluding Treasury shares) as at 31 January 2024.
As at 4 March 2024, no changes have been notified to the Company.
Disclosure under LR 9.8.4 of the
Listing Rules
Details of
long-term
incentive schemes
Annual report
on remuneration
(pages 117 to 119)
Allotment of shares
for cash pursuant
to employee
share schemes
Note 19 to the
consolidated
financial statements
on employee
share schemes
(page 226)
151Hiscox Ltd Report and Accounts 2023
Chapter 4 106
Remuneration
Chapter 5 148
Shareholder
information
Chapter 3 72
Governance
Chapter 6 165
Financial
summary
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Directors’ responsibilities statement Advisors
The Board is responsible for ensuring
the maintenance of proper accounting
records which disclose with reasonable
accuracy the financial position of the
Group. It is required to ensure that the
financial statements present a fair view
for each financial period. The Directors
explain in the Annual Report their
responsibility for preparing the Annual
Report and Accounts.
We confirm that to the best of
our knowledge:
s the financial statements, prepared
in accordance with UK-adopted
international accounting standards,
give a true and fair view of the
assets, liabilities, financial position
and profit or loss of the Company
and the undertakings included in
the consolidation taken as a
whole; and
s the Management report includes
a fair review of the development
and performance of the business
and the position of the Company
and the undertakings included in
the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties
that they face.
Hiscox Ltd
Secretary
Marc Wetherhill
Registered office
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
Registered number
38877
Auditors
PricewaterhouseCoopers Ltd.
Washington House
4th Floor
16 Church Street
Hamilton HM 11
Bermuda
Stockbrokers
Citigroup
Citigroup Centre
33 Canada Square
London
E14 5LB
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
Registrars
Equiniti (Jersey) Limited
c/o Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
United Kingdom
The Directors responsible for
authorising the responsibility statement
on behalf of the Board are the Chair,
Jonathan Bloomer, and the Group
Chief Executive Officer, Aki Hussain.
The statements were approved for
issue on 5March2024.
The Directors consider that the Annual
Report and Accounts, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s
and the Group’s position, performance,
business model and strategy.
Scan the QR code to view
‘the making of the Hiscox
community portrait’ video.
The people behind the policy:
Hiscox community portrait
During 2023, we embarked on an
exciting engagement programme
across the Group.
Everyone at Hiscox has a key role
to play and, working with globally
renowned artist Tim Mann, we’ve
been busy capturing that sense of
community in a piece of art. >
152 Hiscox Ltd Report and Accounts 2023
Portrait23
153Hiscox Ltd Report and Accounts 2023
The Hiscox community portrait is a
celebration of the power of collaboration
and the intrinsic importance of each
individual within a larger collective.
Created by renowned artist Tim Mann,
the artwork merges the overlapping
outlines of over 1,200 employees from
every part of the business, all of whom
volunteered to be part of the project,
creating a powerful visual representation
of the Hiscox community.
Between May and November 2023,
Tim visited six Hiscox offices: Atlanta,
Bermuda, London, Madrid, Munich and
York. After gathering the participants
together in small groups and leading
them into a conversation about the
resonance of the project’s themes
with the Hiscox values, Tim used a
red Conté crayon to draw a simple
silhouette around each person, one
by one – a brief but meaningful act of
intimacy between artist and subject.
Each employee left their own unique
imprint on the work, with absolutely no
sense of hierarchy or differentiation.
“By drawing around each individual in
turn, we created a single image that
celebrates every participant equally,”
says Tim. “Without any one of those
people who took part, it doesn’t
mean as much.”
Tim Mann
During the sessions, a further series of
artworks were created by each of the
subjects drawing around their own hands
in a similar fashion – the hand being,
as Tim explains: “A common symbol
of strength and protection, but also
of greeting and friendship.”
While the finished artworks have a
distinct aesthetic appeal, Tim believes
that their most consequential impact
has come through the hundreds of
thought-provoking personal interactions
that led to their creation. “The actual
artwork is the process through which
those people participate,” Tim explains.
“The piece itself is just the evidence of
that happening.”
The main portrait can now be
viewed in our York office, while the
hand-based pieces are in each of
the participating locations.
Here’s what some our people had to
say about the experience of taking part.
154 Hiscox Ltd Report and Accounts 2023
“It was good to connect with some of
the team that I work with and there were
some new people there that I didn’t
know. It built a connection between
the five of us who went in at the same
time. The artist told us that there’s a
bond there that we’ve created together.
I’ll remember that.”
York
“It’s very Hiscox. People
often ask you what it
means to be a Hiscox
person, and it’s quite
hard to put that into
words. I think this project
sums it up quite neatly.”
Bermuda
“It was an interesting
notion: that it takes many
individuals to make a
community, and we’re all
part of a bigger picture.
We all contribute, but
the community is more
important than the
individual self.”
York
155Hiscox Ltd Report and Accounts 2023
“It was a really intense experience. I
didn’t really think that I’d feel anything.
But then as soon as he started drawing,
I was very aware that a person I’d never
met before was suddenly very close to
me, taking evidence of my existence. It
was a powerful moment.”
London
“To be part of a piece of
art, it just makes you feel
important – being part
of something that will
be there forever.”
Madrid
“I love the idea that it’s
like perfume in a room
– every single person
that makes up the
community is leaving
a little trace.”
London
156 Hiscox Ltd Report and Accounts 2023
“It was really nice to hear Tim talk
about the meaning of being a human
and feeling empathy. The story he tells
is not only about the Hiscox people,
but how we make other people feel.
There were 20 of us in the room, but it
was really quiet. The experience was
quite emotional. I get goosebumps just
thinking about it.”
Munich
157Hiscox Ltd Report and Accounts 2023
158 Hiscox Ltd Report and Accounts 2023
“He was talking to us about the process
being the art, not just what you see on the
wall afterwards – the process of being
part of this whole community.”
Munich
159Hiscox Ltd Report and Accounts 2023
“When you work in corporate America,
people don’t really consider you as an
individual or what your contribution is. By
bringing the whole community together
we’re showing that we actually care
about the people we work with. Having
that put into something that’s artistic,
that’s creative, it’s really interesting.”
Atlanta
160 Hiscox Ltd Report and Accounts 2023
“If I could describe it in
one word, I would say
‘empowering’. It was
a really good reminder
of just how much
impact each of us
brings to Hiscox.”
Atlanta
161Hiscox Ltd Report and Accounts 2023
162 Hiscox Ltd Report and Accounts 2023
163Hiscox Ltd Report and Accounts 2023
“The actual artwork is
the process through
which those people
participate. The piece
itself is just the evidence
of that happening.”
Tim Mann
164 Hiscox Ltd Report and Accounts 2023
165Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Financial summary
166 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Report on the audit of the consolidated financial statements
Our opinion
In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial position
of Hiscox Ltd (the Company) and its subsidiaries (together
the Group) as at 31December2023, and their consolidated
financial performance and their consolidated cash flows for the
year then ended in accordance with UK-adopted international
accounting standards.
What we have audited
The Group’s consolidated financial statements comprise:
A the consolidated balance sheet as at 31December2023;
A the consolidated statement of changes in equity for the
year then ended;
A the consolidated income statement for the year
then ended;
A the consolidated statement of comprehensive income
for the year then ended;
A the consolidated statement of cash flows for the year
then ended; and
A the notes to the consolidated financial statements,
comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities
for the audit of the consolidated financial statements section of
our report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the
International Code of Ethics for Professional Accountants
(including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA
Code) and the ethical requirements of the Chartered Professional
Accountants of Bermuda Rules of Professional Conduct (CPA
Bermuda Rules) that are relevant to our audit of the consolidated
financial statements in Bermuda. We have fulfilled our other
ethical responsibilities in accordance with the IESBA Code and
the ethical requirements of the CPA Bermuda Rules.
Independent auditor’s report
to the Board of Directors and the Shareholders of Hiscox Ltd
Our audit approach
Overview
Materiality
Group
scoping
Key audit
matters
A Overall group materiality: $44million, which
represents 1% of insurance revenue for the year
ended 31December2023.
Our audit comprised:
A full scope audit procedures over four components;
A for certain other components, audit procedures
over financial statement line item balances or
specified procedures;
A for the remaining components that were not
inconsequential, analytical procedures on their
financial information.
A Valuation of insurance contract liabilities and reinsurance
contract assets – assumptions and judgements.
A Implementation of IFRS 17 – transition and restatement
of comparatives.
A Valuation of deferred tax asset – on enactment of
Bermuda Corporate Income Tax.
167Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Independent
auditor’s report
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
In establishing the overall approach to the Group audit a
determination was made of the type of work that needed
to be performed at the components by the Group
engagement team, or by the component audit teams
within the PwC United Kingdom, PwC United States and
PwC Bermuda firms. A determination was made of the level
of involvement of the Group engagement team that was
necessary in the audit work at those components to be
able to conclude whether sufficient appropriate audit
evidence had been obtained. The Group engagement
team had regular interaction with the component teams
during the audit process. The engagement leader and
senior members of the Group engagement team reviewed
in detail all reports with regards to the audit approach and
findings submitted by the component auditors. This together
with additional procedures performed as described above,
gave us the evidence we needed for our opinion on the
consolidated financial statements as a whole.
The impact of climate risk on our audit
As part of our audit, enquiries were made of Management
(both within and outside of the Group’s finance function)
to understand the process Management adopted to
assess the extent of the potential impact of climate risk
on the Group’s financial statements and support the
disclosures made within the notes to the consolidated
financial statements. The key areas where Management
has evaluated that climate risk has a potential to impact
the business are in relation to underwriting risk, financial
risk, and regulatory, legal, and reputational risk.
Management considers that the impact of climate
change does not give rise to a material financial
statement impact.
Our knowledge of the Group was applied to evaluate
Management’s assessment of the impact on the financial
statements. An evaluation was performed of the
completeness of Management’s assessment of
climate change risk under the categories of Physical
risk, Transition risk, and Litigation risk and how these
may affect the consolidated financial statements and
the audit procedures performed.
As part of this, our audit procedures included:
A reading the minutes of meetings of the Group’s
Sustainability Steering Committee;
A reading submissions to regulators;
A reading the Group’s Climate Report 2023; and
A considering the Group’s memberships, accreditations
and public commitments.
The risks of material misstatement to the consolidated financial
statements as a result of climate change were assessed and
it was concluded that for the year ended 31December2023,
there was no impact on the key audit matters or the
assessment of the risks of material misstatement.
Finally, the consistency of the disclosures in relation to
climate change (including the disclosures in the Task Force
on Climate-related Financial Disclosures (TCFD) section)
within the Report and Accounts was considered against
the consolidated financial statements and our knowledge
obtained from our audit including challenging the disclosures
given in the narrative reporting within the consolidated
financial statements.
Audit scope
As part of designing our audit, the risks of material
misstatement in the consolidated financial statements were
assessed and materiality was determined. In particular,
consideration was given to where Management made
subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in
all of our audits, the risk of Management override of internal
controls was addressed, including, among other matters,
consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Tailoring of Group audit scope
The scope of our audit was tailored in order to perform
sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into
account the structure of the Group, the accounting processes
and controls, and the industry in which the Group operates.
The Group is structured into four segments (see note 4 to the
consolidated financial statements) and is a consolidation of
over 50 separate legal entities. The Group is a global specialist
insurer and reinsurer, and its operations primarily consist of
the legal entity operations in the United Kingdom, Europe, the
United States and Bermuda.
A full scope audit was performed for four components located
in the United Kingdom and Bermuda. Financial statement
line item audit procedures or specified procedures were also
performed over components in the United Kingdom, the United
States and Bermuda. Taken together this work provided over
80% coverage of the Group’s insurance revenue and over 80%
of the Group’s total assets.
The four full scope audit components are: (i) Hiscox Dedicated
Corporate Member Syndicate No. 33, (ii) Hiscox Dedicated
Corporate Member Syndicate No. 3624, (iii) Hiscox Insurance
Company Limited, and (iv) the parent Company, Hiscox Ltd
(including consolidation). For certain other components, account
balances were identified which were considered to be significant
in size or audit risk at the financial statement line-item level
in relation to the consolidated financial statements, financial
statement line item audit procedures, or specified procedures
were performed over these specified balances. Analytical
procedures over the financial information of the remaining
components that were not inconsequential were performed.
168 Hiscox Ltd Report and Accounts 2023
Materiality
The scope of our audit was influenced by our application
of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated financial statements are
free from material misstatement. Misstatements may arise due
to fraud or error. They are considered material if, individually or
in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the
consolidated financial statements.
Based on our professional judgement, certain quantitative
thresholds for materiality were determined, including the overall
Group materiality for the consolidated financial statements
as a whole as set out in the table below. These, together with
qualitative considerations, helped to determine the scope of
our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial
statements as a whole.
Performance materiality is used to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, performance materiality is used in determining
the scope of the audit and the nature and extent of testing of
account balances, classes of transactions and disclosures,
for example in determining sample sizes. The performance
materiality applied was 75% of overall materiality, amounting
to $33million for the consolidated financial statements.
A number of factors were considered in the determination of
performance materiality including: the history of misstatements,
risk assessment and aggregation risk and the effectiveness
of controls – we concluded that 75% of overall materiality
was appropriate.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
$2million, as well as misstatements below that amount that,
in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit
of the consolidated financial statements of the current period
and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of
our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
This year there are two new key audit matters:
A Implementation of IFRS 17 – transition and restatement
of comparatives; and
A Valuation of deferred tax asset – on enactment of
Bermuda Corporate Income Tax.
We have combined the prior year key audit matter entitled
‘Valuation of gross claims liabilities’ and ‘Valuation of
reinsurance claims recoverable’ into one single key audit matter
entitled ‘Valuation of insurance contract liabilities reinsurance
contract assets – assumptions and judgements’ to reflect the
matter in terms of IFRS 17.
‘Disclosure of the expected impact of IFRS 17’, which was a key
audit matter last year, is no longer included because this was
a risk relevant to a specific disclosure made in the prior year
consolidated financial statements.
Materiality
Overall Group materiality
How we determined it
Rationale for the materiality
benchmark applied
$44 million
In determining materiality,
we considered a range of
financial metrics believed to
be relevant to the primary
users of the consolidated
financial statements. We
selected a materiality amount
using our professional
judgement which represents
1% of insurance revenue
for the year ended
31December2023.
The materiality amount
selected is appropriate
to the size and nature of
the business. Expressing
materiality in terms of
insurance revenue, one of
the key metrics relevant to
key users of the consolidated
financial statements, provides
a good representation relative
to the size and complexity
of the business and it is
not distorted by insured
catastrophe events to which
the Group is exposed, or the
levels of external reinsurance
purchased by the Group.
Chapter 6 165
Financial
summary
Independent
auditor’s report
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
169Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Independent
auditor’s report
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Key audit matters
Key audit matter
1. Valuation of insurance contract liabilities and reinsurance contract
assets – assumptions and judgements
Refer to notes 2.11, 2.18 and 20 to the consolidated financial statements for
disclosures of related accounting policies and balances.
As at 31 December 2023 insurance contract liabilities comprised
$354.4 million of liabilities for remaining coverage (LRC), and $6.2 billion of
liabilities for incurred claims (LIC). Reinsurance contract assets comprised
$118.8 million of assets for remaining coverage (ARC), and $2.2 billion
of assets for incurred claims (AIC). Insurance contract liabilities and
reinsurance contract assets are inherently uncertain and contain
material estimates.
LIC and AIC – the most subjective element continues to be the incurred
but not yet reported claims cash flows, which form part of the LIC, and
the associated reinsurers’ share of incurred but not yet reported claim
cash flows, which form part of AIC. The LIC and AIC also include the risk
adjustment to reflect the Management’s view of the compensation that
it requires for bearing uncertainty about the amount and timing of cash
flows from non-financial risks.
Management bases these estimates on the estimated ultimate cost of all
claims, together with estimates of the related claims handling costs, these
estimates can be materially impacted by numerous factors including:
A the underlying volatility attached to estimates for certain classes of
business, where small changes in assumptions can lead to large
changes in the levels of the estimate held;
A the risk of inappropriate assumptions used in determining current
year estimates, especially for ‘long-tailed’ classes of business,
there is necessarily greater use of Management judgement;
A the risk that key assumptions in respect of natural catastrophes
and other large claim losses are inappropriate. There is significant
judgement involved in those loss estimates, particularly as they
are often based on limited data;
A the valuation of AIC is uncertain due to the significant degree of
judgement applied in valuing the underlying insurance contracts that
have been reinsured, the complexity of the application and coverage
of the reinsurance programme; and
A the determination of discount rates (including choice of illiquidity
premium) and payment patterns used to derive the cash flow for
incurred claims.
Liabilities and assets for remaining coverage – we consider the most
significant judgements to be:
A the determination of the Premium Allocation Approach (PAA)
measurement model for groups of contracts that are not
automatically eligible, including the selection of ‘reasonably
expects’ assumptions;
A the appropriateness of methodologies and assumptions
adopted to value reinsurance assets associated with
retrospective reinsurance arrangements measured under
the General Measurement Model (GMM); and
A the judgement on the degree of risk that will transfer with
respect to retrospective reinsurance arrangements.
How our audit addressed the key audit matter
In performing our work over the valuation of
insurance contract liabilities and reinsurance
contract assets PwC actuarial specialists were
used, where appropriate. Procedures included
the following:
A understood and evaluated the process and
the design and implementation of controls
in place to determine the insurance
contract liabilities and reinsurance
contract assets. This included evaluating
the design and implementation of the
relevant controls in place;
A tested the underlying data to
source documentation;
A assessed the appropriateness of the
policy applied to determine the risk
adjustment and testing of the derivation
of the adjustment;
A evaluated and challenged the robustness
of the key judgements adopted in relation to
LIC and AIC, including the risk adjustment;
A applied our industry knowledge and
experience and compared the methodology,
models and assumptions used against
recognised actuarial practices;
A for the undiscounted best estimate liabilities,
developed independent point estimates for
classes of business considered to be higher
risk, particularly focusing on the largest and
most uncertain classes, as well as for certain
other classes for unpredictability, as at
31August2023 and performed a roll-forward
test to 31December2023;
A evaluated the methodology and assumptions
or performed a diagnostic check to identify
and investigate any anomalies over the
remaining classes of business;
A tested the accuracy of application of
reinsurance contract terms;
A understood updates made to the actuarial
assumptions impacting the forecast future
claims cash flows, and evaluated any changes
for reasonableness. This includes assumptions
on discount rates and payment patterns; and
A assessed the appropriateness of the
judgements and supporting estimates used
to determine use of the PAA and GMM
measurement models, including testing the
completeness and accuracy of the supporting
data, evaluating the assumptions used and
scenarios applied and testing the accuracy
of the models used.
The results of our procedures indicated that the
valuation of insurance contract liabilities and
reinsurance contract assets were supported by
the evidence obtained.
170 Hiscox Ltd Report and Accounts 2023
Key audit matters
Chapter 6 165
Financial
summary
Independent
auditor’s report
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Key audit matter
2. Implementation of IFRS 17 – transition and restatement
of comparatives
Refer to notes 2.1.1, 2.11 and 20 to the consolidated financial statements
for disclosures of related accounting policies and balances.
On 1 January 2023, the Group transitioned to IFRS 17 Insurance Contracts
which replaced IFRS 4. Due to the significance of the changes introduced
by the standard, which requires new and complex accounting models
and the application of the new accounting policies, there is increased
inherent risk in respect of the functionality and application of these models
in this first year of adoption. This is of particular focus for the Group as
the calculation engine used (Tyche) to determine the liabilities, assets
and related items of income and expense under IFRS 17 has been
internally developed.
The 2022 opening balance sheet and the 2022 comparatives have
been restated in order to comply with the requirements of IFRS 17.
The comparatives have been calculated by Management by adjusting
the reported position on an IFRS 4 basis using internal models developed
for transition. These adjustments require a number of significant
judgements and estimates including:
A the determination of the measurement model to apply under the
standard, in particular Management’s use of the PAA measurement
model for groups of contracts that are not automatically eligible;
A the appropriateness of methodologies and assumptions
adopted to value reinsurance assets associated with retrospective
reinsurance arrangements measured under the GMM;
A the methodology and assumptions in respect of determining
the risk adjustment;
A the methodology used by Management to determine discount
rate, which was deemed to be significant to the overall impact
of transition; and
A the implementation of new models to produce the IFRS 17
results, which include the Tyche and internally developed
models for transition.
How our audit addressed the key audit matter
In performing our audit work over the transition
to IFRS 17, and restatement of the comparative
consolidated financial statements (including
the 2022 opening balance sheet), the following
procedures were performed:
A evaluated the design and implementation of
the relevant controls in place;
A assessed the significant judgements
used by Management to determine the
accounting policies along with the
compliance of those policies with IFRS 17;
A tested the application of Management’s
documented accounting policies;
A assessed the appropriateness of the
judgements and supporting estimates used
to determine use of the PAA and GMM
measurement models, including testing the
completeness and accuracy of supporting
data, evaluating the assumptions used and
scenarios applied, and testing the accuracy
of models used;
A tested Management’s calculation engine and
the transition models using our independent
model;
A evaluated the appropriateness of the
methodology used to determine discount
rates and independently recalculated the
impact of discounting;
A assessed the appropriateness of the policy
applied to determine the risk adjustment and
testing of the derivation of the adjustment;
A tested the mapping of outputs from the
calculation engine to the general ledger
and financial statement disclosures; and
A tested the mathematical accuracy and
completeness of the supporting calculations
and adjustments used to determine the
2022 comparatives and opening position
at 1January2022;
As a result of the procedures performed,
we have no matters to report related to the
Implementation of IFRS 17 – transition and
restatement of comparatives.
171Hiscox Ltd Report and Accounts 2023
Key audit matters
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Chapter 1 6
Performance
and purpose
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Remuneration
Key audit matter
3. Valuation of deferred tax asset – on enactment of Bermuda
Corporate Income Tax
Refer to notes 2.12, 2.18 and 23 to the consolidated financial statements
for disclosures of related accounting policies and balances.
The Bermuda government has introduced a corporate income tax (CIT),
which was substantively enacted on 27 December 2023, and applies to
Bermuda constituent entities with effect from 1 January 2025. The CIT will
apply at a rate of 15% on the profits of Hiscox’s Bermuda entities which are
consolidated in the financial statements of Hiscox Ltd. A deferred tax asset
(DTA) of $150 million in relation to Bermuda CIT has been recognised at the
balance sheet date related to the Economic Transition Adjustment (ETA)
calculated as at 30 September 2023.
The ETA for Hiscox Bermuda is primarily driven from the customer
relationship intangible asset.
Management has used an external expert to value the customer
relationships which is dependent on a number of key assumptions
including: forecast cashflows, discount rate, and contributory
asset charges. These assumptions are inherently judgemental and
the customer relationship intangible asset is sensitive to changes in
these key assumptions.
How our audit addressed the key audit matter
In performing our work over the valuation of the
deferred tax asset arising on enactment of Bermuda
Corporate Income Tax, PwC valuation experts were
used and the following procedures were performed:
A obtained an understanding of the key
components of the customer relationship
intangible asset. We focused our testing on
the material components of the customer
relationship intangible asset and evaluated
the following key assumptions:
A forecast cash flows: compared the
assumptions in respect of forecast
operating profit and cash flows to
historical results and assessed the
underlying projections;
w discount rate: developed an independent
estimate of the discount rate applied to
the cash flows and compared this to the
discount rate used by Management;
A contributory asset charges:
benchmarked the contributory asset
charges applied by Management to
industry benchmark data to assess the
reasonableness of the assumption;
A tested the mathematical accuracy
of Management’s model and the
appropriateness of the methodologies
used to determine the fair value of the
customer relationship intangible asset.
The results of our procedures and the evidence
obtained supported Management’s valuation of
the Bermuda CIT deferred tax asset.
172 Hiscox Ltd Report and Accounts 2023
Other information
Management is responsible for the other information. The
other information comprises the Report and Accounts (but
does not include the consolidated financial statements and our
auditor’s report thereon). The other information also includes
reporting based on the TCFD recommendations. Our opinion
on the consolidated financial statements does not cover the
other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
Responsibilities of Management and those charged with
governance for the consolidated financial statements
Management is responsible for the preparation and fair
presentation of the consolidated financial statements in
accordance with UK-adopted international accounting
standards and for such internal control as Management
determines is necessary to enable the preparation of
consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements,
Management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using
the going concern basis of accounting unless Management
either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for
overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the
consolidated financial statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
A identify and assess the risks of material misstatement
of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations,
or the override of internal control;
A obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
Group’s internal control;
A evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by Management;
A conclude on the appropriateness of Management’s use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date
of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue
as a going concern;
A evaluate the overall presentation, structure and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation; and
A obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for
the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in
our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest
benefits of such communication.
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and purpose
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173Hiscox Ltd Report and Accounts 2023
Report on other legal and regulatory requirements
Other voluntary reporting – Directors’ remuneration
The Company voluntarily prepares a report on Directors’
remuneration in accordance with the provisions of the UK
Companies Act 2006. The Directors have requested an
audit of the part of the report on Directors’ remuneration
specified by the UK Companies Act 2006 to be audited as
if the Company were a UK-registered company.
In our opinion, the part of the report on Directors’ remuneration
to be audited has been properly prepared in accordance with
the UK Companies Act 2006.
Corporate governance statement
The Directors’ statements in relation to going concern,
longer-term viability and that part of the corporate governance
statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code, which the
Listing Rules of the Financial Conduct Authority specify for
review by auditors of premium listed companies has been
reviewed. Our additional responsibilities with respect to the
corporate governance statement as other information are
described in the other information section of this report.
Based on the work undertaken as part of our audit, it was
concluded that each of the following elements of the corporate
governance statement is materially consistent with the
consolidated financial statements and our knowledge obtained
during the audit, and there is nothing material to add or draw
attention to in relation to:
A the Directors’ confirmation that they have carried
out a robust assessment of the emerging and
principal risks;
A the disclosures in the Report and Accounts that
describe those principal risks, what procedures are
in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
A the Directors’ statement in the consolidated financial
statements about whether they considered it
appropriate to adopt the going concern basis of
accounting in preparing them, and their identification
of any material uncertainties to the Group’s ability to
continue to do so over a period of at least twelve
months from the date of approval of the consolidated
financial statements;
A the Directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers
and why the period is appropriate; and
A the Directors’ statement as to whether they have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
The review of the Directors’ statement regarding the
longer-term viability of the Group was substantially less in
scope than an audit and only consisted of making inquiries
and considering the Directors’ process supporting their
statements; checking that the statements are in alignment with
the relevant provisions of the UK Corporate Governance Code;
and considering whether the statement is consistent with the
consolidated financial statements and our knowledge and
understanding of the Group and its environment obtained in
the course of the audit.
In addition, based on the work undertaken as part of our audit,
it was concluded that each of the following elements of the
corporate governance statement is materially consistent with
the consolidated financial statements and our knowledge
obtained during the audit:
A the Directors’ statement that they consider the Report
and Accounts, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the shareholders to assess the Group’s position,
performance, business model and strategy;
A the section of the Report and Accounts that describes
the review of effectiveness of risk management and
internal control systems; and
A the section of the Report and Accounts describing the
work of the audit committee.
There is nothing to report in respect of our responsibility to
report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a
departure from a relevant provision of the Code specified
under the Listing Rules for review by the auditors.
Other matter
As required by the Financial Conduct Authority Disclosure
Guidance and Transparency Rule 4.1.14R, these consolidated
financial statements will form part of the ESEF-prepared annual
financial report filed on the National Storage Mechanism of
the Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (ESEF RTS). This auditor’s
report provides no assurance over whether the annual financial
report will be prepared using the single electronic format
specified in the ESEF RTS.
The engagement partner on the audit resulting in this
independent auditor’s report is Marisa Savage.
PricewaterhouseCoopers Ltd.
Chartered Professional Accountants
Bermuda
5 March 2024
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Consolidated income statement
For the year ended 31 December 2023
Note
| 2022 | |||
| 2023 | (restated)* | ||
| $m | $m | ||
Insurance revenue | 4 | ||
| Insurance service expenses | 4 | ( | ( |
Insurance service result before reinsurance contracts held | |||
| Allocation of reinsurance premiums | 4 | ( | ( |
| Amounts recoverable from reinsurers for incurred claims | 4 | ||
Net expenses from reinsurance contracts held | ( | ( | |
| Insurance service result | 4 | ||
| Investment result | 7 | ( | |
Net finance (expenses)/income from insurance contracts | ( | ||
Net finance income/(expenses) from reinsurance contracts | ( | ||
| Net insurance finance (expenses)/income | 7 | ( | |
| Net financial result | 7 | ( | |
| Other income | 8 | ||
| Other operational expenses | 8 | ( | ( |
Net foreign exchange (losses)/gains | ( | ||
| Other finance costs | 9 | ( | ( |
| Share of profit of associates after tax | 13 | ||
Profit before tax | |||
| Tax credit/(expense) | 22 | ( | |
Profit for the year (all attributable to owners of the Company) | |||
| Earnings per share on profit attributable to owners of the Company | |||
| Basic | 25 | ||
| Diluted | 25 |
*Restated for the adoption of IFRS 17 and IFRS 9, see note 2.1.
Consolidated statement of comprehensive income
For the year ended 31 December 2023
| 2022 | |||
| Note 2023 | (restated) | ||
| $m | $m | ||
Profit for the period | |||
| Other comprehensive income | |||
| Items that will not be reclassified to the income statement: | |||
| Remeasurements of the net defined benefit pension scheme | 24 | ( | |
Income tax effect | ( | ( | |
( | |||
| Items that may be reclassified subsequently to the income statement: | |||
Exchange gains/(losses) on translation of foreign operations | ( | ||
Other comprehensive income net of tax | ( | ||
Total comprehensive income for the year (all attributable to owners of the Company) |
The notes on pages 178 to 245 are an integral part of these consolidated financial statements.
175Hiscox Ltd Report and Accounts 2023
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Consolidated balance sheet
Note
| 31 December | 1 January | |||
| 31 December | 2022 | 2022 | ||
| 2023 | (restated) | (restated) | ||
| $m | $m | $m | ||
| Assets | ||||
| Employee retirement benefit asset | 24 | |||
| Goodwill and intangible assets | 11 | |||
| Property, plant and equipment | 12 | |||
| Investments in associates | 13 | |||
| Deferred tax assets | 23 | |||
| Assets included in disposal group classified as held for sale | 8 | |||
| Financial assets carried at fair value | 14 | |||
| Reinsurance contract held assets | 20 | |||
| Trade and other receivables | 15 | |||
Current tax assets | ||||
| Cash and cash equivalents | 18 | |||
Total assets | ||||
| Equity and liabilities | ||||
| Shareholders’ equity | ||||
| Share capital | 19 | |||
| Share premium | 19 | |||
| Contributed surplus | 19 | |||
Currency translation reserve | ( | ( | ( | |
Retained earnings | ||||
Equity attributable to owners of the Company | ||||
Non-controlling interest | ||||
Total equity | ||||
| Employee retirement benefit obligations | 24 | |||
| Deferred tax liabilities | 23 | |||
| Liabilities included in disposal group classified as held for sale | 8 | |||
| Insurance contract liabilities | 20 | |||
| Financial liabilities | 14 | |||
| Current tax liabilities | ||||
| Trade and other payables | 21 | |||
Total liabilities | ||||
Total equity and liabilities |
The notes on pages 178 to 245 are an integral part of these consolidated financial statements.
Aki Hussain
Group Chief Executive Officer
Paul Cooper
Group Chief Financial Officer
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Consolidated statement of changes in equity
Note
| Equity | |||||||||
| Currency | attributable to | ||||||||
| Share | Share | Contributed | translation | Retained | owners of the | Non-controlling | Total | ||
| capital | premium | surplus | reserve | earnings | Company | interest | equity | ||
| $m | $m | $m | $m | $m | $m | $m | $m | ||
| Balance at 31 December 2021 | |||||||||
(as previously reported) | ( | ||||||||
| IFRS 17 and IFRS 9 opening | |||||||||
equity adjustments (note 2.1) | |||||||||
Balance at 1 January 2022 | ( | ||||||||
Profit for the year | |||||||||
Other comprehensive income net of tax | ( | ( | ( | ||||||
| Employee share options: | |||||||||
| Equity settled | |||||||||
share-based payments | |||||||||
Proceeds from shares issued | 19 | ||||||||
| Deferred and current tax | |||||||||
on employee share options | |||||||||
| Shares issued in relation | |||||||||
| to Scrip Dividend | 19, 26 | ||||||||
| Dividends paid to owners | |||||||||
| of the Company | 26 | ( | ( | ( | |||||
Balance at 31 December 2022 | ( | ||||||||
Profit for the year | |||||||||
Other comprehensive income net of tax | ( | ||||||||
| Employee share options: | |||||||||
| Equity settled | |||||||||
share-based payments | |||||||||
Proceeds from shares issued | 19 | ||||||||
Deferred and current tax on employee share options | |||||||||
| Shares issued in relation | |||||||||
| to Scrip Dividend | 19, 26 | ||||||||
| Dividends paid to owners | |||||||||
| of the Company | 26 | ( | ( | ( | |||||
Balance at 31 December 2023 | ( |
The notes on pages 178 to 245 are an integral part of these consolidated financial statements.
177Hiscox Ltd Report and Accounts 2023
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Consolidated statement of cash flows
For the year ended 31 December 2023
| 2022 | |||
| Note 2023 | (restated) | ||
| $m | $m | ||
Profit before tax | |||
| Adjustments for: | |||
Net foreign exchange losses/(gains) | ( | ||
| Interest and equity dividend income | 7 | ( | ( |
Interest expense | |||
| Net fair value (gains)/losses on financial assets | 7 | ( | |
| Depreciation, amortisation and impairment | 8, 11, 12 | ||
| Charges in respect of share-based payments | 19 | ||
Realised gain/(loss) on sale of subsidiary undertaking, intangible assets and property plant and equipment | ( | ||
| Changes in operational assets and liabilities: | |||
Insurance and reinsurance contracts | |||
Financial assets carried at fair value | ( | ( | |
Financial liabilities carried at amortised cost | |||
Other assets and liabilities | ( | ( | |
| Cash paid to the pension fund | 24 | ( | ( |
Interest received | |||
Equity dividends received | |||
Interest paid | ( | ( | |
Tax paid | ( | ( | |
Net cash flows from operating activities | |||
Proceeds from sale of associate | |||
Purchase of property, plant and equipment | ( | ( | |
Proceeds from the sale of property, plant and equipment | |||
| Purchase of intangible assets | 11 | ( | ( |
Net cash flows used in investing activities | ( | ( | |
Proceeds from the issue of ordinary shares | |||
Proceeds from the issue of loan notes | |||
Distributions made to owners of the Company | ( | ( | |
Repayment of borrowings | ( | ||
Principal elements of lease payments | ( | ( | |
Net cash flows used in financing activities | ( | ( | |
Net increase in cash and cash equivalents | |||
Cash and cash equivalents at 1 January | |||
Net increase in cash and cash equivalents | |||
Effect of exchange rate fluctuations on cash and cash equivalents | ( | ||
| Cash and cash equivalents at 31 December | 18 |
The purchase, maturity and disposal of financial assets and liabilities, including derivatives, is part of the Group’s insurance
activities and is therefore classified as an operating cash flow.
Included within cash and cash equivalents held by the Group are balances totalling $1 8 1 million (2022:$1 78 million) not
available for immediate use by the Group outside of the Lloyd’s Syndicate within which they are held. Additionally, $1 08 million
(2022:$89 million) is pledged cash held against Funds at Lloyd’s, and $1 0. 1 million (2022:$0.5 million) is held within trust funds
against reinsurance arrangements.
The notes on pages 178 to 245 are an integral part of these consolidated financial statements.
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Notes to the consolidated financial statements
1 General information
The Hiscox Group, which is headquartered in Hamilton,
to herein as the ‘Company’) and its subsidiaries (collectively,
the ‘Hiscox Group’ or the ‘Group’). For the current period
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,
| $m | |
| Equity as at 31 December 2021 | |
as previously reported | 2,539.3 |
Impact of IFRS 17 | 25.1 |
Impact of IFRS 9 | (1.2) |
Restated equity 1 January 2022 | 2,563.2 |
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2 Basis of preparation
2.1 Material accounting policies information
2.1.1 IFRS 17 Insurance Contracts continued
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2.1 Material accounting policies information continued
| 31 December 2021 | 1 January 2022 | |||
| IAS 39 | IFRS 9 | |||
| Measurement | Carrying amount | Measurement | Carrying amount | |
| category | $m | category | $m | |
| Financial assets | ||||
Government gilts/bonds | FVPL | 9 07.4 | FVPL (mandatory) | 9 07.4 |
Corporate bonds | FVPL | 3,600.8 | FVPL (mandatory) | 3,600.8 |
Asset backed securities | FVPL | 116.6 | FVPL (mandatory) | 116.6 |
Mortgage-backed securities | FVPL | 36 0.1 | FVPL (mandatory) | 360.1 |
Other fixed income holdings | FVPL | 434.3 | FVPL (mandatory) | 434.3 |
Hedge/equity funds | FVPL | 417.0 | FVPL (mandatory) | 417.0 |
Strategic investments | FVPL | 44.2 | FVPL (mandatory) | 44.2 |
Insurance-linked funds | FVPL | 50.9 | FVPL (mandatory) | 50.9 |
| Deposits with credit institutions | Loans and receivables | 108.9 | Amortised cost | 108.9 |
| (Lloyd’s deposits) | (Amortised cost) | |||
Derivatives | FVPL | 1.1 | FVPL (mandatory) | 1.1 |
Trade and other receivables | Loans and receivables | 68.5 | Amortised cost | 67. 3 |
| (Amortised cost) | ||||
Cash and cash equivalents | Amortised cost | 1,300.7 | Amortised cost | 1,300.7 |
Total | 7,410 .5 | 7,4 09.3 | ||
| Financial liabilities | ||||
Borrowings and accrued interest | Amortised cost | 746.5 | Amortised cost | 746.5 |
Derivatives | FVPL | 0.2 | FVPL (mandatory) | 0.2 |
Trade and other payables | Amortised cost | 22.4 | Amortised cost | 22.4 |
Total | 769.1 | 76 9.1 |
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2.1 Material accounting policies information continued
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2.5 Intangible assets continued
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2.7 Financial assets and liabilities
(a) Recognition continued
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2 Basis of preparation continued
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2 Basis of preparation
2.11 Insurance and reinsurance contracts
(d) Recognition and derecognition continued
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
2 Basis of preparation
2.11 Insurance and reinsurance contracts
(f) Measurement – premium allocation approach continued
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Chapter 2 22
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Performance
and purpose
Chapter 4 106
Remuneration
2 Basis of preparation
2.12 Taxation continued
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Governance
Chapter 5 148
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information
Chapter 2 22
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Performance
and purpose
Chapter 4 106
Remuneration
2 Basis of preparation continued
190 Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
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Performance
and purpose
Chapter 4 106
Remuneration
| Year end 31 December 2023 | |||
| 1 year | 3 year | 5 year | |
| % | % | % | |
USD | 4.83 | 3.92 | 3.74 |
GBP | 4.97 | 4.12 | 3.82 |
EUR | 3.49 | 2.75 | 2.65 |
CAD | 4.63 | 3.69 | 3.39 |
2 Basis of preparation
2.18 Use of significant judgements, estimates
and assumptions
(a) Liability for incurred claims continued
191Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Year end 31 December 2022 | |||
| 1 year | 3 year | 5 year | |
| % | % | % | |
USD | 4.90 | 4.24 | 4.00 |
GBP | 4.59 | 4.64 | 4.55 |
EUR | 3.12 | 3.28 | 3.31 |
CAD | 4.66 | 4.03 | 3.74 |
3 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
2 Basis of preparation
2.18 Use of significant judgements, estimates
and assumptions
(a) Discount rates continued
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Performance
and purpose
Chapter 4 106
Remuneration
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 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, which are
described in notes 3.1, 3.2 and 3.3 below. The Group also
actively manages its capital risks as detailed in note 3.4 and tax
risks as detailed in note 3.5. Additional unaudited information is
also provided in the corporate governance, risk management
and capital sections of this Report and Accounts.
3.1 Operational risk
The Group is exposed to the risk of direct or indirect loss
resulting from internal processes, people or systems, or
from external events. This includes cyber security risk, as
well as major IT, systems or service failures. The Group has
demonstrated continued resilience, underscoring the benefits
of its business model, disciplined risk management and
ongoing investment in technology and infrastructure.
Hiscox has implemented several operational risk management
processes, which include enhancing its defences and
response to information security and cyber threats. Hiscox
regularly reassesses its information security standards
and methodologies to ensure appropriate governance and
consistency in its approach.
In line with its ‘future of work’ programme, Hiscox continues
to monitor and adapt its hybrid working policies and practices
and ensure that the workforce is equipped with the necessary
technology to enable this. In the second half of 2023, the
organisation also completed a ‘ways of working’ review.
These measures have continued to be successful in
addressing employee engagement and a number of
operational risks.
In 2023, Hiscox also focused on Group-wide crisis
management response planning, including conducting
cyber crisis simulations to test and enhance its response
plans. The organisation has also established an enterprise
portfolio management (EPM) capability aimed at
strengthening operational maturity and controls in relation
to its change agenda over the next two-to-three years.
3 Management of risk continued
193Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk
3.2 Insurance risk
i) Underwriting risk continued
| Types of insurance risk in the Group | |||||||
| Property – | Property – | Casualty – | |||||
| Reinsurance | marine and | other | professional | Casualty – | |||
| inwards | major assets | assets | indemnity | other risks | Other* | Total | |
| $m | $m | $m | $m | $m | $m | $m | |
Total | 976.2 | 345.0 | 903.3 | 1,077.1 | 789.2 | 392.4 | 4,483.2 |
| Types of insurance risk in the Group | |||||||
| Property – | Property – | Casualty – | |||||
| Reinsurance | marine and | other | professional | Casualty – | |||
| inwards | major assets | assets | indemnity | other risks | Other* | Total | |
| $m | $m | $m | $m | $m | $m | $m | |
Total | 931.6 | 2 87.1 | 846.4 | 1,046.8 | 780.6 | 380.8 | 4,273.3 |
194 Hiscox Ltd Report and Accounts 2023
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Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk
3.2 Insurance risk continued
195Hiscox Ltd Report and Accounts 2023
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financial statements
Chapter 3 72
Governance
Chapter 5 148
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk
3.2 Insurance risk
Casualty insurance risks continued
196 Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Valuation of securities will continue to be impacted by external
market factors including interest rates, default rates, rating
agency actions and liquidity. The Group will make adjustments
to the investment portfolio as appropriate as part of its overall
portfolio strategy, but its ability to mitigate its risk by selling or
hedging its exposures may be limited by the market environment.
The Group’s future results may be impacted, both
positively and negatively, by the valuation adjustments
applied to securities.
Note 17 provides an analysis of the measurement
attributes of the Group’s financial instruments.
| 2023 | 2022 | |
| % weighting | % weighting | |
Directly held equity securities | 15 | 8 |
Equity funds | 32 | 43 |
Hedge funds | 53 | 49 |
| Geographic focus | ||
Specific UK mandates | 39 | 22 |
Global mandates | 61 | 78 |
| 2023 | 2022 | |
| % weighting | % weighting | |
Government issued | 20 | 20 |
Agency and government supported | 4 | 3 |
Asset-backed securities | 8 | 4 |
Mortgage-backed instruments | 6 | 5 |
Corporate bonds | 60 | 64 |
Lloyd’s deposits and bond funds | 1 | 2 |
Credit funds | 1 | 2 |
| 1% increase/decrease in interest rates | |
| Equity/profit after tax | |
| 31 December 2023 | $m |
Reinsurance contract held assets | (34)/34 |
Insurance contract liabilities | 87/(87) |
Debt and fixed income holdings | (91)/91 |
| 1% increase/decrease in interest rates | |
| Equity/profit after tax | |
| 31 December 2022 (restated) | $m |
Reinsurance contract held assets | (43)/43 |
Insurance contract liabilities | 92/(92) |
Debt and fixed income holdings | (77)/77 |
3 Management of risk
3.3 Financial risk
(a) Reliability of fair values continued
197Hiscox Ltd Report and Accounts 2023
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Chapter 5 148
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk
3.3 Financial risk
(c) Interest rate risk continued
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Chapter 2 22
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Performance
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Chapter 4 106
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| Other/ | |||||||
| AAA | AA | A | BBB | non-rated | Total | ||
| $m | $m | $m | $m | $m | $m | ||
Debt and fixed income holdings | 14 | 8 47.1 | 1,751.1 | 1,721.8 | 1,608.9 | 404.7 | 6,333.6 |
| Reinsurance contract held assets | 20 | 524.9 | 1,039.4 | 525.0 | – | 9.0 | 2,098.3 |
Total | 1,372.0 | 2,790.5 | 2,246.8 | 1,608.9 | 413.7 | 8,431.9 |
| Other/ | ||||||||
| AAA | AA | A | BBB | non-rated | Total | |||
| $m | $m | $m | $m | $m | $m | |||
Debt and fixed income holdings | 14 | 521.6 | 1,475.2 | 1,580.7 | 1,449.3 | 399.8 | 5,426.6 | |
| Reinsurance contract held assets | 20 | 1,0 97. 5 | 689.2 | 715.0 | 0.9 | 14.6 | 2, 517. 2 | |
Total | 1,619.1 | 2,16 | 4.4 | 2,295.7 | 1,450.2 | 414.4 | 7, 94 3 .8 |
3 Management of risk
3.3 Financial risk
(d) Credit risk continued
199Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Within | Between one | Between two | Between three | Between four | Over | 2023 | |
| one year | and two years | and three years | and four years | and five years | five years | total | |
| $m | $m | $m | $m | $m | $m | $m | |
Debt and fixed income holdings | 1,595.7 | 1, 587.7 | 1,489.3 | 659.9 | 366.6 | 634.4 | 6,333.6 |
Cash and cash equivalents | 1,437.0 | – | – | – | – | – | 1, 4 37.0 |
Total | 3,032.7 | 1,587.7 | 1,489.3 | 659.9 | 366.6 | 634.4 | 7,770.6 |
| As at 31 December 2022 (restated)* Within | Between one | Between two | Between three | Between four | Over | 2022 | ||
| one year | and two years | and three years | and four years | and five years | five years | total | ||
| $m | $m | $m | $m | $m | $m | $m | ||
Debt and fixed income holdings | 1,355.5 | 1,519.6 | 1,29 | 6.1 | 495.0 | 272.7 | 4 87.7 | 5,426.6 |
Cash and cash equivalents | 1,350.9 | – | – | – | – | – | 1,350.9 | |
Total | 2,706.4 | 1,519.6 | 1, 29 6.1 | 495.0 | 272.7 | 4 87.7 | 6,777.5 |
| 2023 | 2022 | |
| in years | in years | |
US Dollar | 4.03 | 3.77 |
Sterling | 2.18 | 2.65 |
Euro | 2.55 | 2.67 |
Canadian Dollar | 2.59 | 2.48 |
3 Management of risk
3.3 Financial risk continued
200 Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Within | Between one | Between two | Between three | Between four | Over | 2023 | |
| one year | and two years | and three years | and four years | and five years | five years | total | |
| $m | $m | $m | $m | $m | $m | $m | |
Total | 1,821.6 | 1,042.6 | 557.3 | 359.5 | 202.2 | 368.5 | 4,351.7 |
| Within | Between one | Between two | Between three | Between four | Over | 2022 | |
| one year | and two years | and three years | and four years | and five years | five years | total | |
| $m | $m | $m | $m | $m | $m | $m | |
Total | 1,642.8 | 975.9 | 521.6 | 336.5 | 189.3 | 344.8 | 4,010.9 |
3 Management of risk
3.3 Financial risk
(e) Liquidity risk continued
201Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| US Dollar | Sterling | Euro | Other | 2023 | |||
| $m | $m | $m | $m | $m | |||
Goodwill and intangible assets | 126.8 | 125.8 | 65.3 | 6.0 | 323.9 | ||
Financial assets carried at fair value | 4,691.8 | 1,045.2 | 635.7 | 201.7 | 6,574.4 | ||
Cash and cash equivalents | 819.7 | 321.2 | 219.1 | 77.0 | 1,4 37.0 | ||
Reinsurance contract held assets | 1,710.7 | 203.5 | 157.9 | 26.2 | 2,098.3 | ||
Other assets | 385.2 | 146.7 | 39.6 | 55.4 | 626.9 | ||
Total assets | 7,73 | 4. 2 | 1,842.4 | 1,117.6 | 366.3 | 11,0 60.5 | |
Insurance contract liabilities | 4,893.2 | 764.7 | 845.4 | 100.7 | 6,604.0 | ||
Other liabilities | 92.4 | 939.6 | 96.8 | 31.0 | 1,159.8 | ||
Total liabilities | 4,985.6 | 1,704.3 | 942.2 | 131.7 | 7,76 | 3. 8 | |
Total equity | 2,748.6 | 138.1 | 175.4 | 234.6 | 3,296.7 |
| US Dollar | Sterling | Euro | Other | 2022 | |
| $m | $m | $m | $m | $m | |
Goodwill and intangible assets | 135.7 | 131.7 | 46.7 | 6.3 | 320.4 |
Financial assets carried at fair value | 4,165.8 | 938.5 | 511.8 | 196.0 | 5,812.1 |
Cash and cash equivalents | 773.1 | 248.9 | 229.8 | 99.1 | 1,350.9 |
Reinsurance contract held assets | 1,839.9 | 404.0 | 179.3 | 94.0 | 2, 517. 2 |
Other assets | 99.1 | 212.8 | 33.9 | 16.6 | 362.4 |
Total assets | 7,013. 6 | 1,935.9 | 1,001.5 | 412.0 | 10,363.0 |
Insurance contract liabilities | 4,677.0 | 9 63.1 | 849.3 | 204.9 | 6,694.3 |
Other liabilities | 62.5 | 856.6 | 110.7 | 3.9 | 1,033.7 |
Total liabilities | 4,739.5 | 1,819.7 | 960.0 | 208.8 | 7,728 .0 |
Total equity | 2,274.1 | 116. 2 | 41.5 | 203.2 | 2,635.0 |
3 Management of risk
3.3 Financial risk
(f) Currency risk continued
202 Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| December 2022 | December 2022 | |||
| December 2023 | December 2023 | effect on equity | effect on profit | |
| effect on equity | effect on profit | after tax | before tax | |
| after tax | before tax | (restated) | (restated) | |
| $m | $m | $m | $m | |
Strengthening of Sterling | 77.4 | 13.6 | 62.2 | 17.4 |
Weakening of Sterling | (7 7.4) | (13.6) | (62.2) | (17. 4) |
3 Management of risk
3.3 Financial risk
(f) Currency risk continued
203Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk continued
204 Hiscox Ltd Report and Accounts 2023
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Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
A.M. Best | Fitch | S&P | |
Hiscox Insurance Company Limited | A (Excellent) | A+ | A (Strong) |
Hiscox Insurance Company (Bermuda) Limited | A (Excellent) | A+ | A (Strong) |
Hiscox Insurance Company (Guernsey) Limited | A (Excellent) | A+ | – |
Hiscox Insurance Company Inc. | A (Excellent) | – | – |
Hiscox Société Anonyme | – | – | A (Strong) |
3 Management of risk
3.4 Capital risk management continued
205Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
3 Management of risk
3.4 Capital risk management
Capital modelling and regulation continued
206 Hiscox Ltd Report and Accounts 2023
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Governance
Chapter 5 148
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
207Hiscox Ltd Report and Accounts 2023
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Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Hiscox | ||||||
| Hiscox | London | Hiscox | Corporate | |||
| Retail | Market | Re & ILS | Centre | Total | ||
| $m | $m | $m | $m | $m | ||
Insurance revenue | 2, 337.7 | 1,175.6 | 969.9 | – | 4,483.2 | |
Insurance service expenses | (2,072.3) | (856.5) | (260.5) | – | (3,18 | 9.3) |
Incurred claims and changes to liabilities for incurred claims | (983.6) | (486.5) | (55.6) | – | (1,525.7) | |
Acquisition costs* | (668.2) | (251.1) | (119.7 ) | – | (1,039.0) | |
Other attributable expenses* | (407.3) | (118.9) | (85.2) | – | (611.4) | |
Losses on onerous contracts and reversals | (13.2) | – | – | – | (13.2) | |
Insurance service result before reinsurance contracts held | 265.4 | 319.1 | 709.4 | – | 1,293.9 | |
Allocation of reinsurance premiums | (250.6) | (336.5) | (532.3) | – | (1,119.4) | |
Amount recoverable from reinsurers for incurred claims | 165.4 | 193.4 | (41.0) | – | 317.8 | |
Net expense from reinsurance contracts held | (85.2) | (143.1) | (573.3) | – | (801.6) | |
Insurance service result | 180.2 | 176.0 | 136.1 | – | 492.3 | |
Investment result | 203.9 | 109.9 | 70.6 | – | 384.4 | |
Net finance expense from insurance contracts | (110.9) | (61.1) | (48.7) | – | (220.7) | |
Net finance income from reinsurance contracts | 21.5 | 23.7 | 35.8 | – | 81.0 | |
Net insurance finance income | (89.4) | (37.4) | (12.9) | – | (139.7) | |
Net financial result | 114.5 | 72.5 | 57.7 | – | 244.7 | |
Other income | 21.3 | 22.0 | 41.5 | 6.3 | 91.1 | |
Other operational expenses* | (47.8) | (18.8) | (12.8) | (46.1) | (125.5) | |
Net foreign exchange losses | – | – | – | (27.0) | (27.0) | |
Other finance costs | (0.9) | (0.3) | (1.1) | (47.7) | (50.0) | |
Share of profits of associates | – | – | – | 0.3 | 0.3 | |
Profit/(loss) before tax | 267. 3 | 251.4 | 221.4 | (114.2) | 625.9 | |
| Ratio analysis | ||||||
Claims ratio (%) | 41.6 | 35.5 | 20.5 | – | 37.4 | |
Expense ratio (%) | 50.0 | 43.6 | 47.8 | – | 48.1 | |
Combined ratio (%) | 91.6 | 79.1 | 68.3 | – | 85.5 |
4 Operating segments continued
208 Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
(a) Profit before tax by segment continued
| Hiscox | ||||
| Hiscox | London | Hiscox | ||
| Retail | Market | Re & ILS | Total | |
| $m | $m | $m | $m | |
Insurance revenue | 2, 337.7 | 1,175.6 | 969.9 | 4,483.2 |
Allocation of reinsurance premiums | (250.6) | (336.5) | (532.3) | (1,119.4) |
LPT premium | 62.4 | 7. 9 | (8.6) | 61.7 |
Allocation of reinsurance premiums after reclassifying LPT premium | (188.2) | (328.6) | (540.9) | (1,0 57.7 ) |
Adjusted net insurance revenue | 2,149.5 | 8 47.0 | 429.0 | 3,425.5 |
Incurred claims and changes to liabilities for incurred claims | (983.6) | (486.5) | (55.6) | (1,525.7) |
Amounts recoverable from reinsurers for incurred claims | 165.4 | 193.4 | (41.0) | 317.8 |
LPT premium | (62.4) | (7.9) | 8.6 | (61.7) |
Amounts recoverable from reinsurers for incurred claims after reclassifying LPT premium | 103.0 | 185.5 | (32.4) | 256.1 |
Adjusted net incurred claims | (880.6) | (301.0) | (88.0) | (1,269.6) |
Remove benefit from discounting of claims | (98.5) | (39.5) | (6.3) | (144.3) |
Undiscounted adjusted net incurred claims | (979.1) | (340.5) | (94.3) | (1,413.9) |
| The following ratios reflect the reclassification of LPT premium and remove the impact of discounting. | ||||
| Ratio analysis (undiscounted) | ||||
Claims ratio (%) | 46.2 | 40.2 | 22.0 | 41.7 |
Expense ratio (%) | 50.0 | 43.6 | 47.8 | 48.1 |
Combined ratio (%) | 96.2 | 83.8 | 69.8 | 89.8 |
| Year ended 31 December 2023 | |||
| Hiscox | |||
| Hiscox | London | Hiscox | |
| Retail | Market | Re & ILS | |
| $m | $m | $m | |
1% change in claims or expense ratio | 21.5 | 8.5 | 4.3 |
4 Operating segments
209Hiscox Ltd Report and Accounts 2023
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information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
(a) Profit before tax by segment continued
| Hiscox | |||||
| Hiscox | London | Hiscox | Corporate | ||
| Retail | Market | Re & ILS | Centre | Total | |
| $m | $m | $m | $m | $m | |
Insurance revenue | 2,218.0 | 1,130.6 | 924.7 | – | 4,273.3 |
Insurance service expenses | (2,002.2) | (881.9) | (601.8) | – | (3,485.9) |
Incurred claims and changes to liabilities for incurred claims | (958.0) | (506.4) | (436.7) | – | (1,9 01.1) |
Acquisition costs | (618.4) | (276.6) | (110.5) | – | (1,005.5) |
Other attributable expenses | (422.5) | (98.7) | (54.3) | – | (575.5) |
Losses on onerous contracts and reversals | (3.3) | (0.2) | (0.3) | – | (3.8) |
Insurance service result before reinsurance contracts held | 215.8 | 248.7 | 322.9 | – | 787.4 |
Allocation of reinsurance premiums | (293.3) | (356.3) | (615.2) | – | (1,264.8) |
Amount recoverable from reinsurers for incurred claims | 260.0 | 230.9 | 3 47.4 | – | 838.3 |
Net expense from reinsurance contracts held | (33.3) | (125.4) | (26 7. 8) | – | (426.5) |
Insurance service result | 182.5 | 123.3 | 55.1 | – | 360.9 |
Investment result | (98.9) | (54.4) | (34.0) | – | (187.3 ) |
Net finance expense from insurance contracts | 107. 0 | 56.0 | 50.7 | – | 213.7 |
Net finance income from reinsurance contracts | (38.5) | (27.5) | (3 6.1) | – | (102.1) |
Net insurance finance expense | 68.5 | 28.5 | 14.6 | – | 111.6 |
Net financial result | (30.4) | (25.9) | (19.4) | – | (75.7) |
Other income | 11.7 | 7. 4 | 20.8 | 2.4 | 42.3 |
Other operational expenses | (32.1) | (3.8) | (8.4) | (23.5) | (67.8) |
Net foreign exchange losses | – | – | – | 54.7 | 54.7 |
Other finance costs | (1.5) | – | (1.2) | (37.0 ) | (39.7) |
Share of profit of associates | – | – | – | 0.9 | 0.9 |
Profit/(loss) before tax | 130.2 | 101.0 | 46.9 | (2.5) | 275.6 |
| Ratio analysis | |||||
Claims ratio (%) | 40.0 | 37. 3 | 3 8.1 | – | 39.1 |
Expense ratio (%) | 51.0 | 47. 2 | 46.4 | – | 49.6 |
Combined ratio (%) | 91.0 | 84.5 | 84.5 | – | 88.7 |
4 Operating segments
210 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
(a) Profit before tax by segment continued
| Hiscox | |||||
| Hiscox | London | Hiscox | |||
| Retail | Market | Re & ILS | Total | ||
| $m | $m | $m | $m | ||
Insurance revenue | 2,218.0 | 1,130.6 | 924.7 | 4,273.3 | |
Allocation of reinsurance premiums | (293.3) | (356.3) | (615.2) | (1,264.8) | |
LPT premium | 114.0 | 20.8 | 46.0 | 180.8 | |
Allocation of reinsurance premiums after reclassifying LPT premium | (179.3) | (335.5) | (569.2) | (1,084.0) | |
Adjusted net insurance revenue | 2,038.7 | 795.1 | 355.5 | 3,18 | 9.3 |
Incurred claims and changes to liabilities for incurred claims | (958.0) | (506.4) | (436.7) | (1,9 01.1) | |
Amounts recoverable from reinsurers for incurred claims | 260.0 | 230.9 | 3 47.4 | 838.3 | |
LPT premium | (114.0) | (20.8) | (46.0) | (180.8) | |
Amounts recoverable from reinsurers for incurred claims after reclassifying LPT premium | 146.0 | 210.1 | 301.4 | 6 57.5 | |
Adjusted net incurred claims | (812.0) | (296.3) | (135.3) | (1,243.6) | |
Remove benefit from discounting of claims | (53.9) | (17.7 ) | (4.0) | (75.6) | |
Undiscounted adjusted net incurred claims | (865.9) | (314.0) | (139.3) | (1,319.2) | |
| Ratio analysis (undiscounted) | |||||
Claims ratio (%) | 42.7 | 39.5 | 39.2 | 41.5 | |
Expense ratio (%) | 51.0 | 47. 2 | 46.4 | 49.6 | |
Combined ratio (%) | 93.7 | 86.7 | 85.6 | 91.1 |
| Year ended 31 December 2022 | |||
| Hiscox | |||
| Hiscox | London | Hiscox | |
| Retail | Market | Re & ILS | |
| $m | $m | $m | |
1% change in claims or expense ratio | 20.4 | 8.0 | 3.6 |
4 Operating segments
211Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Year to 31 December 2022 | ||||||||||
| Year to 31 December 2023 | (restated) | |||||||||
| Hiscox | Hiscox | |||||||||
| Hiscox | London | Hiscox | Corporate | Hiscox | London | Hiscox | Corporate | Total | ||
| Retail | Market | Re & ILS | Centre | Total | Retail | Market | Re & ILS | Centre | $m | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | ||
UK | 729.8 | 96.2 | 41.0 | – | 867.0 | 757.7 | 89.1 | 37.0 | – | 883.8 |
Europe | 597.4 | 81.1 | 62.9 | – | 741.4 | 478.4 | 81.8 | 49.8 | – | 610.0 |
USA | 932.4 | 729.6 | 552.9 | – | 2,214.9 | 909.0 | 673.7 | 531.4 | – | 2,114.1 |
Rest of world | 78.1 | 268.7 | 313.1 | – | 659.9 | 72.9 | 286.0 | 306.5 | – | 665.4 |
2, 337.7 | 1,175.6 | 969.9 | – | 4,483.2 | 2,218.0 | 1,130.6 | 924.7 | – | 4,273.3 | |
| 2023 | 2022 | |
| total | total | |
| $m | $m | |
UK | 254.5 | 2 67. 5 |
Europe | 83.5 | 59.9 |
USA | 109.0 | 120.7 |
Rest of world | 8.0 | 11.0 |
455.0 | 4 59.1 |
4 Operating segments continued
212 Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
5 Net asset value per share and net tangible asset value per share
| 2022 | 2022 | |||
| 2023 | 2023 | (restated) | (restated) | |
| net asset value | net asset value | net asset value | net asset value | |
| (total equity) | per share | (total equity) | per share | |
| $m | cents | $m | cents | |
Net asset value | 3,296.7 | 951.1 | 2,635.0 | 764.5 |
Net tangible asset value | 2,972.8 | 857.7 | 2,314.6 | 671.5 |
The NAV per share is based on 346,612,554 shares (2022: 344,672,172), being the shares in issue at 31 December 2023, less
those held in treasury and those held by the Group Employee Benefit Trust. Net tangible assets comprise total equity excluding
intangible assets.
Previously reported NAV as at 31 December 2022 was $2,416.7 million (701.2 cents) and previously reported net tangible asset
value as at 31 December 2022 was $2,096.3 million (608.2 cents). Comparatives have been restated for the adoption of IFRS 17
and IFRS 9.
6 Return on equity
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Profit for the year (all attributable to owners of the Company) | 712.0 | 253.9 |
Opening total equity | 2,635.0 | 2,563.2 |
Adjusted for the time-weighted impact of capital distributions and issuance of shares | (54.3) | (54.9) |
Adjusted opening total equity | 2,580.7 | 2,508.3 |
Return on equity (%) | 27.6 | 10.1 |
The return on equity is calculated by using profit 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
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. Previously reported ROE was 1.7% as at
31 December 2022. Comparatives have been restated for the adoption of IFRS 17 and IFRS 9.
| 2023 | 2022 | ||
| $m | $m | ||
| Investment result | |||
Investment income including interest receivable | 237.0 | 119.5 | |
Net realised losses on financial investments at fair value through profit or loss | (17.6 ) | (54.1) | |
Net fair value gains/(losses) on financial investments at fair value through profit or loss | 170.6 | (254.2) | |
Investment return – financial assets | 390.0 | (188.8) | |
| Net fair value gains on derivative financial instruments | 16 | 1.1 | 8.5 |
Investment expenses | (6.7) | ( 7.0) | |
Total investment return | 384.4 | (187.3 ) | |
| Net finance (expense)/income from insurance contracts: | |||
Interest accreted | (228.5) | (35.7) | |
Effects of changes in interest rates and other financial assumptions | 7.8 | 249.4 | |
Total net finance (expense)/income from insurance contracts | (220.7) | 213.7 | |
| Net finance income/(expenses) from reinsurance contracts: | |||
Interest accreted | 87.5 | 9.5 | |
Effects of changes in interest rates and other financial assumptions | (6.5) | (111.6) | |
Total net finance income/(expenses) from reinsurance contracts | 81.0 | (102.1) | |
Net insurance finance (expense)/income | (139.7) | 111.6 | |
Net financial result | 244.7 | (75.7) |
213Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Other income | 91.1 | 42.3 |
Staff costs | 373.0 | 313.4 |
Depreciation, amortisation and impairment | 77.1 | 60.0 |
Other expenses | 286.8 | 269.9 |
Operational expenses | 736.9 | 643.3 |
| 2022 | |||
| 2023 | (restated) | ||
| $m | $m | ||
Interest charge associated with borrowings | 14 | 39.4 | 32.2 |
Other interest expenses* | 10.6 | 7.5 | |
Other finance costs | 50.0 | 39.7 |
10 Auditor’s remuneration
Fees payable to the Group’s external auditor, PwC, its member firms and its associates (exclusive of VAT) include the following
amounts recorded in the consolidated income statement:
Group
| 2023 | 2022 | |
| $m | $m | |
| Amounts receivable by the auditors and its associates in respect of: | ||
The auditing of the accounts of the Group and its subsidiaries | 6.8 | 5.6 |
All audit-related assurance services | 0.4 | 0.3 |
All other non-audit services | 0.1 | – |
7.3 | 5.9 |
Fees for the auditing of the Group and its subsidiaries in 2023 include audit work relating to the implementation of IFRS 17
Insurance Contracts of $1.8 million (2022: $1.6 million). The full audit fee payable for the Syndicate 33 and Syndicate 6104
audit has been included above, although an element of this is borne by the third-party participants in the Syndicate.
214 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| State | Software and | |||||
| Syndicate | authorisation | development | ||||
| Goodwill | capacity | licences | costs | Other | Total | |
| $m | $m | $m | $m | $m | $m | |
| At 1 January 2022 | ||||||
Cost | 11.5 | 33.1 | 8.5 | 386.4 | 20.2 | 459.7 |
Accumulated amortisation and impairment | (3.2) | – | – | (127.6 ) | (15.8) | (146.6) |
Net book amount | 8.3 | 33.1 | 8.5 | 258.8 | 4.4 | 313.1 |
| Year ended 31 December 2022 | ||||||
Opening net book amount | 8.3 | 3 3.1 | 8.5 | 258.8 | 4.4 | 313.1 |
Additions | – | – | – | 59.2 | 2.7 | 61.9 |
Disposals | – | – | – | (1.1) | – | (1.1) |
Amortisation charges | – | – | – | (35.5) | (1.8) | ( 37. 3) |
Foreign exchange movements | (0.5) | – | – | (14.9) | (0.8) | (16.2) |
Closing net book amount | 7.8 | 33.1 | 8.5 | 266.5 | 4.5 | 320.4 |
| At 31 December 2022 | ||||||
Cost | 10.2 | 33.1 | 8.5 | 409.8 | 20.3 | 481.9 |
Accumulated amortisation and impairment | (2.4) | – | – | (143.3) | (15.8) | (161.5) |
Net book amount | 7.8 | 33.1 | 8.5 | 266.5 | 4.5 | 320.4 |
| Year ended 31 December 2023 | ||||||
Opening net book amount | 7.8 | 33.1 | 8.5 | 266.5 | 4.5 | 320.4 |
Additions | – | – | – | 42.6 | – | 42.6 |
Amortisation charges | – | – | – | ( 37.0) | (1.9) | (38.9) |
Impairment charge* | – | – | – | (6.0) | – | (6.0) |
Foreign exchange movements | 0.4 | – | – | 5.1 | 0.3 | 5.8 |
Closing net book amount | 8.2 | 33.1 | 8.5 | 271.2 | 2.9 | 323.9 |
| At 31 December 2023 | ||||||
Cost | 10.8 | 33.1 | 8.5 | 467.3 | 23.4 | 543.1 |
Accumulated amortisation and impairment | (2.6) | – | – | (19 6.1) | (20.5) | (219.2) |
Net book amount | 8.2 | 33.1 | 8.5 | 271.2 | 2.9 | 323.9 |
215Hiscox Ltd Report and Accounts 2023
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Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
11 Goodwill and intangible assets continued
216 Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Furniture | Right-of-use | ||||
| fittings and | assets: | ||||
| Land and | Leasehold | equipment | property | ||
| buildings | improvements | and art | and other | Total | |
| $m | $m | $m | $m | $m | |
| Year ended 31 December 2022 | |||||
Opening net book amount | 21.8 | 1.9 | 29.0 | 37.7 | 90.4 |
Additions | – | 0.1 | 20.8 | 52.7 | 73.6 |
Disposals | – | – | (0.1) | (0.8) | (0.9) |
Depreciation charge | (1.1) | (0.7) | (4.3) | (16.6) | (22.7) |
Foreign exchange movements | (2.4) | – | (2.4) | (2.5) | ( 7. 3) |
Closing net book amount | 18.3 | 1.3 | 43.0 | 70.5 | 133.1 |
| At 31 December 2022 | |||||
Cost | 26.6 | 13.4 | 80.7 | 116.8 | 2 37. 5 |
Accumulated depreciation | (8.3) | (12.1) | (37.7 ) | (46.3) | (104.4) |
Net book amount | 18.3 | 1.3 | 43.0 | 70.5 | 133.1 |
| Year ended 31 December 2023 | |||||
Opening net book amount | 18.3 | 1.3 | 43.0 | 70.5 | 133.1 |
Additions | – | – | 1.7 | 13.1 | 14.8 |
Disposals | – | – | – | (0.7) | (0.7) |
Depreciation charge | (1.1) | (0.6) | (5.1) | (12.9) | (19.7) |
Impairment | – | (0.4) | (0.2) | – | (0.6) |
Foreign exchange movements | 0.9 | 0.2 | 2.1 | 2.6 | 5.8 |
Closing net book amount | 18.1 | 0.5 | 41.5 | 72.6 | 132.7 |
| At 31 December 2023 | |||||
Cost | 28.1 | 13.1 | 85.1 | 132.4 | 258.7 |
Accumulated depreciation | (10.0) | (12.6) | (43.6) | (59.8) | (126.0) |
Net book amount | 18.1 | 0.5 | 41.5 | 72.6 | 132.7 |
Less: assets held for sale | – | – | – | (2.4) | (2.4) |
Net book amount | 18.1 | 0.5 | 41.5 | 70.2 | 130.3 |
217Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
218 Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
13 Subsidiaries, associates and interests in other entities continued
| 2023 | 2022 | |
| $m | $m | |
At beginning of year | 5.6 | 5.7 |
Disposals during the year | (5.2) | – |
Distributions received | (0.3) | (0.3) |
Net profit from investments in associates | 0.3 | 0.9 |
Foreign exchange movements | 0.4 | (0.7) |
At end of year | 0.8 | 5.6 |
| 100% results | |||||
| Assets | Liabilities | Revenues | Profit after tax | ||
| % interest held at 31 December | $m | $m | $m | $m | |
| 2023 | |||||
Associates incorporated in the UK | 32% | 2.8 | 2.1 | 5.3 | 0.1 |
Associates incorporated in Europe | 26% | 2.6 | 1.4 | 2.8 | 1.1 |
Total at the end of 2023 | 5.4 | 3.5 | 8.1 | 1.2 | |
| 2022 | |||||
Associates incorporated in the UK and USA | from 32% to 35% | 10.3 | 6.7 | 10.9 | 0.9 |
Associates incorporated in Europe | from 26% to 35% | 8.6 | 5.4 | 4.1 | 2.0 |
Total at the end of 2022 | 18.9 | 12.1 | 15.0 | 2.9 |
219Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2023 | 2022 | ||
| $m | $m | ||
Debt and fixed income holdings | 6,333.6 | 5,426.6 | |
Equities and investment funds | 205.4 | 33 9.1 | |
Total investments | 6,539.0 | 5,765.7 | |
| Insurance-linked funds | 17 | 35.4 | 45.3 |
| Derivative financial instruments | 16 | – | 1.1 |
Total financial assets carried at fair value | 6,574.4 | 5,812.1 |
| 2023 | 2022 | |
| $m | $m | |
Within one year | 1,595.7 | 1,355.5 |
After one year | 4,737.9 | 4,071.1 |
6,333.6 | 5,426.6 |
| 2023 | 2022 | ||
| $m | $m | ||
Derivative financial instruments | 16 | 0.3 | 0.3 |
Financial liabilities carried at fair value | 0.3 | 0.3 |
| 2023 | 2022 | |
| $m | $m | |
Borrowings | 667.0 | 628.8 |
Accrued interest on borrowings | 7.4 | 7.1 |
Financial liabilities carried at amortised cost | 674.4 | 635.9 |
Total financial liabilities | 674.7 | 636.2 |
220 Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
14 Financial assets and liabilities continued
| 2023 | 2022 | |
| $m | $m | |
| Debt and fixed income holdings | ||
US Dollars | 4,572.0 | 3,932.4 |
Sterling | 960.9 | 821.5 |
Euro and other currencies | 800.7 | 672.7 |
6,333.6 | 5,426.6 | |
| Equities and investment funds | ||
US Dollars | 84.5 | 188.2 |
Sterling | 84.3 | 117. 0 |
Euro and other currencies | 36.6 | 33.9 |
205.4 | 33 9.1 | |
Total investments | 6,539.0 | 5,765.7 |
221Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Prepayments and accrued income | 31.3 | 30.0 |
| Trade and other receivables: | ||
Accrued interest | 55.5 | 37. 3 |
Other debtors including related party amounts | 119.7 | 93.3 |
Total trade and other receivables | 206.5 | 160.6 |
| The amounts expected to be recovered before and after one year are estimated as follows: | ||
Within one year | 188.2 | 112.0 |
After one year | 18.3 | 48.6 |
222 Hiscox Ltd Report and Accounts 2023
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Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Gross contract | Fair value | Fair value | Net balance | |
| notional amount | of assets | of liabilities | sheet position | |
| $m | $m | $m | $m | |
| Derivative financial instruments included on balance sheet | ||||
Foreign exchange forward contracts | 5.5 | – | (0.1) | (0.1) |
Interest rate futures contracts | 16.9 | – | (0.2) | (0.2) |
| The foreign exchange forward contracts are represented by gross fair value of assets and liabilities as detailed below: | ||||
Gross fair value of assets | – | – | 4.7 | 4.7 |
Gross fair value of liabilities | – | – | (4.8) | (4.8) |
– | – | (0.1) | (0.1) |
| Gross contract | Fair value | Fair value | Net balance | |
| notional amount | of assets | of liabilities | sheet position | |
| $m | $m | $m | $m | |
| Derivative financial instruments included on balance sheet | ||||
Foreign exchange forward contracts | 8.2 | – | (0.3) | (0.3) |
Interest rate futures contracts | 34.9 | 1.1 | – | 1.1 |
| The foreign exchange forward contracts are represented by gross fair value of assets and liabilities as detailed below: | ||||
Gross fair value of assets | – | 0.8 | 6.4 | 7. 2 |
Gross fair value of liabilities | – | (0.8) | (6.7) | (7.5) |
– | – | (0.3) | (0.3) |
223Hiscox Ltd Report and Accounts 2023
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Notes to the
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Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Level 1 | Level 2 | Level 3 | Total | |
| $m | $m | $m | $m | |
| Financial assets | ||||
Debt and fixed income holdings | 1,235.2 | 5,033.5 | 64.9 | 6,333.6 |
Equities and investment funds | – | 175.4 | 30.0 | 205.4 |
Insurance-linked funds | – | – | 35.4 | 35.4 |
Total | 1,235.2 | 5,208.9 | 130.3 | 6,574.4 |
| Financial liabilities | ||||
Derivative financial instruments | – | 0.3 | – | 0.3 |
Total | – | 0.3 | – | 0.3 |
| Level 1 | Level 2 | Level 3 | Total | |
| $m | $m | $m | $m | |
| Financial assets | ||||
Debt and fixed income holdings | 1,122.4 | 4, 237.1 | 67.1 | 5,426.6 |
Equities and investment funds | – | 311.8 | 27.3 | 3 39.1 |
Insurance-linked funds | – | – | 45.3 | 45.3 |
Derivative financial instruments | – | 1.1 | – | 1.1 |
Total | 1,122.4 | 4,550.0 | 139.7 | 5,812.1 |
| Financial liabilities | ||||
Derivative financial instruments | – | 0.3 | – | 0.3 |
Total | – | 0.3 | – | 0.3 |
224 Hiscox Ltd Report and Accounts 2023
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Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
17 Fair value measurements continued
| 31 December | 31 December | |
| 2023 | 2022 | |
| $m | $m | |
Balance at 1 January | 139.7 | 125.7 |
Fair value losses through profit or loss | (11.5) | (0.4) |
Foreign exchange gains/(losses) | 4.8 | (4.4) |
Settlements | (28.7) | ( 7.1) |
Transfers | 26.0 | 25.9 |
Closing balance | 130.3 | 139.7 |
Net unrealised gains in the period on securities held at the end of the period | 3.5 | 0.6 |
225Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2023 | 2022 | |
| $m | $m | |
Cash at bank and in hand | 1,411.2 | 1,276.0 |
Short-term deposits | 25.8 | 74.9 |
Total | 1,4 37.0 | 1,350.9 |
31 December 2023 | 31 December 2022 | |||
| Share | Number | Share | Number | |
| capital | of shares | capital | of shares | |
| Group | $m | 000 | $m | 000 |
Authorised ordinary share capital of 6.5p (2022: 6.5p) | 425.8 | 3,692,308 | 425.8 | 3,692,308 |
Issued ordinary share capital of 6.5p (2022: 6.5p) | 38.8 | 355,283 | 38.7 | 354,067 |
| Ordinary share | Share | Contributed | |
| capital | premium | surplus | |
| $000 | $000 | $000 | |
At 1 January 2022 | 38,661 | 516,817 | 183,969 |
Employee share option scheme – proceeds from shares issued | 1 | 153 | – |
Scrip Dividends to owners of the Company | 5 | 687 | – |
At 31 December 2022 | 38,667 | 517,6 57 | 183,969 |
Employee share option scheme – proceeds from shares issued | 90 | 9,530 | – |
Scrip Dividends to owners of the Company | 10 | 1,645 | – |
At 31 December 2023 | 38,767 | 528,832 | 183,969 |
| Number of | Number of | ||
| ordinary shares | ordinary shares | ||
| in issue | in issue | ||
| 2023 | 2022 | ||
| 000 | 000 | ||
At 1 January | 354,067 | 353,986 | |
Employee share option scheme – ordinary shares issued | 1,094 | 18 | |
| Scrip Dividends to owners of the Company | 26 | 122 | 63 |
At 31 December | 355,283 | 354,067 |
226 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
19 Share capital continued
Assumptions affecting inputs to fair value models 2023 | 2022 | |
Annual risk-free rates of return and discount rates (%) | 3.35-4.78 | 1.36-3.00 |
Long-term dividend yield (%) | 1.40 | 1.27 |
Expected life of options (years) | 3.25 | 3.25 |
Implied volatility of share price (%) | 38.7 | 49.2 |
Weighted average share price (p) | 1,117.4 | 981.1 |
227Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2023 | 2022 | |
| $m | $m | |
Insurance contract liabilities | 6,604.0 | 6,694.3 |
Reinsurance contract held assets | (2,098.3) | ( 2, 517. 2) |
Net insurance contract liabilities | 4,505.7 | 4,177.1 |
Net liabilities for remaining coverage | Net liabilities for incurred claims | ||||
| Excluding | Loss | Estimates of | Risk adjustment | ||
| loss component | component | present value of | for non-financial | ||
| $m | $m | future cash flows | risk | Total | |
| Year to 31 December 2023 | $m | $m | $m | ||
Opening assets | 186.8* | (0.6) | (2,282.4) | (421.0) | (2, 517. 2) |
Opening liabilities | 287.4 | 2.5 | 5,737.1 | 6 67.3 | 6,694.3 |
Net opening balance | 474.2 | 1.9 | 3,454.7 | 246.3 | 4,177.1 |
| Changes in the consolidated income statement | |||||
| Insurance revenue, net of allocation | |||||
| of reinsurance premiums | (3,363.8) | – | – | – | (3,363.8) |
| Insurance service expenses, net of amounts | |||||
| recoverable from reinsurers | |||||
Incurred claims and other attributable expenses | – | ( 7.7 ) | 1,962.5 | 72.4 | 2,027.2 |
Acquisition costs | 1,039.0 | – | – | – | 1,039.0 |
| Adjustments to liabilities for incurred claims | |||||
relating to past service | – | – | (179.5) | (24.1) | (203.6) |
Losses and reversals of losses on onerous contracts | – | 13.2 | – | – | 13.2 |
Effect of changes in non-performance risk of reinsurers | – | – | (4.3) | – | (4.3) |
Total net insurance service expenses | 1,039.0 | 5.5 | 1,778.7 | 48.3 | 2,871.5 |
Insurance service result | (2,324.8) | 5.5 | 1,778.7 | 48.3 | (492.3) |
Net finance (income)/expenses from insurance contracts | (9.1) | – | 148.8 | – | 139.7 |
Net foreign exchange losses | 20.5 | 0.1 | 52.3 | 7. 4 | 80.3 |
Total change recognised in comprehensive income | (2,313.4) | 5.6 | 1,979.8 | 55.7 | (272.3) |
Investment components | 31.8 | – | (31.8) | – | – |
Transfer to other items in balance sheet | (258.3) | – | (682.7) | (1.0) | (942.0) |
| Net cash flows | |||||
Net premium received | 3,3 37.4 | – | – | – | 3, 337.4 |
Net claims and other insurance service expenses paid | – | – | (988.5) | – | (988.5) |
Insurance acquisition cash flows | (806.0) | – | – | – | (806.0) |
Total cash flows | 2,531.4 | – | (988.5) | – | 1,542.9 |
Closing assets | 118.8* | – | (1,696.3) | (520.8) | (2,098.3) |
Closing liabilities | 346.9 | 7.5 | 5,427.8 | 821.8 | 6,604.0 |
Net closing balance | 465.7 | 7.5 | 3,731.5 | 301.0 | 4,505.7 |
228 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract
Net liabilities for remaining coverage | Net liabilities for incurred claims | |||||||
| Estimates of | Risk adjustment | |||||||
| Excluding | Loss | present value of | for non-financial | |||||
| loss component | component | future cash flows | risk | Total | ||||
| Year to 31 December 2022 | $m | $m | $m | $m | $m | |||
Opening assets | 266.7* | (4.2) | (2,616.0) | (503.4) | (2,856.9) | |||
Opening liabilities | 130.1 | 16.5 | 6,18 | 8.0 | 852.3 | 7,18 | 6 .9 | |
Net opening balance | 396.8 | 12.3 | 3,572.0 | 348.9 | 4,330.0 | |||
| Changes in the consolidated income statement | ||||||||
| Insurance revenue, net of allocation | ||||||||
of reinsurance premiums † | (3,008.5) | – | – | – | (3,008.5) | |||
| Insurance service expenses, net of amounts | ||||||||
| recoverable from reinsurers | ||||||||
Incurred claims and other attributable expenses | – | (12.8) | 2,001.5 | 32.6 | 2,021.3 | |||
Acquisition costs | 1,005.5 | – | – | – | 1,005.5 | |||
| Adjustments to liabilities for incurred claims | ||||||||
relating to past service | – | – | (258.3) | (120.2) | (378.5) | |||
Losses and reversals of losses on onerous contracts | – | 2.5 | – | – | 2.5 | |||
Effect of changes in non-performance risk of reinsurers | – | – | (3.2) | – | (3.2) | |||
Total net insurance service expenses | 1,005.5 | (10.3) | 1,74 | 0.0 | ( 87. 6) | 2,6 47.6 | ||
Insurance service result | (2,003.0) | (10.3) | 1,740.0 | ( 87.6 ) | (360.9) | |||
Net finance income/(expense) from insurance contracts | 38.2 | – | (149.8) | – | (111.6) | |||
Net foreign exchange gains | (65.9) | (0.1) | ( 74.1) | (15.0) | (155.1) | |||
Total change recognised in comprehensive income | (2,030.7) | (10.4) | 1,516.1 | (102.6) | (6 27. 6) | |||
Investment components | 20.4 | – | (20.4) | – | – | |||
Transfer to other items in balance sheet | (235.9) | – | (575.4) | – | (811.3) | |||
| Net cash flows | ||||||||
Net premium received | 3,091.3 | – | – | – | 3,091.3 | |||
Net claims and other insurance service expenses paid | – | – | (1,0 37.6 ) | – | (1,0 37.6 ) | |||
Insurance acquisition cash flows | (767.7) | – | – | – | (767.7) | |||
Total cash flows | 2,323.6 | – | (1,0 37.6 ) | – | 1,286.0 | |||
Closing assets | 186.8* | (0.6) | (2,282.4) | (421.0) | (2,517. 2) | |||
Closing liabilities | 287.4 | 2.5 | 5,737.1 | 6 67.3 | 6,694.3 | |||
Net closing balance | 474.2 | 1.9 | 3,454.7 | 246.3 | 4,177.1 | |||
| 2023 | 2022 | |
| $m | $m | |
Adjustment to liabilities for incurred claims relating to past service, net of reinsurance recoveries (on a present-value basis) | 203.6 | 378.5 |
Adjustment for discounting impact | (19.1) | 11.7 |
Adjustment for LPT premium and experience adjustment | (61.7) | (180.8) |
122.8 | 209.4 |
229Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract continued
Liabilities for remaining coverage | Liabilities for incurred claims | ||||
| LRC excluding | Loss | Estimates of | Risk adjustment | ||
| loss component | component | present value of | for non-financial | ||
| $m | $m | future cash flows | risk | Total | |
| Year to 31 December 2023 | $m | $m | $m | ||
Opening assets | – | – | – | – | – |
Opening liabilities | 287.4 | 2.5 | 5 ,737.1 | 6 67.3 | 6,694.3 |
Net opening balance | 287.4 | 2.5 | 5,737.1 | 667. 3 | 6,694.3 |
| Changes in the consolidated income statement | |||||
Insurance revenue | (4,483.2) | – | – | – | (4,483.2) |
| Insurance service expenses | |||||
Incurred claims and other attributable expenses | – | (8.3) | 2,369.3 | 112.8 | 2,473.8 |
Acquisition costs | 1,039.0 | – | – | – | 1,039.0 |
| Adjustments to liabilities for incurred claims relating | – | – | (372.9) | 36.2 | (336.7) |
| to past service | |||||
Losses and reversals of losses on onerous contracts | – | 13.2 | – | – | 13.2 |
Total insurance service expenses | 1,039.0 | 4.9 | 1,996.4 | 149.0 | 3,189.3 |
Insurance service result | (3,444.2) | 4.9 | 1,996.4 | 149.0 | (1,293.9) |
Net finance expenses from insurance contracts | – | – | 220.7 | – | 220.7 |
Foreign exchange movements | 24.9 | 0.1 | 73.7 | 7.1 | 105.8 |
Total change in the consolidated income statement | (3,419.3) | 5.0 | 2,290.8 | 156.1 | (9 67.4) |
Investment components | (1.0) | – | 1.0 | – | – |
Transfer to other items in balance sheet | (258.0) | – | (693.1) | (1.6) | (952.7) |
| Cash flows | |||||
Premium received | 4,543.8 | – | – | – | 4,543.8 |
Claims and other insurance service expenses paid | – | – | (1,908.0) | – | (1,908.0) |
Insurance acquisition cash flows | (806.0) | – | – | – | (806.0) |
Total cash flows | 3,737.8 | – | (1,908.0) | – | 1,829.8 |
Closing assets | – | – | – | – | – |
Closing liabilities | 346.9 | 7. 5 | 5,427.8 | 821.8 | 6,604.0 |
Net closing balance | 346.9 | 7.5 | 5,427.8 | 821.8 | 6,604.0 |
230 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract
Liabilities for remaining coverage | Liabilities for incurred claims | ||||||
| LRC excluding | Loss | Estimates of | Risk adjustment | ||||
| loss component | component | present value of | for non-financial | ||||
| $m | $m | future cash flows | risk | Total | |||
| Year to 31 December 2022 | $m | $m | $m | ||||
Opening assets | – | – | – | – | – | ||
Opening liabilities | 13 0.1 | 16.5 | 6,18 | 8.0 | 852.3 | 7,18 | 6 .9 |
Net opening balance | 13 0.1 | 16.5 | 6,188.0 | 852.3 | 7,18 | 6 .9 | |
| Changes in the consolidated income statement | |||||||
Insurance revenue | (4,273.3) | – | – | – | (4,273.3) | ||
Incurred claims and other attributable expenses | – | (17.7 ) | 2,922.7 | 75.5 | 2,980.5 | ||
Acquisition costs | 1,005.5 | – | – | – | 1,005.5 | ||
| Adjustments to liabilities for incurred claims relating | |||||||
to past service | – | – | (266.4) | (237.5) | (503.9) | ||
Losses and reversals of losses on onerous contracts | – | 3.8 | – | – | 3.8 | ||
Total insurance service expenses | 1,005.5 | (13.9) | 2,656.3 | (162.0) | 3,485.9 | ||
Insurance service result | ( 3, 267.8 ) | (13.9) | 2,656.3 | (162.0) | ( 787.4) | ||
Net finance income from insurance contracts | – | – | (213.7) | – | (213.7) | ||
Foreign exchange movements | (45.2) | (0.1) | (140.9) | (23.0) | (209.2) | ||
Total change in the consolidated income statement | (3,313.0) | (14.0) | 2,301.7 | (185.0) | (1,210.3) | ||
Investment components | (2.0) | – | 2.0 | – | – | ||
Transfer to other items in balance sheet | (235.9) | – | (575.4) | – | (811.3) | ||
| Cash flows | |||||||
Premium received | 4,475.9 | – | 4,475.9 | ||||
Claims and other insurance service expenses paid | – | (2,179.2) | (2,179.2) | ||||
Insurance acquisition cash flows | (767.7) | – | (767.7) | ||||
Total cash flows | 3,708.2 | (2,179.2) | 1,529.0 | ||||
Closing assets | – | – | – | – | – | ||
Closing liabilities | 287.4 | 2.5 | 5,737.1 | 6 67. 3 | 6,694.3 | ||
Net closing balance | 287.4 | 2.5 | 5,737.1 | 6 67. 3 | 6,694.3 | ||
231Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract continued
Asset for remaining coverage | Asset for incurred claims | ||||
| ARC excluding | Loss | Estimates of | Risk adjustment | ||
| loss recovery | recovery | present value of | for non-financial | ||
| component | component | future cash flows | risk | Total | |
| Year to 31 December 2023 | $m | $m | $m | $m | $m |
Opening assets | (186.8) | 0.6 | 2,282.4 | 421.0 | 2,517.2 |
Opening liabilities | – | – | – | – | – |
Net opening balance | (186.8) | 0.6 | 2,282.4 | 421.0 | 2,517.2 |
| Changes in the consolidated income statement | |||||
Allocation of reinsurance premiums | (1,119.4) | – | – | – | (1,119.4) |
| Amounts recoverable from reinsurers | |||||
Recoveries of incurred claims and other attributable expenses | – | (0.6) | 406.8 | 40.4 | 446.6 |
| Adjustments to assets for incurred claims relating | – | – | (193.4) | 60.3 | (133.1) |
| to past service | |||||
Effect of changes in non-performance risk of reinsurers | – | – | 4.3 | – | 4.3 |
Total amounts recoverable from reinsurers | – | (0.6) | 217.7 | 100.7 | 317.8 |
Net expense from reinsurance contracts held | (1,119.4) | (0.6) | 217.7 | 100.7 | (801.6) |
Net finance income from reinsurance contracts | 9.1 | – | 71.9 | – | 81.0 |
Foreign exchange movements | 4.4 | – | 21.4 | (0.3) | 25.5 |
Total changes in the consolidated income statement | (1,105.9) | (0.6) | 311.0 | 100.4 | (695.1) |
Investment components | (32.8) | – | 32.8 | – | – |
Transfer to other items in balance sheet | 0.3 | – | (10.4) | (0.6) | (10.7) |
| Cash flows | |||||
Premium paid | 1,206.4 | – | – | – | 1,206.4 |
Amounts received | – | – | (919.5) | – | (919.5) |
Total cash flows | 1,206.4 | – | (919.5) | – | 286.9 |
Closing assets | (118.8) | – | 1,696.3 | 520.8 | 2,098.3 |
Closing liabilities | – | – | – | – | – |
Net closing balance | (118.8) | – | 1,696.3 | 520.8 | 2,098.3 |
232 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract
20.1(c) Reinsurance contract held assets – analysis by remaining coverage and incurred claims continued
Asset for remaining coverage | Asset for incurred claims | ||||
| ARC excluding | Loss | Estimates of | Risk adjustment | ||
| loss recovery | recovery | present value of | for non-financial | ||
| component | component | future cash flows | risk | Total | |
| Year to 31 December 2022 | $m | $m | $m | $m | $m |
Opening assets | (266.7) | 4.2 | 2,616.0 | 503.4 | 2,856.9 |
Opening liabilities | – | – | – | – | – |
Net opening balance | (266.7) | 4.2 | 2,616.0 | 503.4 | 2,856.9 |
| Changes in the consolidated income statement | |||||
Allocation of reinsurance premiums | (1,264.8) | – | – | – | (1,264.8) |
| Amounts recoverable from reinsurers | |||||
| Recoveries of incurred claims and other insurance | |||||
service expenses | – | (4.9) | 921.2 | 42.9 | 959.2 |
| Adjustments to assets for incurred claims relating | |||||
to past service | – | – | (8.1) | (117.3) | (125.4) |
| Recoveries and reversals of recoveries of losses | |||||
on onerous contracts | – | 1.3 | – | – | 1.3 |
Effect of changes in non-performance risk of reinsurers | – | – | 3.2 | – | 3.2 |
Total amounts recoverable from reinsurers | – | (3.6) | 916.3 | (74.4) | 838.3 |
Net expense from reinsurance contracts held | (1,264.8) | (3.6) | 916.3 | (74.4) | (426.5) |
Net finance expense from reinsurance contracts | (38.2) | – | (63.9) | – | (102.1) |
Foreign exchange movements | 20.7 | – | (66.8) | (8.0) | (5 4.1) |
Total changes in the consolidated income statement | (1,282.3) | (3.6) | 785.6 | (82.4) | (582.7) |
Investment components | (22.4) | – | 22.4 | – | – |
| Cash flows | |||||
Premium paid | 1,384.6 | – | – | – | 1,384.6 |
Amounts received | – | – | (1,141.6) | – | (1,141.6) |
Total cash flows | 1,384.6 | – | (1,141.6) | – | 243.0 |
Closing assets | (186.8) | 0.6 | 2,282.4 | 421.0 | 2,517. 2 |
Closing liabilities | – | – | – | – | – |
Net closing balance | (186.8) | 0.6 | 2,282.4 | 421.0 | 2, 517. 2 |
233Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
20 Insurance liabilities and reinsurance contract continued
| 2019 | 2020 | 2021 | 2022 | 2023 | Total | |
| $m | $m | $m | $m | $m | $m | |
| Estimate of ultimate claims costs as adjusted for foreign exchange* | ||||||
at end of accident year: | 1,555.5 | 1,911.0 | 1,5 87.1 | 1,515.2 | 1,489.7 | 8,058.5 |
one period later | 1,4 87.1 | 1, 8 97. 3 | 1,480.5 | 1,523.1 | – | 6,388.0 |
two periods later | 1,409.3 | 1,729.9 | 1,427.9 | – | – | 4, 567.1 |
three periods later | 1,452.8 | 1,692.3 | – | – | – | 3,145.1 |
four periods later | 1,405.4 | – | – | – | – | 1,405.4 |
Current estimate of cumulative claims | 1,405.4 | 1,692.3 | 1,4 27. 9 | 1,523.1 | 1,489.7 | 7,5 38 .4 |
Cumulative payments to date | (988.0) | (1,120.4) | (8 57.0 ) | (693.3) | (303.9) | (3,962.6) |
| Net cumulative liability for incurred claims – accident years | ||||||
from 2019-2023 | 417.4 | 571.9 | 570.9 | 829.8 | 1,185.8 | 3,575.8 |
| Net cumulative liability for incurred claims in respect of accident | ||||||
years before 2019 | – | – | – | – | – | 775.9 |
Effect of discounting | – | – | – | – | – | (319.2) |
Total Group liability for incurred claims to external parties included in balance sheet – net | 4,032.5 |
| 2019 | 2020 | 2021 | 2022 | 2023 | Total | |
| $m | $m | $m | $m | $m | $m | |
| Estimate of ultimate claims costs as adjusted for foreign exchange* | ||||||
at end of accident year: | 2, 8 07. 2 | 3,269.0 | 2,550.8 | 2,532.2 | 1,996.4 | 13,155.6 |
one period later | 2,555.0 | 3,235.6 | 2,439.1 | 2,522.4 | – | 10,752.1 |
two periods later | 2,390.9 | 3,058.4 | 2,275.6 | – | – | 7,724.9 |
three periods later | 2,3 66.1 | 2,986.5 | – | – | – | 5,352.6 |
four periods later | 2,313.7 | – | – | – | – | 2,313.7 |
Current estimate of cumulative claims | 2,313.7 | 2,986.5 | 2,275.6 | 2,522.4 | 1,996.4 | 12,094.6 |
Cumulative payments to date | (1,800.7) | (2,013.4) | (1,314.1) | (923.9) | (346.2) | (6,398.3) |
| Gross cumulative liability for incurred claims – accident years | ||||||
from 2019-2023 | 513.0 | 973.1 | 961.5 | 1,598.5 | 1,650.2 | 5,696.3 |
| Gross cumulative liability for incurred claims in respect of accident | ||||||
years before 2019 | – | – | – | – | – | 998.5 |
Effect of discounting | – | – | – | – | – | (445.2) |
Total Group liability for incurred claims to external parties included in balance sheet – gross | 6,249.6 |
234 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Social security and other taxes payable | 12.6 | 11.0 |
Lease liabilities | 79.8 | 79.9 |
Accruals and other creditors | 270.1 | 288.4 |
Total | 362.5 | 379.3 |
| 2023 | 2022 | |
| $m | $m | |
Within one year | 284.9 | 282.5 |
After one year | 77.6 | 96.8 |
Total | 362.5 | 379.3 |
| 2023 | 2022 | |
| $m | $m | |
Not later than one year | 16.4 | 12.2 |
Later than one year and not later than five years | 43.2 | 43.2 |
Later than five years | 36.4 | 36.9 |
Total undiscounted lease liabilities | 96.0 | 92.3 |
| 2023 | 2022 | |
| $m | $m | |
Not later than one year | 2.2 | 2.0 |
Later than one year and no later than five years | 1.0 | 2.8 |
3.2 | 4.8 |
235Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
| Current tax expense/(credit) | ||
Expense for the year | 10.0 | 4.5 |
Adjustments in respect of prior years | (1.8) | (1.7) |
Total current tax expense | 8.2 | 2.8 |
| Deferred tax | ||
Expense for the year | 70.4 | 16.7 |
Adjustments in respect of prior years | (13.4) | (0.2) |
Adjustment in relation to Bermuda Economic Transition Adjustment (ETA) | (150.0) | – |
Effect of rate change | (1.3) | 2.4 |
Total deferred tax (credit)/expense | (94.3) | 18.9 |
Total tax (credit)/expense to the income statement | (86.1) | 21.7 |
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Profit before tax | 625.9 | 275.6 |
Tax calculated at the standard corporation tax rate applicable in Bermuda: 0% (2022: 0%) | – | – |
Effects of Group entities subject to overseas tax at different rates | 52.8 | 4.7 |
| Impact of overseas tax rates on: | ||
Effect of rate change | (1.3) | 2.4 |
Expenses not deductible for tax purposes | 0.2 | 1.6 |
Tax losses for which no deferred tax asset is recognised | 21.7 | 11.6 |
Other | (0.9) | 0.1 |
Adjustment for share-based payments | 6.6 | 3.1 |
Adjustment for Bermuda ETA | (150.0) | – |
Prior-year tax adjustments | (15.2) | (1.8) |
Tax charge for the year | (86.1) | 21.7 |
236 Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| 2022 | ||
| 2023 | (restated) | |
| $m | $m | |
Trading losses in overseas entities | 29.0 | 28.4 |
Bermuda ETA | 150.0 | – |
Deferred tax assets | 11.3 | 69.1 |
Deferred tax liabilities | (7.5 ) | (59.3) |
Total net deferred tax assets, before reclassification of assets held for sale | 182.8 | 38.2 |
Less assets held for sale | (2.1) | – |
Total net deferred tax assets | 180.7 | 38.2 |
| Net deferred tax liabilities | ||
Deferred tax assets | 20.4 | – |
Add assets held for sale | 2.1 | – |
Deferred tax liabilities | (79.4) | (4.1) |
Total net deferred tax liabilities | (56.9) | (4.1) |
| Income | Recognised | ||||
| statement | in other | ||||
| 2022 | (charge) | comprehensive | Foreign | ||
| (restated) | /credit | income/equity | exchange | 2023 | |
| $m | $m | $m | $m | $m | |
Deferred compensation | 3.2 | 0.7 | – | – | 3.9 |
Underwriting* | 1.3 | 0.2 | – | 0.2 | 1.7 |
Financial assets | 7. 8 | (5.4) | – | – | 2.4 |
Tangible assets | (5.0) | (2.4) | – | – | (7.4) |
Losses | 28.4 | 1.5 | – | 0.1 | 30.0 |
Bermuda ETA | – | 150.0 | – | – | 150.0 |
Other | 2.5 | 1.9 | – | (0.1) | 4.3 |
Total deferred tax assets | 38.2 | 146.5 | – | 0.2 | 184.9 |
Pension | 0.9 | (11.8) | (1.6) | (0.3) | (12.8) |
Deferred compensation | 11.6 | – | 0.3 | 0.7 | 12.6 |
Underwriting* | (12.7) | (33.6) | – | (1.6) | (47.9) |
Intangible assets | (10.8) | (3.1) | – | (0.7) | (14.6) |
Financial assets | 3.5 | (6.0) | – | (0.1) | (2.6) |
Tangible assets | 1.8 | (3.4) | – | – | (1.6) |
Losses | – | 6.9 | – | 0.5 | 7.4 |
Other | 1.6 | (1.2) | – | 0.1 | 0.5 |
Total deferred tax liabilities | (4.1) | (52.2) | (1.3) | (1.4) | (59.0) |
Net total deferred tax assets | 34.1 | 94.3 | (1.3) | (1.2) | 125.9 |
Less assets held for sale | – | (2.1) | – | – | (2.1) |
Net Group deferred tax asset | 3 4.1 | 92.2 | (1.3) | (1.2) | 123.8 |
237Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
23 Deferred tax
Net deferred tax assets continued
238 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
24 Employee retirement benefit obligations
The Company’s subsidiary Hiscox plc operates a defined benefit pension scheme based on final pensionable salary. The scheme
closed to future accruals with effect from 31 December 2006 and active members were offered membership of a defined
contribution scheme from 1 January 2007. The funds of the defined benefit scheme are controlled by the trustee and are held
separately from those of the Group. 61% of any scheme surplus or deficit is recharged to Syndicate 33. The full pension obligation
of the Hiscox defined benefit pension scheme is recorded and the recovery from the third-party Names for their share of the
Syndicate 33 recharge is shown as a separate asset.
The gross amount recognised in the Group balance sheet in respect of the defined benefit scheme is determined as follows:
| 2023 | 2022 | |
| $m | $m | |
Present value of scheme obligations | 236.2 | 213.9 |
Fair value of scheme assets | (280.6) | (234.8) |
Net amount recognised as a defined benefit surplus | (44.4) | (20.9) |
As the fair value of the scheme assets exceeds the present value of scheme obligations, the scheme reports a surplus
(2022: reports a surplus).
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit actuarial cost
method. A formal full actuarial valuation is performed on a triennial basis, most recently at 31 December 2020, and updated at
each intervening balance sheet date by the actuaries. The year-end present value of the defined benefit obligation under IAS 19 is
determined by discounting the estimated future cash flows, using interest rates of AA-rated corporate bonds that have terms to
maturity that approximate to the terms of the related pension liability, and is not impacted directly by the triennial valuation.
The scheme assets are invested as follows:
At 31 December
| 2023 | 2022 | |
| $m | $m | |
| Investment assets | ||
Pooled investment vehicles | 55.4 | 81.4 |
Equities | – | 26.1 |
Bonds | 201.3 | 122.2 |
Assets held by insurance company | 2.8 | 2.5 |
Cash | 21.1 | 2.6 |
280.6 | 234.8 |
The amounts recognised in total comprehensive income are as follows:
For the year ended 31 December
| 2023 | 2022 | |
| $m | $m | |
Past service cost | – | – |
Interest cost on defined benefit obligation | 10.9 | 6.4 |
Interest income on plan assets | (12.6) | (6.0) |
Net interest (income)/cost | (1.7) | 0.4 |
Administrative expenses and taxes | – | – |
Total (income)/expense recognised in operational expenses in the income statement | (1.7) | 0.4 |
| Remeasurements | ||
Effect of changes in actuarial assumptions | 6.3 | (146.6) |
Return on plan assets (excluding interest income) | (1.3) | 104.7 |
Remeasurement of third-party Names’ share of defined benefit obligation | (0.9) | 7.0 |
Total remeasurement included in other comprehensive income | 4.1 | (34.9) |
Total defined benefit charge/(credit) recognised in comprehensive income | 2.4 | (34.5) |
239Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
24 Employee retirement benefit obligations continued
The movement in the (surplus)/liability recognised in the Group’s balance sheet is as follows:
| 2023 | 2022 | |
| $m | $m | |
Group defined benefit liability at beginning of year | (20.9) | 35.1 |
Third-party Names’ share of liability | (4.3) | (12.3) |
Net defined benefit liability at beginning of year | (25.2) | 22.8 |
Defined benefit cost included in net income | (1.7) | 0.4 |
Contribution by employer | (24.8) | (13.5) |
Total remeasurement included in other comprehensive income | 4.1 | (34.9) |
Other movements | (1.8) | – |
Net defined benefit (surplus)/liability at end of year | (49.4) | (25.2) |
Third-party Names’ share of liability | 5.0 | 4.3 |
Group defined benefit (surplus)/liability at end of year | (44.4) | (20.9) |
A reconciliation of the fair value of scheme assets is as follows:
| 2023 | 2022 | |
| $m | $m | |
Opening fair value of scheme assets | 234.8 | 369.0 |
Interest income | 12.6 | 6.0 |
| Cash flows | ||
Contribution by the employer | 24.8 | 13.5 |
Benefit payments | (7. 8) | (12.1) |
Assets held by insurance company | – | 2.6 |
| Remeasurements | ||
Return on plan assets (excluding interest income) | 1.3 | (104.7) |
Foreign exchange movements | 14.9 | (39.5) |
Closing fair value of scheme assets | 280.6 | 234.8 |
A reconciliation of the present value of obligations of the scheme is as follows:
| 2023 | 2022 | |
| $m | $m | |
Opening present value of scheme obligations | 213.9 | 4 04.1 |
Past service cost | – | – |
Interest expense | 10.9 | 6.4 |
| Cash flows | ||
Benefit payments | (7. 8) | (12.1) |
Assets held by insurance company | – | 2.6 |
| Remeasurements | ||
Changes in actuarial assumptions | 6.3 | (146.6) |
Foreign exchange movements | 12.9 | (40.5) |
Closing present value of scheme obligations | 236.2 | 213.9 |
Assumptions regarding future mortality experience are set based on the S3PA (2022: S3PA) light tables. Reductions in future
mortality rates are allowed for by using the CMI 2019 (2022: 2019) projections (core model) with 1.25% p.a. long-term trend
for improvements.
The average life expectancy in years of a pensioner retiring at age 60 on the balance sheet date is as follows:
2023 | 2022 | |
Male | 29.0 | 28.9 |
Female | 30.8 | 30.8 |
The average life expectancy in years of a pensioner retiring at 60, 15 years after the balance sheet date, is as follows:
2023 | 2022 | |
Male | 29.4 | 29.3 |
Female | 31.0 | 30.9 |
The weighted average duration of the defined benefit obligation at 31 December 2023 was 16.0 years (2022: 15.0 years).
240 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
24 Employee retirement benefit obligations continued
Other principal actuarial assumptions are as follows:
| 2023 | 2022 | |
| % | % | |
Discount rate | 4.77 | 4.95 |
Inflation assumption (RPI) | 2.99 | 3.09 |
Inflation assumption (CPI) | 2.39 | 2.54 |
Pension increases | 2.82 | 2.89 |
The scheme operates under UK Trust law and the Trust is a separate legal entity from the Group. The scheme is governed by a
board of trustees, comprised of member-nominated and employer-appointed trustees. The trustees are required by law to act
in the best interests of scheme members and are responsible for setting certain policies together with the principal employer.
The scheme is funded by the Group when required. Funding of the scheme is based on a separate actuarial valuation for funding
purposes for which assumptions may differ from the assumptions above. Funding requirements are formally set out in the
statement of funding principles, schedule of contributions and recovery plan agreed between the trustees and the Group.
A triennial valuation was carried out as at 31 December 2020 and resulted in a deficit position of £78.0 million ($106.6 million)
on a funding basis. On 21 January 2022, the Group and the scheme’s trustees agreed a recovery plan to reduce the deficit and to
eliminate the deficit by 2027. Under the recovery plan, and taking into account the material improvement in the funding position
since the valuation date, there are six payments of £10.0 million ($13.5 million), which commenced in January 2022 and are
paid annually thereafter. The funding plan will be reviewed again following the next triennial funding valuation which will have an
effective date of 31 December 2023, for which the formal actuarial valuation is ongoing at the date of this report.
While management believes that the actuarial assumptions are appropriate, any significant changes to those could affect the
balance sheet and income statement. For example, an additional one year of life expectancy for all scheme members would
increase the scheme obligations by £5.4 million ($6.9 million) at 31 December 2023 (2022: £5.1 million ($6.1 million)), and
would increase/reduce the recorded net deficit/surplus on the balance sheet by the same amounts.
The most sensitive and judgemental financial assumptions are the discount rate and inflation. These are considered further below.
CPI revaluation in deferment is used for contracted-out members. Contracted-in members are linked to RPI, as well as for all
pension in payment increases.
The Group has estimated the sensitivity of the present value of unfunded obligations to isolated changes in these assumptions at
31 December 2023 as follows:
| Present value | (Increase) | ||
| of unfunded | Present value | /decrease | |
| obligations | of unfunded | in obligation | |
| before change | obligations | recognised on | |
| in assumption | after change | balance sheet | |
| $m | $m | $m | |
| Effect of a change in discount rate | |||
Use of discount rate of 5.02% | 236.2 | 227.8 | 8.40 |
Use of discount rate of 4.52% | 236.2 | 245.1 | (8.90) |
| Effect of a change in inflation | |||
Use of RPI inflation assumption of 3.24% | 236.2 | 238.6 | (2.40) |
Use of RPI inflation assumption of 2.74% | 236.2 | 233.9 | 2.30 |
241Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
25 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and
held in treasury as own shares.
| 2022 | ||||
| Basic 2023 | (restated) | |||
Profit for the year attributable to the owners of the Company ($m) | 712.0 | 253.9 | ||
Weighted average number of ordinary shares in issue (thousands) | 345,402 | 3 | 44,13 | 0 |
Basic earnings per share (cents per share) | 206.1¢ | 73.8 ¢ |
Diluted
Diluted earnings per share is calculated by adjusting for 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.
| 2022 | ||||
| 2023 | (restated) | |||
Profit for the year attributable to the owners of the Company ($m) | 712.0 | 253.9 | ||
Weighted average number of ordinary shares in issue (thousands) | 345,402 | 3 | 44,13 | 0 |
Adjustments for share options (thousands) | 7,981 | 4,908 | ||
Weighted average number of ordinary shares for diluted earnings per share (thousands) | 353,383 | 349,038 | ||
Diluted earnings per share (cents per share) | 201.5¢ | 72.7¢ |
Diluted earnings per share has been calculated after taking account of 5,190,855 (2022: 3,680,735) performance share plan
awards, 648,208 (2022: 352,505) options under Save As You Earn schemes and 2,142,256 (2022: 457,100) employee share
awards. Previously reported diluted EPS was 31 December 2022: 12.0 cents. Comparatives have been restated for the adoption
of IFRS 17 and IFRS 9.
242 Hiscox Ltd Report and Accounts 2023
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Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
26 Dividends paid to owners of the Company
| 2023 | 2022 | |
| $m | $m | |
| Final dividend for the year ended: | ||
31 December 2022 of | 82.8 | – |
31 December 2021 of 23.0¢ (net) per share | – | 79.2 |
| Interim dividend for the year ended: | ||
31 December 2023 of | 43.3 | – |
31 December 2022 of | – | |
126.1 | 120.5 |
The interim and final dividend for 2022 was paid either in cash or issued as a Scrip Dividend at the option of the shareholder. The
interim dividend for the year ended 31 December 2022 was paid in cash of $40.9 million and 34,760 shares for a Scrip Dividend.
The final dividend for the year ended 31 December 2022 of 24.0¢ was paid in cash of $81.7 million and 77,904 shares for the
Scrip Dividend.
The interim dividend for 2023 was paid either in cash or issued as a Scrip Dividend at the option of the shareholder. The amounts
were $42.7 million in cash and 43,673 shares for a Scrip Dividend.
The Board recommended a final dividend of 25.0¢ per share to be paid, subject to shareholder approval, on 12 June 2024 to
shareholders registered on 3 May 2024. Dividends will be paid in Sterling unless shareholders elect to be paid in US Dollars.
The foreign exchange rate to convert the dividends declared in US Dollars into Sterling will be based on the average exchange
rate in the five business days prior to the Scrip Dividend price being determined. On this occasion, the period will be between
21 May 2024 and 28 May 2024 inclusive.
A Scrip Dividend alternative will be offered to the owners of the Company.
When determining the level of dividend each year, the Board considers the ability of the Group to generate cash; the availability
of that cash in the Group, while considering constraints such as regulatory capital requirements and the level required to invest
in the business. This is a progressive policy and is expected to be maintained for the foreseeable future.
243Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
244 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Notes to the
consolidated
financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
29 Principal subsidiary companies of Hiscox Ltd at 31 December 2023
Company | Nature of business | Country |
Hiscox plc* | Holding company | Great Britain |
Hiscox Insurance Company Limited | General insurance | Great Britain |
Hiscox Insurance Company (Guernsey) Limited* | General insurance | Guernsey |
Hiscox Holdings Inc. | Holding company | USA (Delaware) |
ALTOHA, Inc. | Insurance holding company | USA (Delaware) |
Hiscox Insurance Company Inc. | General insurance | USA (Illinois) |
Hiscox Inc. | Insurance intermediary | USA (Delaware) |
Hiscox Special Risks Agency (Americas) Inc. | Underwriting agency | USA (Delaware) |
Hiscox Insurance Services Inc. | Insurance intermediary | USA (Delaware) |
Hiscox Specialty Insurance Company Inc. | General insurance | USA (Illinois) |
Hiscox Insurance Company (Bermuda) Limited* | General insurance and reinsurance | Bermuda |
Hiscox Dedicated Corporate Member Limited | Lloyd’s corporate Name | Great Britain |
Hiscox Re Insurance Linked Strategies Limited* | Investment manager | Bermuda |
Hiscox Agency Limited* | Lloyd’s service company | Bermuda |
Hiscox Holdings Limited | Insurance holding company | Great Britain |
Hiscox Syndicates Limited | Lloyd’s managing agent | Great Britain |
Hiscox ASM Ltd. | Insurance intermediary | Great Britain |
Hiscox Underwriting Group Services Limited | Service company | Great Britain |
Hiscox Underwriting Ltd | Underwriting agent | Great Britain |
Hiscox Société Anonyme* | General insurance | Luxembourg |
Hiscox Insurance Services (Guernsey) Limited | Underwriting agency | Guernsey |
Hiscox MGA Limited | Insurance intermediary | Great Britain |
Hiscox Insurance Holdings Limited | Holding company | Great Britain |
Hiscox Connect Limited | Service company | Great Britain |
Hiscox Assure SAS | Insurance intermediary | France |
Direct Asia Insurance (Holdings) Pte Ltd | Holding company | Singapore |
Direct Asia Insurance (Singapore) Pte Limited | General Insurance | Singapore |
Direct Asia Management Services Pte Ltd | Service company | Singapore |
*Held directly by Hiscox Ltd.
All principal subsidiaries are wholly owned. The proportion of voting rights of subsidiaries held is the same as the proportion of
equity shares held.
245Hiscox Ltd Report and Accounts 2023
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summary
Notes to the
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financial statements
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
| Transactions in | Balances | |||
| the income statement | outstanding | |||
| for the year ended | receivable/(payable) at | |||
| 31 December | 31 December | |||
| 31 December | 2022 | 31 December | 2022 | |
| 2023 | (restated) | 2023 | (restated) | |
| $m | $m | $m | $m | |
Hiscox Syndicates Limited | 24.2 | 6.5 | 23.3 | 5.9 |
Hiscox Group insurance carriers | 20.7 | 11.5 | (75.1) | (83.5) |
Hiscox Group insurance intermediaries | 7.4 | 5.1 | (4.2) | (4.6) |
Other Hiscox Group companies | 47.6 | 44.5 | (0.3) | (1.6) |
99.9 | 67.6 | (56.3) | (83.8) |
| 2023 | 2022 | |
| $m | $m | |
Insurance revenue achieved through associates | 10.9 | 14.0 |
Commission expense charged by associates | 2.9 | 3.5 |
246 Hiscox Ltd Report and Accounts 2023
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Financial
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Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Additional performance measures (APMs)
The Group uses, throughout its financial publications,
additional performance measures (APMs) in addition to
the figures that are prepared in accordance with UK-adopted
International Accounting Standards. The Group believes
that these measures provide useful information to enhance
the understanding of its financial performance. These APMs
are: combined, claims and expense ratios, return on equity,
net asset value per share, insurance contract written premium,
net insurance contract written premium and net tangible
asset value per share and prior-year developments. These
are common measures used across the industry, and allow
the reader of our Annual Report and Accounts to compare
across peer companies. The APMs should be viewed as
complementary to, rather than a substitute for, the figures
prepared in accordance with accounting standards.
A
Combined, claims and expense ratios
The combined, claims and expense ratios are common
measures enabling comparability across the insurance
industry, that measure the relevant underwriting
profitability of the business by reference to its costs as
a proportion of the insurance revenue net of allocation
of reinsurance premiums. Claims are discounted under
IFRS 17 which can introduce volatility to the ratios if
interest rates move significantly during a period, therefore
ratios are also presented on an undiscounted basis.
The calculation is discussed further in note 4, operating
segments. The combined ratio is calculated as the sum
of the claims ratio and the expense ratio.
A
Return on equity (ROE)
Use of return on equity is common within the financial
services industry, and the Group uses ROE as one of its
key performance metrics. While the measure enables
the Group to compare itself against other peer
companies in the immediate industry, it is also a key
measure internally where it is used to compare the
profitability of business segments, and underpins the
performance-related pay and pre-2018 share-based
payment structures. The ROE is shown in note 6, along
with an explanation of the calculation.
A
Net asset value (NAV) per share and net tangible asset
value per share
The Group uses NAV per share as one of its key
performance metrics, including using the movement of
NAV per share in the calculation of the options vesting of
awards granted under Performance Share Plans (PSP)
from 2018 onwards. This is a widely used key measure
for management and also for users of the financial
statements to provide comparability across peers in the
market. Net tangible asset value comprises total equity
excluding intangible assets. NAV per share and net
tangible asset value per share are shown in note 5,
along with an explanation of the calculation.
A
Insurance contract written premium and net insurance
contract written premium
Insurance contract written premium (ICWP) is the
Group’s top-line key performance indicator, comprising
premiums on business incepting in the financial year,
adjusted for estimates of premiums written in prior
accounting periods, reinstatement premium and
non-claim dependent commissions to ensure
consistency with insurance revenue under IFRS 17.
The definition of net insurance contract written premium
(NICWP) has been adjusted for certain items to ensure
consistency with insurance revenue under IFRS 17.
The adjustments primarily relate to reinstatement
premium and non-claim dependent commissions,
along with reinsurance commissions offset.
The tables below reconcile the insurance contract
written premium back to insurance revenue and net
insurance contract written premium back to net
insurance revenue.
2023 2022
Insurance contract
written premium 4,598.2 4,355.4
Change in unearned premium
included in the liability for
remaining coverage (115.0) (82.1)
Insurance revenue 4,483.2 4,273.3
2023 2022
Net insurance contract
written premium 3,555.8 3,225.5
Change in unearned premium
included in the liability for
remaining coverage (115.0) (82.1)
Change in reinsurance provision
for unearned premium included
in the asset for remaining coverage (7 7.0) (134.9)
Net insurance revenue (insurance
revenue less allocation of
reinsurance premiums) 3,363.8 3,008.5
A
Prior-year developments
Prior-year developments are a measure of favourable
or adverse development on claims reserves, net of
reinsurance, that existed at the prior balance sheet
date. It enables the users of the financial statements to
compare and contrast the Group’s performance relative
to peer companies.
The prior-year development is calculated as the positive
or negative movement in ultimate losses on prior accident
years between the current and prior-year balance
sheet date on an undiscounted basis adjusted for LPT
premium and is disclosed in note 20. The LPT premium
reclassification captures the LPT reinsurance recoveries
due to changes in ultimate losses related to the covered
business which is recognised in the reinsurance
asset held for remaining coverage.
247Hiscox Ltd Report and Accounts 2023
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Financial
summary
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Five-year summary
2023
$m
2022
$m
2021
$m
2020
$m
2019
$m
Results
Profit/(loss) before tax 4,483.2 275.6 190.8* (268.5)* 53.1*
Insurance revenue 625.9 4,273.3 – – –
Profit/(loss) for the year after tax 712.0 253.9 189.5* (293.7)* 48.9*
Assets employed
Goodwill and intangible assets 323.9 320.4 313.1 298.9 278.0
Financial assets carried at fair value 6,574.4 5,812.1 6,041.3 6,116.8 5,539.0
Cash and cash equivalents 1,4 37.0 1,350.9 1,300.7 1,57 7.2 1,115.9
Insurance liabilities and reinsurance assets (4,505.7) (4,177.1) (4,690.4)* (5,468.8)* (4,707.6 )*
Other net assets (532.9) (671.3) (155.4) (170.2) (35.6)
Net assets 3,296.7 2,635.0 2,539.3 2,353.9 2,189.7
Net asset value per share (¢) 951.5 764.5 739.8 689.0 768.2
Key statistics
Basic earnings/(loss) per share (¢) 20 6.1 73.8 55.3* (91.6)* 17. 2*
Diluted earnings/(loss) per share (¢) 201.5 72.7 54.7* (90.6)* 16.9*
Combined ratio (%) 85.5
‡
88.7
‡
93.2* 114.5* 106.8*
Return on equity (%) 27.6 10.1 8.1* (11.8)* 2.2*
Dividends per share (¢) 37.5 36.0 34.5 – 13.8
Share price – high
†
(p) 1,193.0 1,106.5 1,004.0 1,431.0 1,777.0
Share price – low
†
(p) 938.0 8 27. 2 770.0 666.4 1,213.0
*Represent balances reported under IFRS 4 and IAS 39.
†
Closing mid-market prices.
‡
Represents combined ratio on a discounted basis.
The five-year summary is unaudited.
248 Hiscox Ltd Report and Accounts 2023
Chapter 6 165
Financial
summary
Chapter 3 72
Governance
Chapter 5 148
Shareholder
information
Chapter 2 22
A closer look
Chapter 1 6
Performance
and purpose
Chapter 4 106
Remuneration
Glossary of terms
ABI stands for Association of
British Insurers.
ABIR stands for Association of
Bermuda Insurers and Reinsurers.
ACA stands for Associate
Chartered Accountant.
AGM stands for Annual General Meeting.
BIBA stands for British Insurance
Brokers’ Association.
BMA
stands for Bermuda
Monetary Authority.
BSCR stands for Bermuda Solvency
Capital Requirement.
CBES stands for Climate Biennial
Exploratory Scenario.
CGU stands for cash-generating unit.
CIAB stands for Council of Insurance
Agents and Brokers.
COR stands for combined ratio.
CSRD stands for Corporate
Sustainability Reporting Directive.
CVaR stands for Climate Value-at-Risk.
DEI stands for diversity, equity
and inclusion.
D&O stands for directors and
officers’ insurance.
DPD stands for direct and
partnership division.
DTA stands for deferred tax asset.
EAD stands for exposure at default.
ECL stands for expected credit loss.
EPS stands for earnings per share.
ESG stands for environmental, social
and governance.
ETR stands for effective tax rate.
FCA stands for Financial
Conduct Authority.
FRC stands for Financial
Reporting Council.
FVOCI stands for fair value through
other comprehensive income.
FVPL stands for fair value through
profit or loss.
GBP stands for Great British
Pounds (Sterling).
GEC stands for Group
Executive Committee.
GHG
stands for greenhouse gas.
GIST stands for general insurance
stress test.
GMM stands for General
Measurement Model.
GRCC stands for Group Risk
and Capital Committee.
GRI stands for Global Reporting Initiative.
GUR stands for Group
Underwriting Review.
H1 stands for first half of the year.
H2 stands for second half of
the year.
IAS stands for International
Accounting Standards.
IBNR stands for incurred but
not reported.
ICWP stands for insurance
contract written premium.
IFRS stands for the International
Financial Reporting Standards.
ILS stands for insurance-linked
securities.
IPCC stands for Intergovernmental
Panel on Climate Change.
ISSB stands for International
Sustainability Standards Board.
KPI stands for key
performance indicator.
LGD stands for loss given default.
LIC stands for liability for incurred claims.
LOC stands for Letter of Credit.
LMA stands for Lloyd’s
Market Association.
LPT stands for legacy
portfolio transaction.
LRC stands for liability for
remaining coverage.
LTIP stands for long-term
incentive plan.
MSCI stands for Morgan Stanley
Capital International.
NAV stands for net asset value.
NAVPS stands for net asset value
per share.
NICWP stands for net insurance
contract written premium.
OCI stands for other
comprehensive income.
OECD stands for Organisation
for Economic Co-operation
and Development.
ORSA stands for own risk and
solvency assessment.
PAA stands for premium
allocation approach.
PBT stands for profit before tax.
PD stands for probability of default.
PRA stands for Prudential
Regulation Authority.
PSP stands for performance share plan.
Re stands for reinsurance.
ROE stands for return on equity.
RIMS stands for Risk and Insurance
Management Society.
SME stands for small- and
medium-sized enterprises.
SPPI stands for solely payments of
principal and interest.
USD stands for United States Dollars.
WACC
stands for weighted average
cost of capital.
Designed by Em-Project Limited
www.em-project.com
Printed by Pureprint
www.pureprint.com
Photography by
Simon Warren
(cover image, IBC)
(reportage images p9, p13, p16, p22,
p36, p47, p49, p62, p82, p84, p96,
p99, p106)
(editorial images p3, p5, p19, p21,
p33, p35, p43, p45, p69, p71, p79,
p81, p103, p105, p145, p147),
(Hiscox community portrait images
p1, p153 to p164)
Suki Dhanda
(Board images p72 to p74,
GEC images p76 to p77)
Printed in the UK by Pureprint using
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Pureprint is a CarbonNeutral
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Disclaimer
This document contains
forward-looking statements
regarding plans, goals and
expectations relating to the
Group’s future financial condition,
performance, results, strategy
or objectives, which by their very
nature involve risk and uncertainty.
Statements that are not historical
facts are based on Hiscox’s beliefs
and expectations. These include
but are not limited to statements
containing the words ‘may’,
‘will’, ‘should’, ‘continue’, ‘aims’,
‘estimates’, ‘projects’, ‘believes’,
‘intends’, ‘expects’, ‘plans’, ‘seeks’
and words of similar meaning.
These statements are based on
current plans, estimates and
projections as at the time they are
made and therefore undue reliance
should not be placed on them.
A number of factors could cause
Hiscox’s actual future financial
condition, performance or other
key performance indicators to differ
materially from those discussed
in any forward-looking statement.
These factors include but are not
limited to future market conditions;
the policies and actions of regulatory
authorities; the impact of competition,
economic growth, inflation, and
deflation; the impact and other
uncertainties of future acquisitions
or combinations within the insurance
sector; the impact of changes in
capital, solvency standards or
accounting standards or relevant
regulatory frameworks, and tax and
other legislation and regulations
in the jurisdictions in which Hiscox
operates; and the impact of legal
actions and disputes. These and
other important factors could result
in changes to assumptions used for
determining Hiscox results and other
key performance indicators.
Hiscox therefore expressly
disclaims any obligation to update
any forward-looking statements
contained in this document, except
as required pursuant to the Bermuda
Companies Act, the UK Listing
Rules, the UK Disclosure Guidance
and Transparency Rules or other
applicable laws and regulations.
22599 03/24
Hiscox Ltd
Chesney House
96 Pitts Bay Road
Pembroke HM 08
Bermuda
T +1 441 278 8300
E enquiry@hiscox.com
www.hiscoxgroup.com