The reason for the low combined ratio for Hisco, apart from having a committed and talented staff, is focus. Hisco focuses on two main areas: higher net worth personal insurances, from the aspiring young executive to the really rich, and commercial insurances of service-based professional firms and media and technology companies. The focus means we are big and expert in the areas in which we specialise, even if we are small as a company in comparison with some of our giant competitors.
People We have learnt a great deal during the recent difficult years. We have made losses in Lloyd’s and will carry the scars for a good many years. Syndicate 33 was losing money when I joined it in 1965, and I so hated the experience that we made money through every downturn until this one. We have all hated these recent losses. We took early action to get the Syndicate back on track and I hope it is a good thirty years before it happens again, if it ever does. We have a very skilful and battle hardened team led by Robert Childs. They have my thanks for pulling it together in very hard times.
Retail business, written through our insurance companies, continues to comprise 26% of the controlled premium income (2000: 26%). Hiscox plc owns 60% of Syndicate 33, retail comprises 39% of Hiscox plc’s business.
Developing business from scratch is a huge challenge to our local teams. They pit their nimbleness and responsiveness against much larger local players to develop our business. In the year ahead we will be working both to deliver further growth, and to improve the underlying underwriting performance.
Employee policies The Group is committed to regular and timely communication with staff including both briefings and written communications. It is the Group’s policy to give employment opportunities to people who are disabled. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and to provide specialised training where this is appropriate.
Major interests in shares The Company has been notified of the following shareholdings of 3% or more in the ordinary shares of the Company as at 17 April 2002.
We read the other information contained in the Annual report, including the corporate governance statement and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Change in the provision for claims: Gross amount (247,646) (20,181) Reinsurers’ share 154,469 8,556
Ultimate claims are projected both gross and net of reinsurance using reinsurance recovery rates based on historical experience, adjusted for the current reinsurance programme.
3(j) Allocation of investment return An allocation is made from the nontechnical account to the general business technical account of the longer term investment return on investments supporting the general insurance technical provisions and all the relevant shareholders’ funds. The longer term investment return is an estimate of the long term trend investment return for Hiscox plc and its subsidiaries, together with the Hiscox Managed Syndicate, policies after the deduction of any acquisition costs deferred. The provision for unexpired risks is calculated separately by classes of business which are managed together, after taking into account the relevant investment return.
4 World Trade Center The Group’s exposure to losses arising from the terrorist attack of 11 September 2001 arises almost entirely from its participation on Syndicate 33. Hiscox Insurance Company and the International Operations of Hiscox have had a negligible loss from this event. The situation is unprecedented and as such the extent of the gross and net losses to the Group is difficult to assess with the degree of confidence which is
At Group level c) Reconciliation of 100% level technical results to Group results
Investment return on insurance company funds: Investment income 6,453 6,392 Unrealised gains/(losses) on investments (1,928) 1,374 Realised gains/(losses) on investments (1,393) 684
21 Other Creditors including taxation and social security Group Group Company Company
26 Directors’ Emoluments salary/fees Benefits Bonus Total salary/fees Benefits Bonus Total
c) Total directors’ remuneration of which £981,000 was recharged to the managed syndicates (2000: £901,000) was: Salaries, benefits and bonuses 1,094 1,223 Pension contributions to defined benefit schemes 403 225 Fees to non-executive directors 119 105
Defined benefit schemes A full actuarial valuation was carried out at 1 January 2000 by a qualified independent actuary. The valuation was updated on an FRS 17 basis as at 31 December 2001. The major assumptions used by the Actuary were as follows: Rate of increase in salaries 3.5% p.a.
Hiscox plc Report and Accounts 200160 Hiscox plc Report and Accounts 200160 Hiscox plc Report and Accounts 2001 32 continued e) Analysis of cash flows for headings netted in the cash flow statement £000 £000