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Notes to the consolidated financial statements continued 37 Capital and lease commitments continued Obligations under finance leases It is the Group’s policy to lease certain of its motor vehicles under finance lease arrangements. The leases have a typical term of three years and are on a fixed repayment basis with a final lump sum component at the end of each agreement should the Group decide to acquire ownership of the vehicle. Interest rates are fixed at the contract commencement date. The Group’s obligations under leases are secured by the lessors’ charges over the leased assets. Finance lease interest expense for the year totalled £20,000 (2008: £35,000). The finance lease obligations to which the Group is committed include the following minimum lease payments: 98 Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2009 2009 2008 £000 £000 Current liabilities due for settlement no later than one year 226 246 Non-current liabilities due for settlement after one year and no later than five years 177 223 403 469 Less: future finance lease interest charges (10) (30) The present value of the minimum lease payments is not materially different to the currently disclosed obligation. 38 Principal subsidiary companies of Hiscox Ltd at 31 December 2009 Company Nature of business Country 393 439 Hiscox plc* Holding company Great Britain Hiscox Insurance Company Limited General insurance Great Britain Hiscox Insurance Company (Guernsey) Limited* General insurance Guernsey Hiscox Inc. Underwriting agent USA (Delaware) Hiscox Holdings Inc. Insurance holding company USA (Delaware) ALTOHA Inc. Holding company USA (Delaware) American Live Stock Inc. Underwriting agent USA (Illinois) Hiscox Insurance Company Inc. General insurance USA (Illinois) Hiscox ASM Limited Insurance intermediary Great Britain Hiscox Insurance Company (Bermuda) Limited* General insurance and reinsurance Bermuda Hiscox Dedicated Corporate Member Limited Lloyd’s corporate Name Great Britain Hiscox Select Insurance Fund PLC Insurance holding company Great Britain Hiscox Select Holdings Limited Insurance holding company Great Britain Hiscox Holdings Limited** Insurance holding company Great Britain Hiscox Insurance Holdings Limited Insurance holding company Great Britain Hiscox Assurances Services SARL Underwriting agent France Hiscox International Holdings B.V. Insurance holding company Netherlands Hiscox Syndicates Limited Lloyd’s managing agent Great Britain Hiscox Underwriting Ltd Underwriting agent Great Britain Hiscox AG Underwriting agent Germany Hiscox Overseas Holdings B.V.* Holding company Netherlands Hiscox bv Underwriting agent Netherlands Hiscox Connect Limited Online intermediary Great Britain Hiscox Underwriting Group Services Limited Service company Great Britain Hiscox NV Underwriting agent Belgium Hiscox Trustees Limited† Corporate trustee Great Britain Hiscox Pension Trustees Limited Pension trustee Great Britain Hiscox Qualifying Employees Share Ownership Trustees Limited Share scheme trustee Great Britain Amershill Limited Underwriting agent Great Britain Hiscox Insurance Services (Guernsey) Limited Underwriting agent Guernsey Hiscox Capital Ltd* General insurance Bermuda Hiscox Agency Ltd* Underwriting agent Bermuda Hiscox Services Ltd* Service company Bermuda Hiscox Europe Underwriting Limited Insurance intermediary Great Britain Hiscox Europe Services Limited Service company Great Britain *Held directly. **Hiscox Holdings Limited held 54,560 shares in Hiscox Ltd (2008: 54,560) at 31 December 2009. †Hiscox Trustees Limited is the trustee of the Hiscox Employee Share Ownership Plan (ESOP). The ESOP owned 132,399 shares in Hiscox Ltd (2008: 132,399) at 31 December 2009. The shares have been purchased by the ESOP for future use in employee share option schemes and are held as own shares. None of these shares are currently under option to employees, nor have any been conditionally gifted to them.
38 Principal subsidiary companies of Hiscox Ltd at 31 December 2009 continued All companies are wholly owned. The proportion of voting rights of subsidiaries held is the same as the proportion of equity shares held. 39 Related-party transactions Details of the remuneration of the Group’s key personnel are shown in the Directors’ remuneration report on pages 37 to 44. A number of the Group’s key personnel hold insurance contracts with the Group, all of which are on normal commercial terms and are not material in nature. The following transactions were conducted with related parties during the year. (a) Syndicate 33 at Lloyd’s Hiscox Syndicates Limited, a wholly owned subsidiary of the Company, received management fees and profit commissions for providing a range of management services to Syndicate 33. 2009 2008 £000 £000 Value of services provided by Hiscox Syndicates Limited to Syndicate 33 50,845 55,947 Amounts receivable from Syndicate 33 at 31 December excluding profit commission accrued 964 745 (b) Transactions with associates Certain companies within the Group conduct insurance and other business with associates. These transactions arise in the normal course of obtaining insurance business through brokerages, and are based on arm’s length arrangements. Total Total 2009 2008 £000 £000 Gross premium income achieved through associates 18,530 20,443 Commission expense charged by associates 4,632 4,974 Amounts payable to associates at 31 December – – Amounts receivable from associates at 31 December – 128 Details of the Group’s associates are given in note 17. (c) Internal reinsurance arrangements During the current and prior year, there were a number of reinsurance arrangements entered into in the normal course of trade between various Group companies. The related results of these transactions have been eliminated on consolidation. Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2009 99
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Hiscox Ltd Report and Accounts 2009
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Corporate highlights Group key perf
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Chairman’s statement It is an eno
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Chief Executive’s report In 2009
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Hiscox London Market Hiscox London
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We have also worked hard to develop
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We have continued to invest in trai
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Hiscox London Market Hiscox London
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Group financial performance Group f
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The expense ratio deteriorated by 7
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High quality and well diversified p
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Risk management The risk management
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Credit Reinsurance counterparties T
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Boxplot and whisker diagram of Hisc
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in essence a non-bureaucratic organ
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Cougar Syndicate 6104 Cougar Syndic
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Hiscox Insurance Company (Bermuda)
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Independent Non Executive Directors
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ecent and relevant financial experi
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Directors’ remuneration report Th
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Executive Directors’ cash incenti
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Remuneration of Executive Directors
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Share options Number of Number of M
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Directors’ report The Directors h
Page 49 and 50: Report of the independent registere
Page 51 and 52: Consolidated balance sheet At 31 De
Page 53 and 54: Consolidated statement of cash flow
Page 55 and 56: 2 Significant accounting policies c
Page 63 and 64: 3 Management of risk continued 3.1
Page 75 and 76: 4 Operating segments continued (a)
Page 77 and 78: 5 Net asset value per share 2009 20
Page 79 and 80: 12 Auditors’ remuneration continu
Page 81 and 82: 15 Intangible assets continued Othe
Page 83 and 84: 19 Reinsurance assets 2009 2008 Not
Page 85 and 86: 22 Derivative financial instruments
Page 87 and 88: 23 Fair value measurements continue
Page 89 and 90: 25 Share capital continued Share op
Page 91 and 92: 27 Insurance liabilities and reinsu
Page 93 and 94: 27 Insurance liabilities and reinsu
Page 95 and 96: 30 Deferred tax continued (b) Group
Page 97 and 98: 31 Employee retirement benefit obli
Page 99: 36 Contingencies and guarantees con
Page 103 and 104: To request a copy of the 2009 Hisco
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