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Corporate responsibility “Fundamental to corporate and social responsibility is honest and fair dealing in all activities of the Group. Hiscox has always been extremely conscious of its reputation. Management has always believed that a reputation for integrity and decent behaviour in all dealings, be they within the Group or with those from outside who come in contact with the Group, will be good for morale and for the results of the business.” Robert Hiscox Hiscox’s commitment to responsible business practices is reflected: In the marketplace Dealing with business partners Insurance brokers are an important Hiscox stakeholder, and Hiscox endeavours to have good relationships with them to create a competitive advantage in the marketplace. Clear communication is key to good relations and Hiscox regularly sends partner brokers updates (electronically or in hard copy) to keep them informed of developments at Hiscox and in the industry. Dealing with investors In keeping with its policy of open and transparent communication, Hiscox reports both its half and full year results to its investors via a series of presentations as well as ensuring all relevant Group financial information is available on its website. In addition, senior management and key employees meet investors and analysts throughout the year to explain and take questions on the Group financial performance and business strategy. Dealing with customers Hiscox is dedicated to advising customers on risk management to prevent burglary and fire in the home and other distressing losses. Should a loss occur, the Hiscox UK philosophy is that insurance is a promise to pay, and the 26 Corporate responsibility Hiscox Ltd Report and Accounts 2009 claims service aims to support customers and make them whole as soon as possible. In the workplace Hiscox wants to employ the best people and provide them with the means and the motivation to excel. This is achieved with fair rewards and by providing staff with an environment in which they can enjoy their work and reach their full potential. Hiscox recognises how important it is for employees to maintain a healthy work/life balance and gives staff the option of flexible and home working wherever possible. Equal opportunities Hiscox is committed to providing equal opportunities to all employees and potential employees in all aspects of employment regardless of disability, sex, race, religion, sexual inclination or background. Rewards and benefits Hiscox encourages employees to identify with the success of the Group through performancerelated pay and bonus savings-related share option schemes and executive share option schemes. Competitive benefits packages contain health, fitness, flexible working and career break opportunities. Salary packages are benchmarked by Watson Wyatt against the financial services industry as a whole and against the Lloyd’s market specifically, where applicable. Packages are also considered on a country-by-country basis. Training and development Hiscox is committed to training and developing its employees to help them maximise their potential. Each permanent member of staff is provided with a tailored personal development programme. Training and development needs are reviewed twice a year, along with performance, against clearly set objectives. Communication and participation Employees are kept informed of business developments through formal briefings, team meetings, intranet bulletins, video conferences and informal routes. Management takes these opportunities to listen to staff and involve them in taking the business forward. A monthly staff e-zine provides updates on issues and social events. Culture The Hiscox culture is underpinned by a set of core values that determine the standard of behaviour expected of employees. These core values – challenge convention, integrity, respect, courage, quality and excellence in execution – guide everything that Hiscox does in its business. With this conduct, the Group recognises that it is more likely to achieve business success and create value for its shareholders. Hiscox strives for the highest standards of corporate governance while being
in essence a non-bureaucratic organisation. An effective and firm system of internal controls ensures that risks are managed within acceptable limits, but not at the expense of innovation or speed of response. The Group believes that it has got this balance right and that it is one of its greatest strengths. The Group’s policies ensure that it continues to follow a best practice approach to managing its people and remains a fair and professional employer. In the unlikely event of an employee having a material concern relating to the operations of the business, a whistleblowing policy explains to staff how they can confidentially raise their misgivings. Hiscox also subscribes to Public Concern at Work, which provides free legal advice to any employee with a concern about possible danger or malpractice in the workplace. In the community Hiscox donated £1,171,000 to charities in 2009. As the Group expands internationally, it has been recruiting local staff wherever possible, developing a rapport with the local community and making a direct contribution to the local economy. The Group has maintained its involvement in its local communities with the strong support of its employees. In Bermuda, Hiscox supports the Bermuda Sunshine League which is a transitional living facility for children removed from unstable living environments and gives employees the opportunity to contribute their time and effort to children who require adult role models and a semblance of stability. Hiscox is a member of the Lloyd’s Community Programme, which supports local initiatives concerning education, training, enterprise and regeneration. In London, the Reading Partners Scheme has continued, through which staff assist pupils at the Elizabeth Selby Infants School in Tower Hamlets. Employees also mentor students at Morpeth School in Tower Hamlets. Supporting the arts The Group continues to support the Bermuda Masterworks Foundation, which aims to repatriate artworks by Bermudian artists or featuring Bermuda landscapes/seascapes. Hiscox has a two-year commitment to support the Whitechapel Art Gallery in London. The Hiscox Foundation The Hiscox Foundation, a charity funded by an annual donation from Hiscox, has been set up to give donations to deserving causes. It gives priority to any charity in which a member of staff is involved with the aim of encouraging and developing such activity. Hiscox staff continued their eight year long support of the Richard House Hospice, raising over £34,000 during 2009. The foundation has committed to support HART (Humanitarian Aid Relief Trust) over a three year period. The charity helps some of the poorest and most abused people in the world. More details of the charities Hiscox supports can be found on our website www.hiscox.com. In the environment The way customers conduct their business is of paramount importance to the Group. Hiscox’s approach to underwriting their risks will take into account customers’ attitudes to all aspects of their business, including care of the environment. The Group’s direct environmental impact is mainly from the energy it uses and the emissions and waste it generates from its premises. In accordance with the Group’s environmental policy, consumables are recycled and reused wherever possible. The Group continues to take steps to reduce the amount of raw materials used in business processes and by staff, particularly through the extensive use of computerisation and communications technology. Programmes for recycling batteries, mobile phones, lamps and CDs continued during the year. The Group’s efforts were rewarded by a Clean City Award from the City of London Corporation, which aims to promote good waste management practices and encourage waste minimisation, reuse and recycling. Hiscox is a member of Climatewise, an insurance industry initiative which aims to reduce the economy’s and society’s long-term risk from climate change. Hiscox supports the principles of Climatewise and is encouraged by the actions taken by Lloyd’s to assist the market to meet the majority of the principles. In 2009 Hiscox UK conducted an audit of its impact on the environment and, with Corporate Citizenship, calculated the carbon footprint of the UK business. Hiscox UK aims to be Carbon Neutral by the end of 2010 by reducing greenhouse gas emissions, engaging employees to modify their behaviours and seeking to offset unavoidable carbon emissions. More detailed information relating to the actions Hiscox is taking to meet each of the Climatewise Principles will be published on www.hiscox.com in June 2010. Hiscox strives for the highest standards of corporate governance while being in essence a non-bureaucratic organisation. Corporate responsibility Hiscox Ltd Report and Accounts 2009 27
Page 1 and 2: Hiscox Ltd Report and Accounts 2009
Page 3 and 4: Corporate highlights Group key perf
Page 5 and 6: Chairman’s statement It is an eno
Page 7 and 8: Chief Executive’s report In 2009
Page 9 and 10: Hiscox London Market Hiscox London
Page 11 and 12: We have also worked hard to develop
Page 13 and 14: We have continued to invest in trai
Page 15 and 16: Hiscox London Market Hiscox London
Page 17 and 18: Group financial performance Group f
Page 19 and 20: The expense ratio deteriorated by 7
Page 21 and 22: High quality and well diversified p
Page 23 and 24: Risk management The risk management
Page 25 and 26: Credit Reinsurance counterparties T
Page 27: Boxplot and whisker diagram of Hisc
Page 31 and 32: Cougar Syndicate 6104 Cougar Syndic
Page 33 and 34: Hiscox Insurance Company (Bermuda)
Page 35 and 36: Independent Non Executive Directors
Page 37 and 38: ecent and relevant financial experi
Page 39 and 40: Directors’ remuneration report Th
Page 41 and 42: Executive Directors’ cash incenti
Page 43 and 44: Remuneration of Executive Directors
Page 45 and 46: Share options Number of Number of M
Page 47 and 48: 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
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12 Auditors’ remuneration continu
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15 Intangible assets continued Othe
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19 Reinsurance assets 2009 2008 Not
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22 Derivative financial instruments
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23 Fair value measurements continue
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25 Share capital continued Share op
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27 Insurance liabilities and reinsu
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27 Insurance liabilities and reinsu
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30 Deferred tax continued (b) Group
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31 Employee retirement benefit obli
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36 Contingencies and guarantees con
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38 Principal subsidiary companies o
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To request a copy of the 2009 Hisco
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