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3 Management of risk continued
3.2 Financial risk continued
(d) Liquidity risk continued
The main focus of the investment portfolio is on high quality short duration debt and fixed income securities, and cash. There are no
significant holdings of investments with specific repricing dates. Notwithstanding the regular interest receipts and also the Group’s
ability to liquidate these securities and the majority of its other financial instrument assets for cash in a prompt and reasonable manner,
the contractual maturity profile of the fair value of these securities at 31 December was as follows:
Fair values at balance sheet date analysed
by contractual maturity
Debt and Deposits Derivative Cash
fixed income with credit Catastrophe financial and cash 2009 2008
securities institutions bonds assets equivalents Total Total
£000 £000 £000 £000 £000 £000 £000
Less than one year 463,526 7,877 1,878 1,018 259,647 733,946 665,770
Between one and two years 710,347 3,517 5,836 – – 719,700 593,371
Between two and five years 668,602 – 3,596 – – 672,198 669,819
Over five years 359,094 – – – – 359,094 407,273
Sub-total 2,201,569 11,394 11,310 1,018 259,647 2,484,938 2,336,233
Other non-dated instruments 54,168 – – – – 54,168 61,297
Total 2,255,737 11,394 11,310 1,018 259,647 2,539,106 2,397,530
The Group’s equities and shares in unit trusts and other non-dated instruments have no contractual maturity terms but could also be
liquidated for cash in a prompt and reasonable timeframe within one year of the balance sheet date.
Average contractual maturity analysed by
denominational currency of investments
2009 2008
Years Years
Pound Sterling 1.52 4.85
US Dollar 4.89 6.95
Euro 3.21 5.10
Canadian Dollar 1.38 2.45
The following is an analysis by liability type of the estimated timing of net cash flows based on the net claims liabilities held. The Group
does not discount claims liabilities. The estimated phasing of settlement is based on current estimates and historical trends and the
actual timing of future settlement cash flows may differ materially from that disclosure below.
Liquidity requirements to settle estimated profile
of net claim liabilities on balance sheet
Within Between one Between two Over 2009
one year and two years and five years five years Total
£000 £000 £000 £000 £000
Reinsurance inwards 86,533 61,120 52,478 13,529 213,660
Property – marine and major assets 54,426 33,557 34,163 10,194 132,340
Property – other assets 115,406 42,065 32,477 5,234 195,182
Casualty – professional indemnity 99,372 101,486 183,597 36,193 420,648
Casualty – other risks 55,636 37,247 34,243 8,301 135,427
Other* 56,342 30,266 27,088 9,480 123,176
Total 467,715 305,741 364,046 82,931 1,220,433
Liquidity requirements to settle estimated profile
of net claim liabilities on balance sheet
Within Between one Between two Over 2008
one year and two years and five years five years Total
£000 £000 £000 £000 £000
Reinsurance inwards 136,718 75,744 53,762 8,859 275,083
Property – marine and major assets 71,590 41,561 39,787 6,630 159,568
Property – other assets 143,891 44,696 30,918 3,826 223,331
Casualty – professional indemnity 109,421 109,516 185,154 41,266 445,357
Casualty – other risks 60,526 47,281 49,774 11,912 169,493
Other* 34,985 15,742 14,220 3,646 68,593
Total 557,131 334,540 373,615 76,139 1,341,425
*Includes a diverse mix of certain specialty lines such as kidnap and ransom, terrorism, bloodstock and other risks which contain a mix of property and casualty exposures.
Details of the payment profile of the Group’s borrowings, derivative instruments and other liabilities is given in notes 20 and 28.
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2009
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