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25 Share capital continued
Share options and performance share plan awards continued
The weighted average fair value of each share option granted during the year was 85.5p (2008: 60.5p). The weighted average fair value
of each performance share plan award granted during the year was 308.0p (2008: 213.4p).
Movements in the number of share options during the year and details of the balances outstanding at 31 December 2009 are shown
in the Directors’ remuneration report.
The implied volatility assumption is based on historical data for periods of between five and ten years immediately preceding grant date.
For options issued after 1 January 2006 the assumptions regarding long-term dividend yield have been aligned to the progressive
dividend policy announced during the 2005 Rights Issue.
Additional details on the Group’s share option schemes are shown in the Directors’ remuneration report accompanying these financial statements.
26 Retained earnings and other reserves
2009 2008
£000 £000
Currency translation reserve at 31 December 37,728 107,317
Retained earnings at 31 December 784,104 462,146
The currency translation reserve comprises qualifying net investment gains and losses and foreign exchange differences arising from
the translation of the financial statements of, and investments in, foreign operations.
There were no transactions by the Company in its own shares during the year.
During 2008, Hiscox Ltd purchased 28,300,742 of ordinary shares of 5p each in open market transactions. These shares are held
in treasury. In addition, during 2008, 1,000,000 ordinary shares of 5p each were purchased and held in trust. Retained earnings reduced
by £65,066,000 being the consideration paid for these transactions. Included within this amount were transaction cost expenses
of £125,000 directly related to the purchases. The highest price paid per share was 260p, the lowest price paid was 191.5p and the
average price paid was 221.7p per share.
At 31 December 2009 Hiscox Ltd held 28,142,874 shares in treasury. Additional details are shown in note 38 to these financial
statements in respect of additional Hiscox Ltd shares held by subsidiaries.
Included within Group retained earnings is an amount of £27,068,000 (2008: £23,932,000), which is not distributable and is held
to meet solvency capital requirements to maintain an equalisation provision. The amounts in the equalisation provision are realised when
particular entities in the Group have suffered insurance losses in excess of levels set out in the relevant solvency capital regulations.
In addition, the Group maintains certain levels of capital to meet minimum solvency requirements for regulatory and rating purposes.
27 Insurance liabilities and reinsurance assets
2009 2008
Note £000 £000
Gross
Claims reported and claim adjustment expenses 800,307 885,905
Claims incurred but not reported 749,016 881,823
Unearned premiums 573,028 509,688
Total insurance liabilities, gross
Recoverable from reinsurers
2,122,351 2,277,416
Claims reported and claim adjustment expenses 173,987 180,406
Claims incurred but not reported 154,903 245,897
Unearned premiums 91,236 77,491
Total reinsurers’ share of insurance liabilities
Net
19 420,126 503,794
Claims reported and claim adjustment expenses 626,320 705,499
Claims incurred but not reported 594,113 635,926
Unearned premiums 481,792 432,197
Total insurance liabilities, net 1,702,225 1,773,622
The amounts expected to be recovered and settled before and after one year, based on historical experience, are estimated as follows:
Within one year 939,565 979,380
After one year 762,660 794,242
1,702,225 1,773,622
Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2009
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