Hiscox Ltd Interim Statement 2024

Hiscox Ltd interim results

For the six months ended 30 June 2024

"Solid delivery. Executing on our commitments."

	H1 2024	H1 2023
Insurance contract written premium1	$2,812.9m	$2,723.3m
Net insurance contract written premium1	$2,027.2m	$1,945.6m
Insurance service result	$240.7m	$221.4m
Investment result	$152.4m	$121.8m
Profit before tax	$283.5m	$264.8m
Earnings per share	75.1¢	72.2¢
Interim dividend per share	13.2¢	12.5¢
Net asset value per share	989.0¢	823.3¢
Tangible net asset value per share	896.9¢	728.1¢
Group combined ratio (discounted)1	85.4%	85.7%
Group combined ratio (undiscounted)1	90.4%	90.2%
Retuon equity (annualised)1	16.5%	19.9%
Positive prior year development1	$50.8m	$61.7m

Highlights

• Insurance contract written premium (ICWP) grew by $89.6 million or 3.3% to $2,812.9 million (H1 2023: $2,723.3 million) with sustained retail growth and additional capital deployed in big-ticket property.
• Profit before tax grew 7.1%, to $283.5 million (H1 2023: $264.8 million), underpinned by:

• 1. insurance service result of $240.7 million (H1 2023: $221.4 million);o investment result of $152.4 million (H1 2023: $121.8 million).
• Undiscounted combined ratio of 90.4% (H1 2023: 90.2%) in a more active loss environment.
• Group ROE of 16.5% (H1 2023: 19.9%).
• Excellent tangible NAV per share growth of 23.2%.
• Over 85%2 of the $150 million buyback completed; interim dividend of 13.2 cents per share, an increase of 5.6% from last year.
• Strong balance sheet and reserves; estimated Bermuda Solvency Capital Ratio (BSCR) of 206%.
• Our diversified portfolio is well placed to deliver sustainable returns and growth for the Group through the insurance cycle.

Aki Hussain, Group Chief Executive Officer, Hiscox Ltd, commented:

"Our business has built on the momentum from 2023 and delivered strong profits and robust growth in the first half. We are focused on deploying capital to generate profitable growth and investing in underwriting and technology capabilities to build out our competitive advantages. This has delivered a strong and increased underwriting result of $241 million, despite a more active loss environment, and positions us well to deliver high-quality growth through the insurance cycle."

ENDS

1Alternative performance measure definitions used by the Group are included within the condensed consolidated interim financial statements. 2As of 30 June 2024.

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CEO's statement

The Group has continued to deliver strong profitability and sustained growth in the first six months of the year, building on the momentum achieved in 2023. In our big-ticket businesses, positive market conditions have persisted, although more variable than in 2023. Into this market we have proactively, yet selectively, deployed capital and we are managing the various stages of the cycle across different parts of our portfolio. Combining this with continued profit and growth momentum in Retail has resulted in strong profits and an annualised retuon equity of 16.5%.

In the first six months the Group has added $90 million of premiums, with the majority of this ($77 million) coming from growth momentum in Retail. Our focus on profitable growth and underwriting discipline ensured that losses are within our expectations, despite a more active loss environment. The strong profit before tax of $283.5 million, up 7.1% year-on-year, is the combined effect of an insurance service result of $240.7 million, up 8.7%, and an improving investment result of $152.4 million.

In Retail, profitability is robust, with the business achieving an undiscounted combined ratio of 93.8%. The actions we have taken over the last few years are leading to strong growth momentum in US DPD, Europe and the UK. In our target customer segments, new business formation and digital adoption trends remain robust, underpinning significant long-term structural growth opportunities. We continue to invest in our retail capabilities, including improving broker service, to build market share and realise the full growth potential of our business.

As the best property market conditions in a decade have mostly persisted into 2024, we deployed more capital early in the year into our reinsurance business, to lock in advantageous pricing and terms when market conditions were most certain. In our London Market business, we remain disciplined, growing where we see profitable opportunities and continuing to manage the cycle in cyber and D&O.

Our diversified portfolio is well placed to deliver attractive and sustainable returns and growth for the Group through the insurance cycle. In line with our strategy we are continuing to invest in the long-term opportunity in Retail to grow the market and capture share. At the same time, we see opportunities to generate strong returns in our London Market and Re & ILS businesses and, as a result, have put more capital to work.

Our balance sheet remains strong, with the confidence level of our reserves stable at 82% and solid capital generation leading to an estimated Bermuda Solvency Capital Ratio (BSCR) of 206%. Over 85% of the

$150 million share buyback announced in March was completed at the balance sheet date. The Group's capital management approach is to invest in the many attractive growth opportunities available from our diversified business model while maintaining balance sheet strength and efficiency. Following the first six months of the year, I am pleased to announce that the Board has approved an interim dividend of 13.2 cents per share, an increase of 5.6% from last year.

Hiscox Retail3

Hiscox Retail comprises our retail businesses around the world: Hiscox UK, Hiscox Europe, Hiscox USA and DirectAsia. In this segment, our specialist sector and class of business knowledge, ongoing investment in the brand, distribution (including broker relations) and technology reinforce our strong market position in an increasingly digital world.

3K&R business written through Syndicate 33 has been transferred from Hiscox USA to Hiscox London Market. 2023 financials have been restated to report on a consistent basis.

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Retail ICWP of $1,335.3 million (H1 2023: $1,258.3 million) increased by 5.0% in constant currency, as growth returned to the target range. We continue to see strong momentum in Europe and US DPD and a pleasing step up in UK growth momentum. US broker premiums continue to contract due to a combination of both external and internal factors, albeit at a slower pace in the second quarter. We are taking targeted action to reverse this trend and expect to see the benefit in the second half of the year.

Rates in Retail increased 3% across the markets, as inflation moderates.

On an undiscounted basis, Hiscox Retail's combined ratio was 93.8% (H1 2023: 94.0%). This is a 2.6 percentage point improvement on the full year 2023 undiscounted combined ratio of 96.4% and within the target combined ratio range. We have continued to invest in our retail capabilities, including people, marketing and technology to build momentum for growth. Our intention remains to run our Retail business within the 89-94% combined ratio range for the long-term benefit of our shareholders.

Hiscox UK

Hiscox UK provides commercial insurance, locally traded specialty insurance, as well as personal lines cover, including high-value household, fine art and luxury motor.

Hiscox UK ICWP grew 4.3%, on a constant currency basis, to $427.4 million (H1 2023: $399.3 million). The underlying growth, excluding the impact of some non-recurring income in June 2023, was 6.4% in constant currency, which is the highest since 2018 and is more reflective of the current momentum in the UK.

This underlying positive business momentum in the UK is broad based. The UK commercial business is growing well and our art and private client business delivered low double-digit growth, benefitting from favourable market dynamics and the launch of the high-value household product on the e-trade platform.

The first half of the year also marked a significant milestone for Hiscox UK, which now has over half a million customers. Proactive management of distribution and improving broker sentiment have resulted in strong new business flows complemented by high retention rates. The business also signed six new distribution deals, which will help sustain growth momentum going forward.

Our brand campaign continues to attract significant attention and was awarded Gold at both the 2024 Outdoor Media Awards for the 'best multi-format campaign' and the 2024 Creative Circle Awards in the 'best use of outdoor medium' category, beating a number of well-known financial and non-financial brands. Spontaneous brand awareness has improved significantly as a result of the brand campaign and has had a positive impact on our acquisition metrics, with strong double-digit growth in branded search.

Catherine Frost joined our business during the first half as UK Chief Operating Officer, after 22 years at RSA where she was most recently Managing Director for UK Commercial Lines.

Hiscox Europe

Hiscox Europe provides commercial insurance, and personal lines cover, including high-value household, fine art and classic car.

Our European business achieved strong growth of 8.5% in constant currency for the first six months of the year, with ICWP of $400.4 million (H1 2023: $365.6 million). Growth in Europe has been broad based with the strongest momentum in France, our second largest market in Europe, where premiums are growing at a strong double-digit rate. We expect the momentum in Europe to build further in the second half of the year, sustained by continued product and distribution innovation as well as the signing of new distribution deals.

The roll-out of our new core technology continues on schedule, with Germany's commercial business now live and activity focused on Germany's art and private client business and France's commercial business. Hiscox Europe is also progressing with the build of broker and customer portals, across our markets, wrapped around our single core technology, as we are digitalising more and more of our customer and broker interactions. This will support sustained growth and drive greater efficiencies in our European business.

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Hiscox USA3

Hiscox USA focuses on underwriting commercial risks with distribution through brokers, partners and direct-to- consumer using a wide range of trading models - traditional, service centre, portals and application programming interfaces (APIs). Our aspiration is to build America's leading small business insurer.

Hiscox USA's ICWP grew by 2.9% to $476.5 million (H1 2023: $463.1 million) with sustained growth in US DPD and continued but slowing contraction in US broker.

US DPD grew ICWP by 8.8% to $284.2 million (H1 2023: $261.2 million), sustaining the momentum built over 2023. Our US direct business delivered strong double-digit growth boosted by increased investment in marketing spend and strong retention. The first half of the year saw the full digital launch of our workers' compensation partnership, which extends our range of products and brings us a step closer towards meeting the full range of insurance needs of small businesses. In US digital, partnerships growth was more variable, as some established partners' production momentum slowed in the second quarter. This is partially offset by growth from the 29 new partners onboarded over the last 12 months.

US broker ICWP decreased by 4.8% to $192.2 million (H1 2023: $201.9 million). The business is rotating back to growth, having been decisively re-underwritten in 2021 and impacted by challenging conditions in the cyber market. The rate of decrease has slowed in the second quarter to 1.9%, having been 7.5% over the first three months of the year. Growth is now being seen across architects and engineers, terrorism and entertainment, with other lines of business showing improving trends. Nonetheless, we anticipate the US broker business will continue to contract, albeit at a more measured rate, in the second half of the year.

We are excited to welcome Mary Boyd, who has joined Hiscox USA as our new Chief Executive Officer. Mary joins from Plymouth Rock Assurance where she served as CEO of its independent agency business since 2018. She began her career in actuarial roles before moving into leadership positions at The Hartford Insurance Company, ACE, Explorer Insurance, and Chubb. This appointment further underlines our ambition to build America's leading small business insurer and to take the business to scale.

Hiscox Asia

DirectAsia delivered ICWP growth of 3.6% in constant currency to $31.0 million (H1 2023: $30.3 million) with strong double-digit growth in Singapore partially offset by more moderate growth momentum in Thailand. The Group previously announced its agreement to sell DirectAsia to Ignite Thailand Holdings Limited, subject to customary conditions and regulatory approvals. These conditions have not been met within the agreed time period and the agreement to sell has now been terminated. The Group is exploring other options.

Hiscox London Market3

Hiscox London Market uses the global licences, distribution network and credit rating of Lloyd's to insure clients throughout the world.

Hiscox London Market has continued to deliver excellent underwriting results, through diligent risk selection and underwriting, combined with proactive, yet selective, deployment of capital. This has led to strong profits of $108.1 million and an undiscounted combined ratio of 86.9%, despite a more active claims environment.

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ICWP decreased by 2.8% to $648.3 million (H1 2023: $667.1 million) and net ICWP decreased by 3.2% to

$439.1 million (H1 2023: $453.8 million). This is driven by three factors: the decision to non-renew certain large binder deals; our proactive management of the underwriting cycle in casualty lines; and a reduction in space premiums, as there were fewer risks in the market and we took a decision to reduce line size due to heightened recent loss activity. As expected, in the second quarter the business delivered a four percentage point improvement in growth compared to the first quarter of 2024, on a discrete quarterly basis.

Hiscox London Market achieved an average rate increase of 4% during the first half, with cumulative rate increases of 77% since 2018.

Property continues to enjoy a strong rating environment, particularly in property binders and flood. Competition in major property has increased, causing rate to begin to flatten after the strong growth achieved last year. Property premiums grew in the period, although the trend was impacted by strategic non-renewals. The Group utilises its broad market access to deploy capital flexibly across both London Market and Re & ILS, to capture the best opportunities, and we will continue to be agile as the market evolves.

Cycle management activities in cyber and D&O are ongoing, as rates decreased by 9% and 8% respectively. ICWP reduced at a double-digit rate in both of these lines, as we reflect the transitioning markets.

The core marine and upstream energy lines are experiencing an increase in competition, although we continue to see attractive structural growth opportunities in power and renewables and aim to lead more in this space. Upstream construction is also seeing a good flow of new business, where Hiscox is well placed with excellent engineering and underwriting expertise.

Our collaboration with Google Cloud continues in 2024. Our AI solution for terrorism risk is about to be implemented into the live environment following the 2023 proof of concept, which successfully demonstrated that we could reduce the time taken to quote a terrorism risk from three days to three minutes. In parallel, we are extending the core proof of concept capabilities to major property, a more complex class, where we are also aiming to reduce the time to quote. Over time, we aim to roll out AI capabilities to all relevant lines of business to support both our growth and efficiency ambitions.

We continue to proactively pursue new business in our ESG sub-syndicate, Syndicate 3033, and have included liability, D&O, carbon offset and product recall risks for the first time.

The first half of the year saw a number of uncorrelated small- to mid-size loss events across non-casualty divisions of Hiscox London Market. These losses have included the Francis Scott Key Bridge collision near the US Port of Baltimore. Despite this more active loss environment, Hiscox London Market delivered an insurance service result of $74.2 million (H1 2023: $77.8 million) and an undiscounted combined ratio of 86.9% (H1 2023: 83.2%). This marks the fourth consecutive half year of an undiscounted combined ratio in the 80-90% range.

Hiscox Re & ILS

Hiscox Re & ILS comprises the Group's reinsurance businesses in London and Bermuda and insurance-linked securities (ILS) activity written through Hiscox ILS.

Hiscox Re & ILS grew net ICWP by 10.5% to $381.2 million (H1 2023: $345.1 million) as the business deployed additional capital early to successfully capture the attractive market conditions. ICWP grew by 3.9% to $829.3 million in the first half (H1 2023: $797.9 million), with a majority of the growth achieved during the January renewals when market conditions were most attractive. The overall growth rate has reduced at subsequent renewal periods, as additional quota share capacity and own capital deployed were offset by a reduction in ILS capital.

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The market has remained disciplined at mid-year renewals, with attachment points and terms and conditions broadly holding firm. While market capacity has increased, this has been largely offset by growth in demand from cedants. As anticipated, there have been some rate reductions in the upper layers of structures and on higher-quality business, however, these were from generationally high levels. Overall, rate is flat for the first six months of the year with the market remaining attractive, after cumulative rate increases of 90% since 2018.

As a result of gross capital inflows of $300 million into our side car and ILS funds from a number of new and existing investors in the first six months of the year, Hiscox ILS assets under management were $1.7 billion as at

30 June 2024 (31 December 2023: $1.8 billion). Following a planned retuof capital to investors, these reduced to $1.4 billion at 1 July 2024. The third-party capital strategy we have executed in Re & ILS over many years adds scale to the business, enabling more meaningful relationships with our cedants, and allowing Hiscox to manage net retentions within volatility parameters consistent with our ambitions, and also creates a fee-based income stream for risk origination and subsequent profit commissions. In the first six months of this year, fee income increased by 57.7% to $44.3 million (H1 2023: $28.1 million) due to a rise in performance fees reflecting underwriting performance.

Hiscox Re & ILS delivered a strong insurance service result of $43.5 million (H1 2023: $32.7 million) at an

undiscounted combined ratio of 77.3% (H1 2023: 81.2%), and an excellent profit before tax of $86.5 million

(H1 2023: $55.1 million). Due to the seasonal nature of the risks underwritten by Hiscox Re & ILS, the majority of premium is earned in the second half of the year.

Claims

The first half saw several natural catastrophe loss events occur around the world, including flooding in Dubai and Germany, an earthquake in Taiwan and severe convective storms in the USA. The total net loss reserved for these events for the Group is in line with our expectations.

The Group reserved $28 million net for the events relating to the MV Dali collision with the Francis Scott Key Bridge in Baltimore, causing the bridge to collapse and a number of tragic fatalities. The majority of this loss has been recognised within Hiscox London Market, with the remainder booked in Hiscox Re & ILS. Additionally, there have been a number of uncorrelated, small- to mid-sizeman-made losses within Hiscox London Market impacting the crisis management and marine, energy and specialty divisions.

The Group loss experience has been within our expectations.

Strong foundations

Reserves

As at 30 June 2024, the Group's net reserves are at the 82% confidence level (FY 2023: 83%, HY 2023: 77%) in line with our conservative reserving philosophy, with the risk adjustment above the best estimate of $262.0 million4 (FY 2023: $272.9 million, HY 2023: $211.1 million).

Net reserve releases of $50.8 million demonstrate the effectiveness of our reserving philosophy, which is evident in the consistently positive reserve development we have reported over many years.

Over recent years we have been proactive in executing legacy portfolio transactions (LPTs) to protect certain lines of business, in particular those lines we have exited. These LPTs continue to provide protection, covering 31% of Group gross reserves and 42% of casualty gross reserves for 2019 and prior years from inflationary and other pressures. We will continue to periodically pursue similar transactions to manage volatility and optimise capital.

Capital

The Group remains strongly capitalised from both a regulatory and a ratings agency perspective. Capital generation has been strong in the first half, lifting the estimated Group BSCR ratio to 206% at 30 June 2024 after payment of the final dividend and with over 85% of the share buyback completed at the balance sheet date. The BSCR ratio excludes any benefit from the $150 million Bermuda deferred tax asset, consistent with our year-end quoted figure.

4Allows for the reclassification of LPT recoveries into claims.

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Having considered the capital requirements of the business, the Board has approved the payment of an interim dividend of 13.2 cents per share, an increase of 5.6%. The record date for the dividend will be 16 August 2024 and the payment date will be 24 September 2024. The Board proposes to offer a Scrip alternative, subject to the terms and conditions of the Group's 2022 Scrip Dividend Scheme. The last date for receipt of Scrip elections will be

2 September 2024 and the reference price will be announced on 10 September 2024. Further details on the dividend election process and Scrip alternative can be found on the investor relations section of our corporate website, www.hiscoxgroup.com.

Liquidity

The Group, at the holding company level, continues to retain a significant level of liquidity with fungible assets in excess of $1 billion, comprised of liquid assets and undrawn borrowing facilities. The leverage position as at 30 June 2024 for the Group is 16.4%5, comfortably within the range that the Group chooses to operate in.

Investments

The investment result for the first six months of 2024 was $152.4 million (H1 2023: $121.8 million), or a

retuof 1.9% year to date (H1 2023: 1.7%) as the interest and coupons from cash, debt and fixed income portfolios increased by 48% year-on-year6. Assets under management at 30 June 2024 were $8.0 billion (FY 2023: $8.0 billion).

Bond markets continued to fluctuate on statements from central banks as they assess the inflation outlook. Although the inflationary trend was down, pricing pressures did not ease as quickly as expected. While the European Central Bank and Bank of Canada did cut rates, other central banks did not, with expectations for policy changes pushed further into the second half of the year. Market yields remaining at current levels is favourable for our portfolio reinvestment, despite being a mark-to-market headwind in the short term. The reinvestment yield on the bond portfolio was 5.2% at 30 June 2024, up from 5.1% at year-end, with a book yield of 4.8%. Duration is now 1.9 years.

We continue to look to incrementally improve long-term risk and capital-adjusted outcomes through diversification.

Outlook

Our priority remains profitable growth delivered through disciplined underwriting and proactive capital allocation across our divisions. We will continue to invest capital and drive growth where we believe the returns are attractive and will step away from the business which in our view is not rate adequate. The Group's diversified business portfolio is well positioned to deliver high-quality earnings in 2024 and over the long term.

In Retail, we expect growth momentum to continue to build gradually in the second half as management initiatives take effect and we capture more of the structural growth opportunity, although growth momentum is not expected to be linear. In our London Market business, moderate growth is expected to retuin the second half, as we write more business to replace non-renewed binders. In Re & ILS, we wrote over three-quarters of this year's reinsurance premiums in the first half, with a greater share of these premiums to be earned in the second half in line with the risk profile of the business. For the full year we expect to continue to see strong net growth in line with the first half, which will exceed top-line growth as we continue to anticipate ILS fund outflows. We face into the US wind season well capitalised and with a high-quality portfolio written at attractive rates.

Our portfolio of businesses and our talented and ambitious teams position us well to continue delivering high-quality disciplined growth and earnings.

Aki Hussain

Group Chief Executive Officer

7 August 2024

5Leverage defined as borrowings over borrowings and shareholder equity. 6Net of fees.

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Condensed consolidated interim income statement

For the six month period ended 30 June 2024

The notes to the condensed consolidated interim financial statements are an integral part of this document.

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Condensed consolidated interim statement of comprehensive income

For the six month period ended 30 June 2024

The notes to the condensed consolidated interim financial statements are an integral part of this document.

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