Interim Statement 2023

CEO's statement

Our business has delivered growth in revenues and profits in every business unit, as our proactive and disciplined underwriting and favourable market conditions come together. Our portfolio of businesses, our people and innovation to meet the changing needs of our customers position us well to continue delivering high-quality growth and earnings.

Hiscox Retail

*As restated under IFRS 17.

The Group delivered continued growth and strong profits in the first six months of the year, as we benefitted from sustained momentum across our Retail businesses, a proactive approach to (re)insurance cycle management in big-ticket, continued underwriting discipline, and

a positive rating environment that persists across all business segments. Losses were within our expectations and we deployed incremental capital judiciously where we saw attractive opportunities. Profit before tax of $264.8 million is a combined effect of the insurance service result of $221.4 million, up 57.9% on the

prior period, and the improved investment result

of $121.8 million, as higher bond reinvestment yields begin to eathrough.

I am pleased with the progress we have made this year in maximising the strength of our portfolio of businesses. All of our three business segments have delivered strong growth and earnings and are well positioned to continue to do so, as we face into favourable market and societal trends. Our diverse business portfolio enables Hiscox to operate in a number of different parts of the specialist insurance sector, allocating capital with agility to areas of expertise which offer the highest risk-adjusted returns. This has enabled us to deliver a half-year annualised RoE of 19.9%.

Group net ICWP increased by an impressive 11.4% in constant currency to $1,945.6 million (H1 2022: $1,784.5 million). Our reinsurance business is leaning into the hard market in a focused way and enjoying some of the best market conditions in over a decade. Our London Market business has returned to growth, as we believe the property book is priced adequately following significant re-rating and we are benefitting from attractive new growth opportunities in upstream energy, marine and renewables. In Retail, the opportunity remains significant, particularly in the USA, as the digitalisation of small businesses continues to accelerate and new business formation levels remain strong.

2Hiscox Ltd Interim Statement 2023

With a focus on quality growth, we have maintained our commitment to disciplined underwriting. For example, in Retail, where we have faced downward pressure on rates in certain segments of our cyber portfolio, we have remained disciplined and accepted a decline in share to maintain quality of earnings. As previously disclosed, we have also been exiting some non-core underwriting partnerships in the UK which are outside of our risk appetite. These two factors, which we consider to be transitory, have tempered headline growth in order to maintain quality of earnings. The strength and diversity in our Retail business means that the underlying growth1 in Retail is 7.3% in constant currency.

One of our current priorities is to continue our investment in technology and expand our distribution capabilities. We are making material progress that positions Hiscox to achieve sustained long-term growth. Our technology investment in the USA is beginning to drive benefits, with digital direct now achieving double-digit growth and digital partnerships gaining momentum in the second quarter. Our core system implementation in Europe is also going well and we anticipate operational benefits as the programme proceeds.

We continue to expand our product and distribution capabilities with solid progress in our e-broker extranet roll-out in the UK and, in an exciting step in the USA, we have agreed a new partnership with a multi-line US insurer to distribute workers' compensation, thereby materially increasing our reach and relevance in our target addressable market whilst also creating a new fee income stream. In London Market the ESG sub-syndicate is now operational and we have begun writing incremental new business.

Rates

The rating environment has been favourable in aggregate across all Hiscox businesses, and in particular in property lines, which continued to experience hard market conditions in both reinsurance and primary lines.

1Excludes Retail cyber and UK underwriting partnerships.

Hiscox Re & ILS benefitted from an average rate increase of 34%, with positive trends experienced in all lines

of business - most notably in North American natural catastrophe (up 43%) and retrocession (up 42%). This is the sixth successive year of rate improvement in Hiscox Re & ILS with cumulative rate increases of 95% since 2018. Cyber reinsurance continues to benefit from notable rate increases (25% at half year), and our terror business saw rates increase by 31%. Importantly, in these hard market conditions we have improved the quality of our book by significantly removing aggregate contracts and moving to higher attachment points.

Hiscox London Market achieved a 9% rate increase in the first half of 2023, with an overall 72% cumulative rate increase since 2018. Property lines are seeing the strongest increases, with 27% in household and 23% in major property, and we see the potential for further rate hardening through the rest of the year. Terrorism rates are up 15%, as expected, driven by geopolitical uncertainty, which allowed us to maintain top-line premiums while reducing exposure, thus further increasing the overall profitability of the portfolio. In contrast, casualty lines, in particular D&O and cyber, continue to see rate decreases. Overall, we expect London Market rates to continue their current trajectory for the remainder of 2023.

Hiscox Retail benefitted from an average rate increase of 6% in the first half of 2023 with rates remaining in aggregate positive across all markets.

Claims

While there were tragically several natural catastrophes during the first half, including New Zealand floods, Syria/Turkey earthquake, winter storm Elliot and cyclone Gabrielle, as well as other non-natural catastrophe events, the total estimated net losses are within our modelled expectations. In addition, our net loss reserved for the Russia/Ukraine conflict remains unchanged. Large and attritional losses across the Group are within our expectations.

While inflationary pressures continue to persist across our markets, the impact on our business is relatively contained due to the short-tail nature of our book, with the average duration of our liabilities at 1.9 years.

The Group has a conservative reserving philosophy and continuously evaluates reserve adequacy to ensure we maintain a robust balance sheet position, with net reserves at the 77% confidence level (FY 2022: 78%) and a risk adjustment above best estimate of $211.12 million (FY 2022: $217.6 million). The Group's legacy portfolio transactions (LPTs) continue to provide protection of 25% for 2019 and prior-year gross reserves from inflationary pressures up to a 1-in-200 downside risk. The favourable prior-periodrun-off is reflected in reserve releases of $61.7 million, broadly in line with prior year.

With regards to the new business we are writing, we mitigate inflationary pressures through a combination of exposure indexation and rate increases. The inflation assumptions included in our pricing and reserving models across the Group remain robust. The increased premiums being collected through rate and indexation are keeping pace with our view of expected inflation.

Hiscox Retail

Hiscox Retail comprises our retail businesses around the world: Hiscox UK, Hiscox Europe, Hiscox USA and DirectAsia. In this segment, our specialist knowledge and ongoing investment in the brand, distribution and technology reinforce our strong market position in an increasingly digital world.

Retail ICWP of $1,271.0 million (H1 2022: $1,237.7 million) increased by 5.5% in constant currency.

We continue to achieve strong top-line growth in Europe, improving momentum in the UK and acceleration in US DPD. Overall retail growth was tempered by the business

2Allows for the reclassification of LPT recoveries into claims.

maintaining discipline in the face of increased competition and reducing prices in the cyber product line, particularly prevalent in the USA. While not significant in absolute terms for the Retail division, it has impacted growth by 0.8 percentage points as we experience a reduction in cyber new business and retention. As previously reported, in the UK we have been exiting some non-core underwriting partnerships business which are outside our risk appetite, impacting top line by 1.0 percentage points. Excluding these two temporary factors, Retail growth continues

to deliver in line with expectations. Looking forward, taking into account these factors, we expect the full year headline growth to be in line with the half-year trend.

On an undiscounted basis, Hiscox Retail's combined ratio is 93.8%. Under IFRS 4, the Group had a Retail combined ratio operating range of 90% to 95% in normal circumstances, equivalent to 89%-94% under IFRS 17

of this course correction to continue to moderate into the fourth quarter. The core portfolio continues to grow well.

To reinforce the strength of our brand and support the acquisition marketing engine in the UK, we are increasing our investment in brand advertising for the second half of the year. Our new brand campaign will run nationally from September and will target primarily small business and APC customers.

Our e-trade extranet has been live since the start of the year and now has over 200 brokers. During the second quarter, we have continued to improve the core platform capability with ongoing builds of specialty product extranets, a high net worth product build, and we are in the early stages of developing the technology for our schemes business.

US DPD is accelerating growth in line with expectations following the technology re-platforming, with growth accelerating in the second quarter to 8.9% from 6.8% in the first quarter with overall growth for the first six months of the year at 7.8%."

on an undiscounted basis. Our first half result is within the range on both bases.

The IFRS 17 accounting standard introduces discounting of liabilities, which results in greater volatility in the combined ratio purely due to external macro-economic factors with potential off-setting elements captured outside the combined ratio, therefore reducing its usefulness as a measure of underwriting profits. We will report the combined ratio on an undiscounted basis, which we believe is a useful measure of underwriting profits, and improves comparability period on period. Considering the definitional changes, the new standard requires reclassification of some expenses, primarily related to brand and some other overheads, as non-attributable, which results in a permanent definitional benefit to the Retail combined ratio. This is partially offset by the negative impact from moving to the own share presentation, thus resulting in an overall small net benefit leading to the restated operating range. For clarity, there is no change to the economics of our business.

Hiscox UK

Hiscox UK provides commercial insurance for small and medium-sized businesses, as well as personal lines cover, including high-value household, fine art and luxury motor.

Hiscox UK ICWP grew by 4.0% on a constant currency basis. In US Dollars this reduced by 1.7% to $399.3 million (H1 2022: $406.4 million). The business delivered solid growth in commercial lines, with commercial property, general liability and emerging professions showing sustained momentum. Pleasingly, the art and private client (APC) book has seen growth momentum in the first half of 2023, as we continue to sharpen the focus

of the book on our target high net worth segment.

The previously reported course correction to reduce exposure to some non-core delegated authority partnerships had a 2.6 percentage points impact on growth in the first half of 2023. We expect the impact

Earlier this year Hiscox UK launched its Underwriting Academy, the latest incarnation of the long tradition we have of investing in talent across our underwriting ecosystem to ensure we are training, developing and growing top-tier capabilities in this area.

Hiscox Europe

Hiscox Europe provides both personal lines cover, including high-value household, fine art and classic car, and commercial insurance for small- and medium-sized businesses.

Our European business has again delivered excellent growth, with ICWP of $365.6 million

(H1 2022: $339.3 million) up 11.2% in constant currency, or 7.8% in US Dollars. France, Benelux and Iberia grew particularly well in the first half of the year.

France, Europe's second largest market, continues to demonstrate strong top-line growth of 16.8% in constant currency, benefitting from proactive management actions in the prior years which laid the groundwork for profitable growth. In Germany, we continue to see good growth of 8.0% in constant currency. Throughout the Group there is a strong culture of being attentive to customer needs and innovating to meet these needs as they evolve. In response to newly passed legislation, Hiscox Germany has developed and launched a new whistle blower assistance programme for small businesses that

are unable to offer this function in-house.

We continue to make significant progress in the technology re-platforming programme in Europe, with its phased roll-out across our European markets progressing as planned.

Hiscox USA

Hiscox USA focuses on underwriting small 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 2.0% to $475.8 million

(H1 2022: $466.3 million). US DPD is accelerating growth in line with expectations following the technology re-platforming, with growth accelerating in the second quarter to 8.9% from 6.8% in the first quarter with overall growth for the first six months of the year at 7.8%.

The Direct business has now been live on the new technology for 12 months, delivering a positive and accelerating growth trend. Direct ICWP growth rate has improved reaching double digits, underpinned by particularly strong momentum in new business, where the top line grew in excess of 30%, supported by increasing marketing expenditure.

As anticipated, the embedding of the new technology in our partnerships business slowed growth in the first quarter of the year; this has now begun to recover from its low point over the past three months, albeit at a moderate pace. To accelerate technology adoption and new business generation among the established partners, we have ongoing tailored partner engagement and introduced temporary financial incentives. Since the start of the year, we have added 17 new portal partners to our digital platform and have a healthy pipeline of further opportunities. We also continue to refine our internal onboarding processes to find ways to accelerate the timeline from sign-up to production.

A key part of building America's leading small business insurer is to increasingly become the destination brand for a wider breadth of insurance customer needs in our DPD business - whether we underwrite those ourselves or partner with others where we do not take insurance risk onto our own balance sheet. A prerequisite to being able to attract high-quality partners is to have the gravitational pull of a substantial customer base - with customer numbers now well in excess of 500,000 we have reached

a tipping point. In June, we launched a workers' compensation product in partnership with a multi-line US insurer. This is a balance sheet 'lite' approach, with Hiscox taking no underwriting risk and, instead, generating fee income.

The addition of this product from a high-quality partner enables Hiscox to reach a greater proportion of the target market, it increases our potential share of wallet from existing customers through cross-selling opportunities and introduces a new non-insurance fee income stream. At present the product has been soft launched (available through the Hiscox call centre) with the full launch due in the next six months; this will include integration into the Hiscox digital shop front and straight-through processing to our partner, providing a more efficient and seamless customer experience.

Our confidence in the value of the new platform is increasing, as the Direct business is showing sustained positive momentum, although embedding of the partnerships business will take longer as discussed in March. The combination of continued acceleration in the digital direct business and improving momentum in digital partnerships is expected to drive US DPD growth towards the middle of the 5% to 15% range in 2023.

Growth in the US broker business has been tempered by the business maintaining discipline in the face of increased competition and reducing prices in the cyber product line, as a result US broker revenue has reduced by 4.2%.

Hiscox Asia

DirectAsia delivered insurance contract written premiums growth of 16.1% in constant currency to $30.3 million (H1 2022: $25.7 million). This was driven by a good performance in both Singapore and Thailand, where both markets benefitted from an increase in both partnership and travel insurance business, and a strong renewal performance.