Hiscox Ltd Change in presentation currency

Transcription

1 Ltd Change in presentation currency In November 2017 the Group announced the functional currency of Syndicate 33, Dedicated Member Limited, Syndicate Limited and Capital Ltd, and the presentation currency of the Group would change from Sterling to US Dollars effective 1 January The change in functional currency will significantly reduce the volatility of the Group s earnings due to foreign exchange movements, in particular due to translation of foreign currency balances. Given that a significant majority of Group earnings are denominated in US Dollars, we believe that the presentation currency change will give investors and other stakeholders a clearer understanding of s performance over time. To assist investors, the financial information for the full year and interim results of 2017 and the full year results of 2016 is re-presented in US Dollars below. Basis of preparation In accordance with the guidance defined in IAS 21 The Effects of Changes in Foreign Exchange Rates, for the full year and interim results of 2017 and the full year results of 2016 have been re-translated to US Dollars as follows: Assets and liabilities were translated into US Dollars at closing rates of exchange. Trading results were translated into US Dollars at average rates of exchange for the period. Differences resulting from the re-translation on the opening net assets and the results for the year have been taken to the foreign currency translation reserve (FCTR); The cumulative translation reserve was set to nil at 1 January 2004 (i.e. the transition date to IFRS). Share capital, share premiums and other reserves were translated at historic rates prevailing at the dates of transactions; and All exchange rates used were extracted from the Group s underlying financial records. The exchange rates used were as follows: GBP/USD FY2017 HY2017 FY2016 Closing rate Average rate

2 Consolidated income statement Year to 31 Dec 2017 Six months to 30 June 2017 Year to 31 Dec 2016 Income Gross premiums written 3,286,021 1,836,178 3,257,897 Outward premiums (883,022) (561,138) (833,447) Net premiums written 2,402,999 1,275,040 2,424,450 Gross premiums earned 3,295,965 1,564,717 3,011,475 Premiums ceded to reinsurers (879,757) (386,434) (740,159) Net premiums earned 2,416,208 1,178,283 2,271,316 Investment result 104,750 58,533 95,774 Other income 54,079 27,618 50,980 income 2,575,037 1,264,434 2,418,070 Expenses Claims and claim adjustment expenses, net of (1,310,916) (557,556) (1,003,132) (805,022) (376,233) (730,148) Reinsurance commission income 217, , ,418 Operational expenses (528,973) (253,851) (557,801) Net foreign exchange (losses)/gains (80,890) (38,836) 206,665 expenses (2,508,709) (1,122,663) (1,909,998) Results of operating activities 66, , ,072 Finance costs (26,895) (12,432) (27,481) Share of profit /(loss) of associates 259 (240) 182 Profit before tax 39, , ,773 Tax expense (5,788) (5,933) (23,806) Profit for the period (all attributable to owners of the Company) 33, , ,967 2

3 Consolidated balance sheet Assets 31 Dec June Dec 2016 Goodwill and intangible assets 186, , ,418 Property, plant and equipment 65,628 60,919 60,047 Investments in associates 10,723 10,332 17,155 Assets held for sale - 7,271 - Deferred tax 53,462 51,225 51,326 Deferred acquisition costs 446, , ,777 Financial assets carried at fair value 5,139,643 4,796,919 4,702,121 Reinsurance assets 1,833,255 1,203, ,005 Loans and receivables including insurance receivables 1,121,452 1,259, ,592 Current tax 5,716 7,517 2,985 Cash and cash equivalents 867,767 1,001, ,373 assets 9,729,813 9,061,987 8,235,799 Equity and liabilities Shareholders equity Share capital 33,913 33,858 33,806 Share premium 45,849 40,448 34,031 Contributed surplus 183, , ,969 Currency translation reserve (310,582) (357,624) (437,569) Retained earnings 2,414,158 2,514,771 2,439,509 Equity attributable to owners of the Company 2,367,307 2,415,422 2,253,746 Non-controlling interest 1,074 1,074 1,074 equity 2,368,381 2,416,496 2,254,820 Employee retirement benefit obligations 64,114 72,981 69,612 Deferred tax - 9,798 21,116 Insurance liabilities 6,007,750 5,266,834 4,777,693 Financial liabilities 391, , ,604 Current tax 9,456 13,402 26,952 Trade and other payables 889, , ,002 liabilities 7,361,432 6,645,491 5,980,979 equity and liabilities 9,729,813 9,061,987 8,235,799 3

4 Operating segments Year to 31 December 2017 Gross premiums written 1,835, , ,800-3,286,021 Net premiums written 1,674, , ,816-2,402,999 Net premiums earned 1,585, , ,347-2,416,208 Investment result 29,361 14,509 27,942 32, ,750 Other income 35,351 13,908 4, ,079 income 1,650, , ,639 33,408 2,575,037 (721,851) (400,229) (188,836) - (1,310,916) (401,070) (159,823) (27,037) - (587,930) Operational expenses (384,685) (61,469) (53,294) (29,525) (528,973) Foreign exchange losses (530) (15,174) (5,253) (59,933) (80,890) expenses (1,508,136) (636,695) (274,420) (89,458) (2,508,709) Results of operating activities 141,865 (46,706) 27,219 (56,050) 66,328 Finance costs (10) - (1,716) (25,169) (26,895) Share of (loss)/profit of associates (247) Profit/(loss) before tax 141,608 (46,706) 25,503 (80,713) 39,692 Profit/(loss) before tax and foreign exchange 142,138 (31,532) 30,756 (20,780) 120, % ratio analysis Claims ratio % Expense ratio % Combined ratio excluding foreign exchange % Foreign exchange impact % Combined ratio % Year to 31 December % ownership Net premiums earned 1,622, , ,205-2,640,035 (734,160) (493,201) (222,953) - (1,450,314) (413,145) (197,629) (28,488) - (639,262) Operational expenses (386,080) (73,882) (59,264) - (519,226) Foreign exchange losses (1,120) (20,531) (7,535) - (29,186) 4

5 Six months to 30 June 2017 Gross premiums written 930, , ,049-1,836,178 Net premiums written 857, , ,193-1,275,040 Net premiums earned 757, , ,935-1,178,283 Investment result 14,711 9,958 16,331 17,533 58,533 Other income 11,541 7,623 8, ,618 income 784, , ,585 17,668 1,264,434 Claims and claims adjustment expenses, net of (328,896) (155,232) (73,428) - (557,556) (180,926) (85,228) (6,266) - (272,420) Operational expenses (184,173) (34,588) (25,253) (9,837) (253,851) Foreign exchange gains/(losses) 2,497 (10,375) (1,852) (29,106) (38,836) expenses (691,498) (285,423) (106,799) (38,943) (1,122,663) Results of operating activities 92,563 21,697 48,786 (21,275) 141,771 Finance costs (5) - (777) (11,650) (12,432) Share of (loss)/profit of associates (248) (240) Profit/(loss) before tax 92,310 21,697 48,009 (32,917) 129,099 Profit/(loss) before tax and foreign exchange 89,813 32,072 49,861 (3,811) 167, % ratio analysis Claims ratio % Expense ratio % Combined ratio excluding foreign exchange % Foreign exchange impact % Combined ratio % Six months to 30 June % ownership Net premiums earned 776, , ,091-1,285,739 Claims and claims adjustment expenses, net of (334,322) (181,626) (87,225) - (603,173) (185,268) (104,701) (5,409) - (295,378) Operational expenses (185,240) (41,065) (28,421) - (254,726) Foreign exchange gains/(losses) 2,273 (13,736) (3,322) - (14,785) 5

6 Year to 31 December 2016 Gross premiums written 1,601, , ,423-3,257,897 Net premiums written 1,480, , ,583-2,424,450 Net premiums earned 1,383, , ,595-2,271,316 Investment result 41,208 16,664 13,639 24,263 95,774 Other income 19,088 12,368 18, ,980 income 1,444, , ,817 25,204 2,418,070 (537,163) (353,195) (112,774) - (1,003,132) (356,003) (186,007) (13,720) - (555,730) Operational expenses (388,771) (77,117) (64,605) (27,308) (557,801) Foreign exchange gains 50,508 47,448 31,132 77, ,665 expenses (1,231,429) (568,871) (159,967) 50,269 (1,909,998) Results of operating activities 212,705 61, ,850 75, ,072 Finance costs - - (2,243) (25,238) (27,481) Share of profit/(loss) of associates 1,542 (1,360) Profit before tax 214,247 59, ,607 50, ,773 Profit before tax and foreign exchange 163,739 12, ,475 (27,342) 274, % ratio analysis Claims ratio % Expense ratio % Combined ratio excluding foreign exchange % Foreign exchange impact % Combined ratio % Year to 31 December % ownership Net premiums earned 1,419, , ,778-2,494,401 (545,801) (428,430) (128,575) - (1,102,806) (367,457) (223,918) (14,017) - (605,392) Operational expenses (390,581) (89,358) (70,695) - (550,634) Foreign exchange gains 54,396 65,225 39, ,846 6

7 Sensitivity analysis The following sensitivity analysis is based on a 10% strengthening or weakening of Sterling against the US Dollar. This analysis assumes that all other variables, in particular interest rates, remain constant and that the underlying valuation of assets and liabilities in their base currency is unchanged. Effect on profit before tax ($m) As at 31 December 2017 New basis Old basis 10% strengthening of US Dollar (21.0) % weakening of US Dollar 17.2 (98.7) For further information Ltd Marc Wetherhill, Group Company Secretary, Bermuda Ryan Thompson, Investor Relations, +44 (0) Notes to editors About The Group is a global specialist insurer, headquartered in Bermuda and listed on the Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle. It s a long-standing strategy which in 2017 saw the business deliver a profit before tax (excluding foreign exchange) of 93.6 million despite reserving net $225 million for claims in the most costly year ever for natural catastrophes. The Group employs over 2,700 people in 14 countries, and has customers worldwide. Through the retail businesses in the UK, Europe, Asia and the US, we offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and is underwritten through and. Our values define our business, with a focus on people, quality, courage and excellence in execution. We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit 7