2022 Interim Statement – ​​InsuranceNewsNet

We have a conservative approach to booking and are slow to release good news in our long-tail health insurance lines. We have various inflation items loaded into our

the loss ratio is already taken, our case reserves are defined

and revised in light of the current inflationary outlook, and we added another $55 million precautionary net inflationary charge to our best estimate in the first half. At group level, we hold a margin of 11.0% above an already conservative best estimate, and we have completed four LPTs in the past two years, protecting 20% ​​of 2019 gross reserves and previous years against inflationary pressures.

From a new business perspective, we are mitigating inflationary pressures through a combination of exposure indexing, leading to higher premiums and continued rate increases. Our current pricing and provisioning assumptions incorporate expected inflation which is a multiple of recent experience; it is also significantly above our actual loss experience. Therefore, the premium increase we are getting across the group is keeping pace

or beyond our current claims inflation assumptions.

Hiscox Retail

Hiscox Retail includes our retail operations worldwide: Hiscox UKHiscox Europe, United States and Hiscox Asia. In this segment, our specialist knowledge, technical capabilities and retail products differentiate us, and our continued investments in branding, distribution and technology help reinforce our strong market position in an increasingly digital.

Personal gross premiums written increased by 1.5% for $1,235.2 million (H1 2021: $1,216.4 million), i.e. 5.9% at constant exchange rates. We have now completed the repositioning of our portfolio in the US broker channel, which continued to have a dampening effect on retail growth in the first half. Excluding this, retail business activity accelerated to 8.5% at constant exchange rates,

compared to 6.4% during the previous period.

4Hiscox AG Provisional statement 2022

Hiscox Retail achieved a combined ratio of 95.5%, showing good progress towards the 90% to 95% range

  • the target we had set ourselves to achieve in 2023. Since 2019, when this target was set, we have exited business portfolios that did not meet our profitability criteria; In the meantime, we have expanded in attractive areas, raising rates and improving terms and conditions, standardizing policy wordings and implementing cost efficiency in claims handling.

United States

United States focuses on underwriting small commercial risks with distribution through brokers, partners and directly to the consumer using a wide range of trading models

  • platforms, service desks, portals and application programming interfaces (APIs). Our aspiration is to build America’s premier insurer for small businesses.

Hiscox USA gross written premiums increased by 1.2% for $464.9 million (H1 2021: $459.3 million), with double-digit growth in the DPD division offsetting the impact of the final phase of planned reductions in retail brokerage lines to reshape this business towards the profitable small business segment. Taking the latter into account, future activity in the United States was up 7.8% year-over-year.

The US broker channel re-subscription program was completed in the first half of the year. In total, since 2019, we have released approximately $160 million turnover, including the non-renewal of business with customers whose turnover exceeds $100 million and through portfolio remediation in D&O and media. Throughout this period, we have also driven substantial rate increases in the broker portfolio, achieving cumulative rate growth of over 34% since 2019.

The company is now beginning to see the benefits of the steps taken in previous years to improve the profitability and operational efficiency of the claims function in the United States. Improved internal capabilities translate into significant efficiency, as average claims processing

field service costs were down 40% year over year. Overall, we are now better equipped to support a growing high-volume business and have focused on getting the US broker sales team back into growth mode.

In a context of strong demand for our product, our DPD business in the United States increased its gross written premiums by 10.1% to $242.0 million. As previously stated, to maintain the high standards of service to our customers and reduce the complexity of the technology transition, we have temporarily disabled certain new business opportunities and suspended onboarding new partners, which has

a temporary moderating effect on growth for 2022.

The technology overhaul is a major undertaking involving the migration of over 150 channel partners and over 500,000 customers. In June, we reached an important milestone with the launch of our new direct-to-consumer online portal in all 50 states. In Q3, we will begin migrating Partner Portals and then APIs, with this process expected to be materially completed by the end of it.

of the year.

Once fully operational, the new platform will be able to support an improved revenue growth trajectory from 2023 through an improved customer experience and significantly reduced quote time. We have a healthy pipeline of partners who want to integrate with the new platform once live to take full advantage of the improved connectivity and functionality. Operational savings will be achieved by automating previously manual tasks.

Due to the deactivation of some new business opportunities and the suspension of new partner onboarding, we now expect gross written premiums from DPD in the US to grow in the middle of our stated range of 5% to 15% for retail for the full year 2022. The majority of the impact of partner migration will be felt in the third quarter, with growth accelerating in the fourth quarter. We expect the DPD business to return to growth rates above 15% in 2023.

The opportunity for our DPD business in the US remains strong, the market is large, fragmented and continues to grow, with new business creation still significantly above pre-Covid-19 levels . We anticipate that the commercial digitization of small business insurance will only continue to gain momentum. In the construction

To complete the platform redesign, targeted marketing campaigns will resume in Q3 to deliver the highest growth rate through 2023.

In June, Steve Primas joined our highly experienced US team as Chief Underwriting Officer of United States. With over 25 years of specialty insurance experience, Steve brings an exceptional breadth and depth of knowledge in the areas of financial and professional insurance,

as well as an inherent understanding of the small and medium business market and insurance technology landscape.

Hiscox UK

Hiscox UK provides commercial insurance for small and medium-sized businesses as well as insurance for individuals, including high-value household, fine art and luxury automobile.

Hiscox UK premiums increased by 4.6% at constant exchange rates, but decreased by 1.2% in US dollars at $406.2 million (H1 2021: $411.2 million). The Enterprise business continued to show strong growth, recording 9.0% at constant exchange rates, supported by favorable rate winds and excellent retention rates above 85%. This was partially offset by our decision not to renew certain higher commission business in our portfolio of artistic and private clients as returns were expected to fall below an acceptable threshold.

Hiscox UK benefited from good growth in protection lines, after recovering well from the pandemic, as well as strong rate increases in technology, commercial real estate and professional indemnity.

Source: United States Census Bureauupdated June 16, 2022.

Hiscox AG Provisional statement 2022