Hiscox Ltd Report and Accounts 2020 Ownership Passionate, commercial and accountable. Ownership means making it your business.. Why ownership is so important to us Taking ownership means making it your business. It means being passionate, curious and restless, always looking for a better way of doing things. We strive to be the kind of people who take responsibility, are ambitious, accountable, pragmatic, tenacious and proudly high-achieving. In a growing business like ours, taking initiative is something we expect of everyone, regardless of their role. It shows itself in a willingness to speak up, to confront problems, to avoid easy excuses, and to embrace hard work. These are qualities we have always valued and nurtured. But in 2020, Covid-19 meant that instinct to step up and take ownership was more vital than ever before. It is in difficult times that our values are tested, but it is also in difficult times that they prove the greatest guide. Throughout this report, you will find some examples of how we showed ownership in 2020. Hiscox is a diversified international insurance group with a powerful brand, strong balance sheet and plenty of room to grow. We are headquartered in Bermuda, listed on the London Stock Exchange, and currently have over 3,000 staff across 14 countries and 35 offices. Our products and services reach every continent, and we are one of the only insurers to offer everything from small business and home insurance to reinsurance and insurance-linked securities. Chapter 1: Chapter 2: Chapter 3: Chapter 4: A balanced business A closer look Governance Remuneration 1 2 3 4 3 Showing ownership 17 Owning our understanding 51 Owning the Hiscox view 75 Taking ownership of in claims of the cyber risk of risk employee well-being 4 Our key performance 18 Chairman’s statement 52 Board of Directors 76 Letter from the Chair of the indicators (KPIs) 21 Chief Executive’s report 54 Senior management Remuneration Committee 6 Our response to Covid-19 34 Capital 56 Chairman’s letter 78 Remuneration summary 8 Our purpose, values, culture 36 Risk management to shareholders 80 Annual report on and vision 40 Stakeholder engagement 57 Corporate governance remuneration 2020 10 Our strategy and 42 Environmental, social and 63 Compliance with the UK 88 Implementation of how we operate governance (ESG) Corporate Governance remuneration policy 12 Key risks and business Code 2018 for 2021 priorities 68 Nominations and Governance 90 Other remuneration matters 14 Why invest in Hiscox? Committee report 94 Remuneration policy 71 Audit Committee report Chapter 5: Chapter 6: Shareholder information Financial summary 5 6 107 Owning our contributions 113 Owning our adoption of As a Bermuda–incorporated to the local community big-ticket digital trading company, Hiscox is not subject 108 Directors’ report 114 Independent auditor’s report to the UK Companies Act. As a 111 Directors’ responsibilities 122 Consolidated income company listed on the London statement statement Stock Exchange, we comply with 111 Advisors 122 Consolidated statement of the requirements set out in the comprehensive income UK Corporate Governance Code 123 Consolidated balance sheet 2018 and the Listing Rules and 124 Consolidated statement of Disclosure & Transparency Rules changes in equity of the of the UK Listing Authority. 125 Consolidated statement of Our remuneration report is cash flows consistent with UK regulations. 126 No tes to the consolidated Any additional disclosures over financial statements and above these requirements, 187 Additional performance have been made for the benefit of measures (APMs) shareholders, on a voluntary basis. 188 Five-year summary Hiscox Ltd Report and Accounts 2020 1 2 Hiscox Ltd Report and Accounts 2020 Chapter 1: A balanced business 1 Be passionate, curious, restless and always look for a better way. Showing ownership in claims Among the many life-changing impacts of Covid-19, a postponed concert, deferred sports event or cancelled flight may seem trivial. But for businesses that rely on events for revenue, or individuals unable to return home or be reunited with family members, these cancellations can be devastating. Travel disruption was one of the earliest impacts of Covid-19, and required immediate ownership from our claims teams. In the first month of the UK lockdown, we processed over 200 travel claims, including repatriation costs for customers who were abroad when the Foreign & Commonwealth Office advised all British nationals to return home immediately. Travel bans and restrictions were soon followed by event cancellations. Our UK team worked with small- to medium-sized businesses to provide support and find solutions. One example was Motorcycle Live 2020, a Birmingham-based show representing the best of the British motorcycle industry. With a global audience, cancelling the November show was not taken lightly, but as a result of our prompt claims resolution they were able to make an announcement in June, provide significant notice for attendees, and shift their efforts to promoting the 2021 event. Hiscox Ltd Report and Accounts 2020 3 Chapter 1 3 Chapter 2 17 Chapter 3 51 Chapter 4 75 Chapter 5 107 Chapter 6 113 A balanced business A closer look Governance Remuneration Shareholder information Financial summary Our key performance indicators (KPIs) The global pandemic impacted on profitability in 2020, but digitisation and exceptional commitment from our employees helped to deliver good underlying performance and our usual service levels. Financial KPIs Gross premiums written Net premiums earned (Loss)/profit before tax $4,033.1m $2,752.2m $(268.5)m 2020 4,033.1 2020 2,752.2 2020 (268.5) 2019 4,030.7 2019 2,635.6 2019 53.1 2018 3,778.3 2018 2,573.6 2018 135.6 2017 3,286.0 2017 2,416.2 2017 37.8 2016 3,257.9 2016 2,271.3 2016 480.0 Combined ratio Basic (loss)/earnings Ordinary dividend 114.5% per share 0.0¢ (91.6)¢ 2020 114.5 2020 (91.6) 2020 0.0 2019 106.8 2019 17.2 2019 13.8 2018 94.4 2018 41.6 2018 41.9 2017 98.8 2017 8.1 2017 39.8 2016 90.6 2016 159.0 2016 35.0 Net asset value per share Tangible net asset Return on equity 689.0¢ value per share (11.8)% 601.5¢ 2020 689.0 2020 601.5 2020 (11.8) 2019 768.2 2019 670.6 2019 2.2 2018 798.6 2018 726.2 2018 5.3 2017 817.1 2017 751.5 2017 1.0 2016 792.5 2016 737.7 2016 22.5 4 Hiscox Ltd Report and Accounts 2020 Chapter 1 3 Chapter 2 17 Chapter 3 51 Chapter 4 75 Chapter 5 107 Chapter 6 113 A balanced business A closer look Governance Remuneration Shareholder information Financial summary Our key performance indicators (KPIs) Non-financial KPIs UK gender pay gap London Market broker UK customer satisfaction 21.2% satisfaction 69% 92% As a UK company with 250 or more employees, Each year, we survey our London Market broker In the UK, customers who speak to one of our we are required to disclose our gender pay gap for partners to understand more about their insurance experts in our customer experience UK employees, which we have done since 2017. experience of working with Hiscox throughout centre in York are asked to rate their experience Improving diversity and inclusion at Hiscox is a high the year. Their feedback is a reflection of our of Hiscox at the end of the call. Whether they have priority, and we continue to focus on finding ways products and service levels, so receiving phoned for advice, a quote, to purchase a new policy to reduce our gender pay gap. consistently good scores matters to us. or make changes to an existing one, their feedback helps us to constantly improve our service. 2020 21.2% 2020 69% 2020 92% 2019 26.1% 2019 78% 2019 89% 2018 28.8% 2018 76% 2018 90% 2017 31.1% 2017 66% 2017 90% Data only available from 2017. 2016 76% Data only available from 2017. Employee engagement UK claims net promoter US customer reviews 68% score 72 using Feefo 4.8/5 Our annual global employee engagement survey We measure and monitor the satisfaction of our In the USA, we ask customers to review their looks at how connected we feel to Hiscox, our customers at critical points during the policyholder experience of Hiscox post-purchase. We do this managers, teams and roles. The results are shared journey, and especially in the event of making a using Feefo, which has a five-star rating system, widely and heavily influence our people strategy. claim. Our UK claims net promoter score is based and are pleased to maintain such high scores on customers’ responses as to the likelihood year after year even as the business grows. they would recommend Hiscox following a claims experience with us, on a scale where ten is very likely and zero is unlikely, and we are pleased with the stability of these scores over time. 2020 68% 2020 72 2020 4.8 2019 71% 2019 75 2019 4.8 2018 74% 2018 76 2018 4.7 2017 77% 2017 67 2017 4.7 2016 78% Data only available from 2017. 2016 4.8 Hiscox Ltd Report and Accounts 2020 5 Chapter 1 3 Chapter 2 17 Chapter 3 51 Chapter 4 75 Chapter 5 107 Chapter 6 113 A balanced business A closer look Governance Remuneration Shareholder information Financial summary Our response to Covid-19 Coronavirus affected us all in 2020 and as the situation evolves, so has our response. Our efforts are focused on four key areas; our customers, our employees, our operations, and our contribution to the communities in which we live and work.