Hiscox Ltd

Good morning everyone. It's great to be here to present another set of strong results. Hiscox is built to deliver through the cycle. Our diverse business portfolio and effective execution of our strategy are delivering growth at attractive returns in an increasingly complex trading environment. We've grown premiums by 10%, our insurance service result is up 30% and we've delivered an attractive combined ratio of 90%. Our underlying investment income continues to benefit from strong yields and a growing asset base. And we've achieved a return on tangible equity of 20%, materially above our mid-teens through the cycle target. This drives strong capital generation and supports a 17% increase in the interim dividend. and over the last 12 months we have returned $460 million of capital to shareholders through dividends and buybacks while growing the book value by 9%. Now looking at the performance of our businesses in more detail, We have built a multi-year track record of delivering growth and strong profitability. In retail, we have now achieved three consecutive years of accelerating growth and margin expansion. Since 2023, our growth rate has doubled, driven mostly by policy count and reflecting the quality and breadth of our customer propositions. and today we're upgrading our 2026 retail growth guidance from 8 to 9% for the full year, a material step up from the 6% we achieved in 2025. Retail margin continues to expand as we gradually and consistently improve within our 89 to 94% target range as guided at the CMD last year. In London market, the diversification in our portfolio has again resulted in the business delivering a solid combined ratio, after absorbing the impact from the Middle East conflict. This is consistent with our long track record of disciplined underwriting and profitable growth. In reinsurance, we have once again delivered an excellent combined ratio of 70%. This follows three years of achieving outstanding combined ratios in the 60s. Our disciplined underwriting and reselection continue to be recognised by third party capital providers, driving the top line in the first half. Now turning to the profile of our growth. Our momentum is underpinned by dynamic capital allocation as we deploy or indeed pull back depending on the quality of the opportunities we see in front of us. Retail is leading our growth, adding $174 million of premium, almost as much as in the whole of 2025. We're capturing a structural growth opportunity by combining our competitive advantages in brand, marketing and technology with a market leading underwriting and claims ecosystem and a business builder culture. In London market we continue to navigate micro cycles and for the moment growth in some existing lines and our selective expansion into adjacencies is offsetting targeted reductions in business that no longer meets our return thresholds. To bring this to life, we have launched structured solutions and downstream energy. Both are growing nicely, and at the same time, we shrank major property premiums by 24%. You'll hear more about this combination of expansion and cycle management from Jo in a moment. In reinsurance, we grew our top line. by matching strong third party capital demand with high quality opportunities our underwriters are able to access. At the same time, we continue to manage our net exposures in line with the guidance we set out last year. Now looking at the initiatives driving this growth. Over the last few years we have we have materially increased the pace at which new initiatives are launched. You can see here a selection from the last six months as well as some in our pipeline which we continually top up. We're expanding surety across Europe and personal accident in France leveraging significant experience we have in these lines across the group. In addition, we are continuing to expand into more and more specialist niches, such as podcasters, streamers, and even range rooms. While building and strengthening our partnerships to get more products to more customers, we now offer commercial auto in USDPD, Underwritten by a highly reputable multi-line US insurer and one of our largest existing partners. Now looking ahead, we have added another top 15 US carrier to our partnerships, who in the second half will begin selling our products through their extensive agent network. These opportunities have significant potential to drive premium growth and fee income at the scale of the next 18 months. In London market, we are continuing to grow our established digital auto underwriting capability through Flood Plus, complementing it further with a new product we call Surf, targeted at larger, more complex US flood risks. And finally, we are expanding our geographic footprint. We've now received a branch license in Italy and appointed a managing director. And we're continuing to innovate using disruptive technologies to drive growth and redefine the customer experience. As you know, a core underpin of our DPD business in retail has been the use of machine learning. This business is almost entirely auto underwritten, an essential feature to generate satisfactory returns on policies averaging less than a thousand dollars in premium. We're now augmenting this with AI across distribution, underwriting, and claims. Through technology innovation, we can sustain our growth momentum, opening new markets and creating new products while redefining the customer experience through a more frictionless service at every touchpoint. This is about using technology to drive growth, expand our reach, improve customer service, and help our colleagues maximize their potential. and we're already making tangible progress. Across our retail business we are now in the process of rolling out new front-end portals for our customers and brokers based on a common modular technology. These will open up new self-serve capabilities and expand our ability to deploy AI tooling. We have launched self-service options in our USDPD contact centre. Customers calling our general enquiry line can now discuss their insurance needs and submit a claim with Sarah, our AI voice agent, whose voice you just heard a moment or two ago. Feedback so far has been excellent. Around 30% of the calls taken by Sarah are completed with her, with a high customer satisfaction score of 88%. Sarah joins Harry, our agent exclusion in London Market, already deployed across middle market property. Harry receives submissions, reviews them, identifies missing information, assesses the risk against our underwriting appetite, and provides recommendations to our underwriters. And in a first for Lloyds, London Market, in collaboration with Google Cloud, is developing an agent to agent protocol, which will allow Harry to interact directly with a broker as they develop their own agents. We plan to make the protocol open source to accelerate the market's adoption of agentic trading. But we're not stopping there. We are continuing to invest and build new capabilities and solutions with some exciting developments to come in retail over the next 12 months. And I look forward to updating you next year. Now with that, I'll now hand over to Paul who will take you through our financial performance in the first half.

Thanks Aki. Good morning. It's great to be here with you all today presenting another strong set of results. We have delivered a strong underwriting performance underpinned by profitable growth, underwriting discipline and the emerging benefits of our change program. ICWP increased by 10.1% to over 3.2 billion with profitable growth in all three business segments. Net ICWP grew by 6.8% to 2.3 billion. Reflecting continued momentum in retail alongside disciplined underwriting management in big ticket. The insurance service result increased by 30.2% to 255.4 million, demonstrating the quality of the portfolio and the benefit of improving operating leverage. The undiscounted combined ratio improved to 90.4, an improvement of 220 basis points year on year. And this reflects the benefits of the group's diverse business model, a smaller impact from large losses, and the emerging benefit of our change program. In relation to the Middle East conflict, the group has prudently reserved an estimated net loss of 60 million, with 40 million in London market reflecting our specialty exposures. This was offset by a benign natural catastrophe loss experience in the first half. The investment result was 128.2 million, lower than the prior year, reflecting mark-to-market movements on fixed income assets. And these are expected to unwind over the next 18 months as bonds mature and pull to par. These are excluded from operating profit. The adjusted operating profit before tax was 331 million, up 26.3% year on year, generating a 20.2% operating return on tangible equity. And this includes a 2.2 percentage point benefit from the recognition of 64.5 million of deferred tax assets. We have taken management action, enabling us to access historical tax losses that were previously unrecognizable. This is expected to reduce future cash tax payments, but is not expected to have a material impact on future P&L tax charges. Turning to shareholder returns, we have increased the interim dividend by 16.7% to 16.8 cents per share, consistent with our policy to set the interim at one third of the prior year total, and follows the 20% step up in the 2025 final DPS. The 300 million share buyback is progressing well with 32% completed in the first half. And these results demonstrate continued delivery of our growth and change agenda and discipline cycle management in big ticket, all delivering attractive shareholder returns. Moving to retail. Retail continues to deliver accelerating growth and expanding margin. ICWP grew by 12.6% to 1.6 billion, or 8.2% in constant currency, ahead of guidance. Growth continues to be broad-based and volume-driven, as the policy count increased at a faster rate than premiums, with rate up modestly at 1%. The insurance service result increased by 16.6% to 149.2 million, supported by profitable volume-driven growth and improving margins. The undiscounted combined ratio improved to 92.1, benefiting from a lower loss ratio and the emerging benefits of the change programme. Based on the continued momentum we see, we have upgraded our 2026 retail growth guidance to 9% for the full year in constant currency. Retail continues to execute well against its multi-year growth strategy and remains on track for double digit growth in 2028. Turning to London market, we continue to operate With a disciplined approach to cycle management while investing in innovation and selective growth opportunities. The reported ICWP growth of 9.8% benefits from prior period premium adjustments, mainly in property binders. The business was written in previous years and we have adjusted where growth came in slightly higher than initially estimated. So on an underlying basis, ICWP increased by 5.3% reflecting expansion into adjacencies and new business opportunities. Net premiums grew by 3.2% with higher reinsurance sessions as we benefit from lower reinsurance pricing. The insurance service result was 44.1 million compared to 61.8 in the prior year. This primarily reflects the impact of losses from the Middle East conflict and a softer rating environment in some lines. As such, the undiscounted combined ratio increased to 93.8. London market is well positioned with a diversified portfolio, continued innovation and strong underwriting discipline. Turning to Hiscox Re. ICWP increased 6.4% to £944.5 million, driven by additional third-party capital deployment. Net premiums declined by 7.4% as we maintained discipline in property catastrophe and retro lines, reducing exposure in areas where returns fail to meet our profitability hurdles or target volatility profile. And this was partially offset by growth in specialty and pro rata lines. The insurance service result increased to £62.5 million, reflecting strong underwriting performance and a benign natural catastrophe environment compared with the prior year. As such, Hiscox Re delivered an excellent undiscounted combined ratio of 70.4. We continue to see strong demand from third-party capital, with assets under management increasing to £2.9 billion, of which £1 billion is in our Cat Bond Fund. Fee income from third party capital was 53 million in the first half. Overall, Hiscox Re is delivering disciplined underwriting results and generating attractive fee income through our capital partners platform. Turning now to our change program. We are seeing ongoing tangible progress across the business. Our productivity is increasing. ICWP per FTE is up 10% in retail. And in London market, the number of submissions processed is rising materially, up 50 times across sabotage and terrorism, cargo and middle market property as we deploy digitally augmented underwriting. And through the deployment of automation and AI, we are responding to our customers faster. 70% of total retail premiums are now auto underwritten and the average submission to quote time in London market has reduced by 15% in middle market property. Savings from claims recoveries have almost doubled and are recognised in the P&L. We've also achieved a similar increase in claims fraud detection, which is prudently yet to be recognised in the P&L. As we execute our resourcing strategy, 9% of roles have been outsourced, with a higher proportion in impacted functions. In areas like technology, we have insourced a further 96 roles since the fall year, many in Lisbon with similar or better capability in a lower cost location. Pleasingly, following a deliberate program to upskill our staff, our teams are embracing the power of AI with a 69% adoption rate across the business. And we are continuing to optimize the number of applications, suppliers, and property footprint. In addition to unlocking growth and expansion, these changes are driving further efficiency and operating leverage across the group. In the first half, we delivered 45 million of P&L benefit against the 2024 baseline and incurred 39 million of costs to achieve. Around one fifth of the benefit is driven by improvements in claims recoveries, which are recognised in the claims line on the P&L. Improvements in our expense base are driven by savings with strategic suppliers and a greater use of outsourcing. With strong progress being made across a wide range of initiatives, we remain on track to deliver 75 million of benefit in 2026 and 200 million in 2028. Our growth and change agenda is driving positive operating jaws. Premium growth is outpacing underlying expense growth. As a result of the change programme, underlying expenses have increased by only 0.4%. This reflects the P&L benefit more than offsetting underlying inflation, investment in the growth initiatives Aki spoke about earlier, and an increase in brand spend which will fuel retail growth over the longer term. This is favourable when compared with ICWP growth of 8% in constant currency. In turn, this is driving an improvement in the group admin expense ratio, which has improved 80 basis points to 16.1%. Turning to investments, the investment result reflects continued strong cash and coupon income supported by a growing asset base. As noted earlier, the investment result reflects mark-to-market movements on fixed income, which are expected to unwind over time as bonds mature. Our assets remain conservatively positioned with a high quality bond portfolio, average credit rating of A, and a short duration of two years. Turning to reserves, we continue to exercise a conservative reserving philosophy. This enables our long track record of favourable reserve development with 174 million of positive development in the first half. These releases are broad based and from all segments. At the same time, our confidence level remains strong at the 86th percentile, above the target range of 75 to 85. The risk adjustment of 355 million is an increase of 10 million since the full year. The balance sheet remains robust. Organic capital generation of 14 points is driven by underwriting performance across all segments and returns from the growing investment portfolio. Our capital position remains very strong with an estimated BSCR ratio of 224. On a pro forma basis, post announced returns, our BSCR stands at an estimated 210. This strong capital strength supports continued profitable growth, investment in new capabilities, and attractive shareholder returns. With that, thank you for listening, and I will now hand over to Jo for an update on underwriting.

Thank you, Paul, and good morning, everybody. When people think about underwriting, they often think about pricing risk. But more than ever, the job of a COO is about change. Anticipating it, understanding and responding with speed and discipline. The world is changing at an accelerated pace driven by geopolitical tension, technological advancement, economic uncertainty and climate change. And this creates both risks and opportunities. And our job as underwriters is to help our customers navigate through that uncertainty whilst protecting the long-term performance of Hiscox. Performance which is increasingly being driven by underwriting actions rather than market tailwinds. And I think our first half results are a good example. So in the first half, there were several industry losses, most notably from the conflict in the Middle East. We have prudently reserved 60 million net across both London Market and Reinsurance. Sadly, those tensions are ongoing. We continue to support our customers right in business, reflective of the risk environment. Outside of this, industry natural catastrophe for the first half was below our 10 year average and losses across the attritional was well within expectation for the group and consistent with last year. And all of this is combined to give a group undiscounted loss ratio of 43% as we benefit from our portfolio construction, exposure management and our diversification. The strength of Hiscox lies not in any one individual class but in the diversification of the portfolio and you can see that on the left hand side. Retail compounds, London market balances growth with cycle management and reinsurance flexes between our and third party capital. The retail growth opportunity gives the option but not the need to grow our big ticket businesses. And because these portfolios are highly traded, we're able to manage the various micro cycles that exist. And you can see that on the right hand side, we lean in when conditions of conditions are favorable, but we step back when excess capital erodes returns. So where are we in the market? So this next slide, hopefully a familiar slide to you, the chart on the left is our rates indexed back to 2018 for our three core segments. Retail, which is purple, demonstrates the stability of a highly diversified portfolio. We're now serving over 1.7 million customers and rating across UK, Europe and the US is strong. Our big ticket businesses have moved from a rate acceleration part of the cycle into a now more moderate phase and rates have come down in 2026, although much of the gains have been retained since 2018 and attractive underwriting opportunities still exist, although it is becoming more differentiated and you can see that on the right hand chart. So as a reminder, adequate means pricing capable of delivering attractive returns in a mean loss environment. Adequate plus is margin and addition. And low is still profitable, but just below our targeted return hurdles. As you can see despite the pressures the position is broadly consistent with the position we gave you at the beginning of the year and that's for a couple of reasons. One, the market has evolved in line with our expectations and secondly our cycle management actions which you can see on the next couple of slides. So our London market strategy is made up of three components. First, manage the cycle. We actively reduce exposure where risk and reward is not commensurate. And you can see in the first half, we've non-renewed 17% and 23% of major property risks and renewables risks. Added to this, we've reduced line sizes in places like general liability and product recall. The second component of our strategy is build out our adjacencies. Adjacencies where we have existing expertise and capability. We're extending our property capabilities into US mid markets. We're relying on our financial lines expertise for financial institutions and our terror expertise for aviation whole war. And then the third part of our strategy is leaning into structural market changes. So facilities and MGAs are now an established part of the distribution landscape and we have invested in structured solutions, global MGAs and beta follow to build a strategic portfolio solutions capability to support select parts of this market profitably. So the headline underlying growth for London market is plus 5% but that's actually made up of minus 8 from cycle management offset by plus 13 from existing and adjacent lines where we see attractive opportunities and this is moderated further on a net. Our reinsurance strategy is similar with three components. First, manage the cycle. We selectively deploy our capital in line with our high return hurdles and our volatility profile. And you can see we've reduced exposure in the first half, reducing the property cat and retro by 11 and 35%. Secondly, we're scaling into our non-catastrophe lines, things like pro rata and specialty, where we benefit from client relationships and our expertise, and this further diversifies our portfolio. And lastly, scaling Hiscot's capital partners. So third party capital gives us both relevance in the market, but it also enables us to deploy more of our underwriting capability than our own balance sheet would allow. And this builds attractive portfolios for our partners and fee income for ourselves. So having significantly increased our net retained in a hard market, we're now just moderating that position as conditions evolve. and then moving on to retail where our active portfolio management is underpinned by a specialist underwriting ecosystem across the whole value chain and our focus now is on next generation of underwriting capability through data, technology and further automation. So we're rolling out a new pricing engine across UK, Europe and the US and this is giving us greater segmentation capability but it's also allowing us to respond to trends with greater precision and speed. We're enriching our data. We're adding third party data to our own proprietary data. Again, multiple benefits from risk segmentation and selection, but also it makes us easier to do business with. As an example, our new Cyber Accelerate product has reduced the number of questions we need to ask our customers by over 60%. and then further automation is driving productivity, freeing up our underwriters to focus where their judgment matters. We have a new AI augmented solution that we've rolled out in a part of our US broker business and this is increasing or decreasing the time it takes to process a quote from submission to quote by 80% and we're now going to roll that out for the rest of retail. So taken together, these all support profitable growth at scale. So as I look forward, my focus is clear. Manage the cycle, continue to reshape our portfolios in line with the evolving market conditions. Secondly, accelerate innovation, continue to invest in sectors, in products, in distributions that will all define our future growth. And then lastly, elevate our underwriting. We're going to equip our underwriters with data and tools to really amplify their specialty expertise. So I've no doubt the market will evolve and risks will change, but I'm really confident in our ability to adapt. In a world defined by uncertainty, a strong underwriting capability is a competitive advantage. Thank you. And I'll hand back to Aki.