Hiscox Trading Statement & Acquisition of US Livestock Insurer - 26.06.07

Hiscox Ltd recently issued a trading update for the five months to 31 May 2007 as well as a US acquisition. The press releases are attached and copied below:

Trading Statement

"Group Revenue
The Group has had a good start to the year with gross written premium to May 2007 increasing by 15% on 2006, to £590 million (2006: £515 million) despite adverse exchange rates. The main driver of growth has been catastrophe reinsurance with the specialist regional business showing steady progress.

Hiscox Global Markets
Gross written premium income is up 5% year on year to £352 million (2006: £335 million). (This would have been 12.5% at constant exchange rates.)

Rates are generally softening, but are still at a healthy level. The exception
is in areas of business exposed to natural catastrophes in the US where rates
remain strong. We have taken advantage of this and are pleased at the continued growth of our catastrophe reinsurance business which has benefited from the extra capacity from Panther Re, the sidecar reinsurer we set up at the end of last year.

In line with our strategy of a disciplined reduction when rates soften, we
anticipate reducing the capacity of Syndicate 33 in 2008 to £700 million from £875 million in 2007.

Hiscox UK and Europe
The UK business continues to grow steadily with a 5% increase in gross written premium to £92 million (2006: £87 million). The TV advertising was a success and we will be launching a new campaign later in the year.

Europe has benefited from the strengthened management team. A new focus on specialty commercial business in addition to our high value household account has led to a 20% increase in gross written premium to £36 million (2006: £30 million). New offices across France, Germany and Sweden have contributed to this excellent growth.


Hiscox International
Our Bermudian business has again met the tough targets we set with a 100% gross written premium increase on 2006, writing £82 million (2006:£41 million) of external reinsurance business.

Hiscox USA is performing well, generating £8 million (2006:£1 million) of gross written premium. The acquisition of American Live Stock Insurance Company brings valuable licences to our US business. Having our own admitted carrier will allow us to access new business and eventually roll out our products across the US.

Debt financing
We are currently evaluating means of refinancing our existing facilities in
order to extend facility duration and to increase our financial flexibility".

Robert Hiscox said:
"The year has started well. We are taking full advantage of the continuing
strong catastrophe rates, and business is still very healthy in our regional
specialist areas. Our long term focus on those specialist risks where we have
great expertise and a dominant position will really bear fruit if the rates
continue to soften. We are a balanced business with a wide geographical spread and plenty of opportunity for profit. Our reduction in Syndicate 33 capacity shows our determination to be disciplined, and our acquisition of American Live Stock Insurance Company shows our commitment to regional expansion in our specialist areas."

Acquisition

"Hiscox Ltd today announced the acquisition, subject to regulatory approval, of ALTOHA, Inc. ("ALTOHA") an insurance holding company and its subsidiaries American Live Stock Insurance Company, the premier live stock insurer in the US, and Harding & Harding, Inc. the affiliated insurance agency. The purchase price is $55 million which will be satisfied out of internal resources and Hiscox will acquire net tangible assets of $45 million. Closing is expected in July. ALTOHA is a privately held group owned by various individuals and its subsidiaries are based in Geneva, Illinois. It has a staff of 23.

American Live Stock Insurance Company is an admitted insurance company with licences in all fifty US states. Its main business is animal mortality insurance for cattle and horses. In 2006 it had gross written premium income of $16.9 million and a combined ratio of 80.9%. As an affiliated agency, Harding & Harding, Inc. places all of its business with American Live Stock Insurance Company".

Commenting on the acquisition Bronek Masojada, Chief Executive of Hiscox, said: "Earlier in the year we said that in order to continue to develop our US business we would acquire an admitted insurance carrier when the right opportunity arose. The acquisition of ALTOHA is an excellent fit on all fronts.
It gives us a carrier admitted in 50 states through which we can expand our
existing US operations and product offering".