Main features of the corporate reorganization plan are as follows:

• A new Bermudian holding company for the Group, Hiscox Ltd., has been established;
• Shareholders of Hiscox will receive one share in Hiscox Ltd. for each share held in Hiscox;
• Application will be made for Hiscox Ltd. to be listed on the London Stock Exchange and it is expected to replace Hiscox as a member of the FTSE 250 Index;
• Shares in Hiscox Ltd. will be tradable in CREST through depository interests;
• It is not expected that Hiscox's existing dividend policy will be affected and shareholders will have the right to elect to receive UK sourced dividends;
• The corporate reorganization is expected to be neutral in tax terms for UK resident shareholders.
• Hiscox Ltd. will report consolidated results under IFRS in sterling.

In 2005, Hiscox formed Hiscox Bermuda as a reinsurer in the Bermudian market and also established Hiscox USA in New York as the base through which the Group underwrites and distributes specialist products in the USA. The company says that these developments were in response to a recognition that Hiscox needed to have operations on the ground in the US where the non-life markets are considered to be the largest in the world and in Bermuda which had become one of the major reinsurance centres.

In addition, a significant proportion of the business that is written in Hiscox Global Markets, the Group's international market business unit substantially based in Lloyd's, emanates from the USA. US business accounted for 36.3% of the Group’s gross earned premiums in 2005. With the formation of Hiscox Bermuda and Hiscox USA and the strong growth of these divisions anticipated by the directors, the amount of US and Bermudian originated business is expected to increase significantly.

Hiscox says that it is appropriate to move the domicile of the Group to Bermuda for the following reasons:

• As the major issues and risks are expected increasingly to arise in Hiscox’s Bermudian and US businesses, the Board believes that the centre for decision making needs to be in close proximity to the originating markets for those risks;
• It is anticipated that such a move will demonstrate Hiscox’s commitment to the Bermudian and US markets and consequently lead to an increased flow of business from insurance brokers active in those markets. Indeed, since the opening of Hiscox Bermuda and Hiscox USA a number of new brokers have begun to show new business to the Group; and
• Many of the Group’s principal competitors already enjoy the substantial potential tax benefits that would become available to Hiscox Ltd and that this scheme should improve the prospects for the Group’s share price.

The company intends that the Scheme be neutral in tax terms for UK-resident shareholders. In particular, a UK-resident Hiscox shareholder who receives Hiscox Ltd shares under the Scheme should not be charged for capital gains tax or corporation tax on chargeable gains as a result of the exchange of his Hiscox shares for Hiscox Ltd shares.

Hiscox Ltd will, shortly after the Scheme becomes effective, put in place a dividend access mechanism which is designed to preserve the current UK tax treatment of UK-resident Hiscox shareholders in relation to dividends to be paid by Hiscox Ltd. Under this dividend access mechanism, holders of Hiscox Ltd shares may elect to be paid dividends from Hiscox via a trustee rather than from Hiscox Ltd. Hiscox Ltd will send further details of the plan to shareholders and an explanation of how holders of Hiscox Ltd shares may elect to receive dividends from Hiscox shortly after the Scheme becomes effective.