Beazley - Interim Results announcement

906 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
906
On SlideShare
0
From Embeds
0
Number of Embeds
591
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Beazley - Interim Results announcement

  1. 1. Cover Results for the six months ended 30 June 2013 Tuesday, 23 July 2013 1
  2. 2. Disclaimer notice Certain statements in the presentation, are or may constitute “forward looking statements”. Such forward looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed by such forward looking statements. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. There is no intention, nor is any duty or obligation assumed to supplement, amend, update or revise any of the information contained in this presentation. 2
  3. 3. Contents Pages Overview Business update 5 6 Financials Performance Investments Reserves Capital position 8 9-10 11-12 13 In Focus Property 14-19 Underwriting review and outlook 20-22 Appendix 24-34 3
  4. 4. Generic title white Overview
  5. 5. Overview – Strong underwriting performance in an increasingly competitive market • Profit before income tax of $82.3m (2012 profit: $112.9m) • Gross written premiums increased 5% to $1,066.7m (2012: $1,013.1m) • Combined ratio 89% (2012: 91%) • Rate change on renewal business 1% (2012: 3%) • Prior year reserve releases of $60.8m (2012: $47.6m) • Investment return of $0.3m (2012: $36.1m) • Annualised return on equity of 12% (2012: 18%) • Interim dividend up 7% to 2.9p 5
  6. 6. Business update • Continue to achieve rate increases in specialty lines • Changes made to property group to enhance performance • Aviation business progressing well • European floods are covered in our reserves (maximum loss would be $30m retention) • Challenging investment markets in Q2 6
  7. 7. Generic title white Financials
  8. 8. Six months financial performance 6 months ended 30 June 2013 6 months ended 30 June 2012 % increase 1,066.7 1,013.1 5% Net written premiums ($m) 758.0 650.8 16% Net earned premiums ($m) 758.8 703.3 8% 82.3 112.9 (27%) Earnings per share (pence) 9.3 12.5 Dividend per share (pence) 2.9 2.7 Net assets per share (pence) 152.0 142.2 Net tangible assets per share (pence) 138.0 126.0 Gross written premiums ($m) Profit before tax ($m) 8
  9. 9. Portfolio delivers a nil return during H1 2013 100.0 7.0% 80.0 6.0% 5.0% 46.9 60.0 46.5 40.0 3.0% 16.8 43.5 20.0 2.0% 29.0 36.1 1.0% 22.5 21.3 0.3 8.5 0.0 0.0% -1.0% -20.0 -2.0% -40.0 (62.8) -3.0% -4.0% -60.0 -5.0% -80.0 -6.0% 2008 2009 2010 2nd half 2011 1st half 2012 2013 Return 9 Annualised Investment Return Investment Return ($m) 4.0%
  10. 10. Conservative portfolio maintained Jun-13 Other Credit, 2.3% Capital Growth Assets, 11.4% Dec-12 Other Credit, 2.0% Cash and Cash Equivalents, 14 .7% Capital Growth Assets, 9.7% Cash and Cash Equivalents, 14. 7% Investment Grade Credit, 23.9% Sovereign and Supranational, 47.7% Sovereign and Supranational, 4 8.8% 10
  11. 11. Prior year reserve releases remain stable 16.0% 210 14.0% 190 170 12.0% 150 10.0% 130 110 8.0% 90 6.0% 70 50 4.0% 30 2.0% 10 -10 2008 Specialty lines 2009 2010 Political risks and contingency 2011 Life accident and health 2012 Marine 2012 HY Property 2013 HY Reinsurance 0.0% % of NEP 11
  12. 12. Whole account reserve strength within our target range % above actuarial estimate Preferred upper end 8.2% 7.5% 6.7% 6.1% 2003 2004 6.4% 2005 7.9% 7.4% 7.4% 6.9% 6.7% 2006 2007 2008 2009 Financial year 2010 2011 2012 7.1% 2013 (HY) 12
  13. 13. Strong capital position Sources of funds 2013 HY 2012 FY 1,157.6 1,204.5 Subordinated debt ($m) 133.5 184.3 Retail bond ($m) 114.0 122.3 1,405.1 1,511.1 Lloyd’s underwriting ($m) 876.0 876.0 US Insurance Company ($m) 107.7 107.7 983.7 983.7 421.4 527.4 (236.1) (267.1) Available for underwriting surplus ($m) 185.3 260.3 Un-utilised banking facility ($m) 225.0 225.0 Shareholders funds ($m) Uses of funds Surplus ($m) Unavailable surplus ($m) 13
  14. 14. Generic title white In Focus – Property
  15. 15. Covering: Key themes • Team Structure • • Continuity in leadership • Product Mix Increased margins Performance • • Growth where appropriate • • Favourable trading conditions 15
  16. 16. Property Group “To become and be recognised as the highest performing specialist property insurer” Team/Location Products Access Large Risks London and Singapore • Commercial Property Lloyd’s broker Construction & Engineering Team/Location London, Singapore, US Risk Size Middle market US • Commercial Property • Homeowners US wholesale broker Products Large risks in London and Singapore Smaller risks in US Access Lloyd’s brokers (London & Singapore) Small business London • Homeowners • Commercial Property • Jewellers’ Block Lloyd’s broker US wholesale and retail brokers (US) 16
  17. 17. Where we underwrite Where our business comes from Split by team Europe Worldwide USA Large Property Medium Market Property Small Business Construction and Engineering 17
  18. 18. GWP $m Property Group – 5 year summary 18
  19. 19. Favourable market conditions 150.0% 100.0% 50.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 HY Rate changes of Beazley Property Group 19
  20. 20. Underwriting review and outlook 20
  21. 21. Cumulative rate change since 2001 250% Rate Change 200% 150% 100% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 HY Underwriting Year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 21
  22. 22. Outlook • Increasing competitive headwinds • New capital entering the reinsurance market • Entrants to US surplus lines markets • Broker led initiatives increasing capacity in London • Beazley’s balanced portfolio is well positioned for these headwinds and thanks to specialty lines, we are planning to achieve flat rates in 2014 • We have growth areas that will continue into 2014 • We expect to earn a 2% yield on the investment portfolio going forward 22
  23. 23. Questions? Any questions?
  24. 24. Generic title white Appendix
  25. 25. US interest rates 3.50% US Government Bond Yields 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 30/06/2011 30/09/2011 30/12/2011 30/03/2012 30/06/2012 US 10 Year Index 30/09/2012 30/12/2012 US 5 Year Index 30/03/2013 30/06/2013 US 2 Year Index 25
  26. 26. Specialty lines incurred claims remain in line with expectations Development Year Net incurred loss ratio at each development year 6 5 4 3 2 ULR 140% 120% 113% Net incurred loss ratio 100% 84% 80% 74% 62% 56% 60% 41% 42% 41% 62% 46% 45% 47% 40% 26% 20% 5% 0% 19931996 Net ultimate premium $m 79 19972000 2001 109 53 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 430 465 427 441 420 429 Underwriting Year 94 268 322 340 354 26
  27. 27. US originated business $208m for HY 2013 GWP by Product 150 140 130 120 110 100 90 80 $m 70 60 50 40 30 20 10 0 2008 Architects and Engineers High Value Homeowners 2009 2010 2011 Technology and Media Professional Liability Other Property Commercial Property 2012 2013 HY Healthcare and Lawyers Political risks & contingency 27
  28. 28. Diversified portfolio achieves consistent combined ratio through market cycles 160 % 140 % 120 % 100 % 80 % 60 % 40 % 2008 2009 2010 2011 2012 2013HY Year 28
  29. 29. Life, accident & health 6 months ended 30 June 2013 2012 Gross premiums written ($m) 56.4 49.7 Net premiums written ($m) 39.0 45.3 Net earned premiums ($m) 45.4 43.7 Claims ratio 76% 60% Rate change on renewals (1%) (1%) Percentage of business led 78% 79% • Reserves strengthened on our Australian business • US admitted open for business 29
  30. 30. Marine 6 months ended 30 June 2013 2012 Gross premiums written ($m) 197.1 184.6 Net premiums written ($m) 165.2 156.8 Net earned premiums ($m) 131.5 135.9 Claims ratio 43% 47% Rate change on renewals (2%) - 44% 7% growth in gross premiums with aviation team delivering against plan • Developing marine liability account • Percentage of business led • Prior year reserve releases of $17.0m (2012: $8.9m) 46% 30
  31. 31. Political risks and contingency 6 months ended 30 June 2013 Gross premiums written ($m) 2012 63.3 71.9 • • Net premiums written ($m) 46.0 46.3 Prior year reserve releases of $10.2m (2012: $13.8m) 58.2 Net earned premiums ($m) Reduction in gross premiums due to increased competition in political risks 49.8 Claims ratio 33% 22% Rate change on renewals (1%) (1%) Percentage of business led 74% 70% 31
  32. 32. Property 6 months ended 30 June 2013 2012 Gross premiums written ($m) 199.0 201.5 Net premiums written ($m) 130.1 98.7 Net earned premiums ($m) 150.2 130.2 52% 50% 3% 7% 71% 68% Claims ratio Rate change on renewals Percentage of business led • 33% growth in net premiums written as a result of consolidation in reinsurance purchased • Expense ratio improved to 39% (2012: 51%) 32
  33. 33. Reinsurance 6 months ended 30 June 2013 2012 Gross premiums written ($m) 170.3 139.8 Net premiums written ($m) 121.1 96.7 Net earned premiums ($m) 70.8 59.6 24% (1%) 5% Percentage of business led 41% Prior year reserve releases of $14.9m (2012: $1.6m) • Increased competition in this market due to new capital entering 51% Rate change on renewals 22% increase in gross premiums with growth across the account • Claims ratio • 39% 33
  34. 34. Specialty lines 6 months ended 30 June 2013 2012 Gross premiums written ($m) 380.6 365.6 Net premiums written ($m) 256.6 195.1 Net earned premiums ($m) 314.6 284.1 Rate change on renewals Percentage of business led 62% 63% 4% Prior year reserve releases of $17.9m (2012: $19.6m) 3% 95% Continue to grow premiums in the technology and media product range • Claims ratio • 94% 34

×