REG - Beazley PLC - Beazley plc results for period ended 30 June 2024
08/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240808:nRSH6353Za&default-theme=true
RNS Number : 6353Z Beazley PLC 08 August 2024
Press Release
Beazley delivers record first half year profit of $728.9m
London, 8 August 2024
Beazley plc results for period ended 30 June 2024
• Profit before tax increased to $728.9m (2023HY: $366.4m)
• Insurance written premiums increased to $3,123.3m (2023HY: $2,921.1m)
• Undiscounted combined ratio of 81% (2023HY: 88%)
• Discounted combined ratio of 77% (2023HY: 84%)
• Return on equity (annualised) of 28% (2023HY: 18%)
• Share buyback of up to $325m announced in March 2024 on track to
complete by end of the year
• FY undiscounted COR guidance of around 80%
• FY premium growth of high single digits reiterated
Period ended Period ended %
30 June 2024 30 June 2023 movement
Insurance Written Premiums ($m) 3,123.3 2,921.1 7%
Net Insurance Written Premiums ($m) 2,586.5 2,349.6 10%
Insurance Service Result ($m) 558.0 342.2 63%
Profit before tax ($m) 728.9 366.4 99%
Earnings per share (pence) 68.7 34.9 97%
Net assets per share (pence) 504.7 376.6 34%
Net tangible assets per share (pence) 483.1 360.4 34%
Adrian Cox, CEO of Beazley, said:
"I am pleased to report a record first half profit of $728.9m. Expertise in
underwriting and active risk selection are key drivers of this strong result,
even as the rating environment is moderating. Property grew 25% in the first
half, demonstrating the success of our strategy to grow in this increasingly
specialist class, focusing on the US E&S market. We continue to innovate
in cyber, launching one of the market's most comprehensive, integrated cyber
security and insurance offerings with Full Spectrum Cyber and Beazley
Security. When faced with the world's largest ever IT outage, Beazley's
approach to underwriting cyber risk was tested and proved to be highly
resilient. We see opportunities in the remainder of the year and are confident
in delivering on our high single digit growth guidance. We are also pleased to
confirm that we have improved our undiscounted combined ratio guidance for the
full year to around 80%."
Conference call for investors and analysts will be held at 11.30am BST on
Thursday, 8 August 2024.
Dial in details for analysts:
UK-Wide: +44 (0) 33 0551 0200
Webcast Link for all other participants:
https://brrmedia.news/BEZ_HY_24 (https://brrmedia.news/BEZ_HY_24)
ENDS
For further information:
Investors and analysts
Sarah Booth
+44 (0) 207 6747582
Media
Sam Whiteley
+44 (0) 207 6747484
Note to editors:
Beazley plc (BEZ.L), is the parent company of specialist insurance businesses
with operations in Europe, North America, Latin America, and Asia. Beazley
manages seven Lloyd's syndicates and, in 2023, underwrote gross premiums
worldwide of $5,601.4million. All Lloyd's syndicates are rated A by A.M.
Best.
Beazley's underwriters in the United States focus on writing a range of
specialist insurance products. In the admitted market, coverage is provided by
Beazley Insurance Company, Inc., an A.M. Best A rated carrier licensed in all
50 states and its subsidiary, Beazley America Insurance Company, Inc. In the
surplus lines market, coverage is provided by the Beazley syndicates at
Lloyd's, and from 1 January 2024, also from Beazley Excess and Surplus
Insurance, Inc.
Beazley's European insurance company, Beazley Insurance dac, is regulated by
the Central Bank of Ireland and is A rated by A.M. Best and A+ by Fitch.
Beazley is a market leader in many of its chosen lines, which include
Professional Indemnity, Cyber Liability, Property, Marine, Reinsurance,
Accident and Life, and Political Risks and Contingency business.
For more information please go to: www.beazley.com (http://www.beazley.com/)
Interim results statement
Overview
Beazley achieved a record interim profit before tax of $728.9m for the first
half of 2024 (30 June 2023: $366.4m). This included an insurance service
result of $558.0m (30 June 2023: $342.2m), resulting in a discounted
combined ratio of 77% (30 June 2023: 84%) and an undiscounted combined ratio
of 81% (30 June 2023: 88%). Our investment team achieved a strong investment
result of $251.7m (30 June 2023: $143.9m) or 4.8% annualised (30 June 2023:
3.0%). Insurance written premiums growth across our business continued at 7%.
Our annualised return on equity was 28% (30 June 2023: 18%).
Seizing the opportunity for specialty insurance
Beazley's performance in the first half of the year is a testament to the hard
work and determination of our employees.
At 7%, growth is maintaining its positive trajectory, driven by our agile and
disciplined approach to underwriting. As expected, the upwards rating
environment, or hard market, of recent years is moderating and our clear
priority is maintaining rate adequacy, whilst continuing with active cycle
management to benefit from market opportunities and a change in risk reward
ratios.
Achieving growth of 7% against a backdrop of a flat rating environment in
total at the half year demonstrates how our robust approach to underwriting
has delivered across Beazley.
Demand from brokers and businesses for specialty underwriting is strong, be
that in the Excess & Surplus (E&S) market in the US, across our
expanding European footprint or in the specialist classes we underwrite
via Lloyd's.
On 19 July the world experienced its worst ever systems outage. I am proud of
the response of all our teams to support clients during this incident,
particularly those in Claims, Cyber Risks and at Beazley Security. We have
long prepared for an incident of this nature and as a result I am pleased to
confirm this event had no impact on our view of the outlook for the remainder
of 2024. Our approach to cyber has been tested and proved resilient and we
remain committed to a stable and sustainable rating environment.
We are proud that our approach to specialty underwriting was recognised at the
prestigious British Insurance Awards, in July, where we were named Specialist
Insurance Company of the Year 2024.
Highlights of the half year
In January 2024, our onshore US E&S carrier began underwriting and we have
seen strong interest from our US broker partners, particularly where their
clients are located away from the coasts or have a strong preference for
locally based cover.
Beazley Security officially launched at the end of June 2024, with the
integration of our in-house Cyber Services team and our wholly owned cyber
security company Lodestone.
Our experience of managing thousands of cyber incidents shows that
organisations with integrated risk management services are better able to
pre-empt, respond and adapt to cyber threats. We believe our ability to keep
clients one step ahead of the cyber threat aids the client's experience and
enhances our underwriting potential.
At the start of the year, we announced the launch of our first 144a Cyber
Catastrophe bond. At $140m it was nearly twice the size of the cover we
achieved in 2023, via the market's first ever cyber catastrophe bond, and
in May 2024, the bond more than doubled to $300m. Both of these have been a
great success and we will continue to look at opportunities in a similar vein
in the future.
We were also the first company to launch a property catastrophe bond on the
Lloyd's London Bridge platform at the start of the year. This is also the
first time that Beazley has sponsored its own property catastrophe bond.
These developments are testament to the outstanding work of our team in
managing and modelling cyber risk so that we have a specialist investor base
eager to invest. Together we are creating a vibrant cyber reinsurance market
which will benefit the development of the whole cyber insurance industry.
In June 2024 we were pleased that these efforts to innovate in the catastrophe
bond arena were recognised by winning (Re)Insurer Sponsor of the Year at the
Insurance Insider ILS awards.
Access to risk
We continue to believe in the importance of being located where our clients
and brokers are based and developing product solutions to the risk landscape
they face.
Our three platforms are split into Wholesale (Lloyd's) 52%, North America 40%
and Europe 8% at the half year. We continue the build out in Europe, with the
appointment of Country Managers in France, Spain and the UK.
Changes to management
I want to welcome two new senior colleagues to Beazley, Carolyn Johnson, who
joined the Board (and is Chair of our US holding company) in March and Barbara
Plucnar Jensen who joined the Board as Chief Financial Officer in May. This is
the first set of results I have worked on with Barbara and I am pleased to
have such an experienced and capable colleague to lead our finance function.
Underwriting performance
Cyber Risks
The first half of the year saw attractive opportunities across international
markets, where our strong underwriting discipline combined with ongoing rate
adequacy was a significant driver of the 7% growth we saw in the division,
although we are now seeing increased competition in this segment. In the US,
the rating environment is now stabilising after rate reductions in the very
competitive conditions of 2023. This reflects the ongoing maturing of the
cyber insurance market, which sees increasing price stability, better cyber
resilience and awareness of the threat amongst businesses leading to strong
demand for both cyber security services and insurance.
Across our book we continue to see no material shift in ransomware claims
despite the increased frequency in activity and we believe our integrated Full
Spectrum Cyber offering is supporting our clients to build greater cyber
resilience. We are also investing in our Cyber Risks management team with the
appointment of new leads in North America and Europe.
Digital Risks
Our small business distribution division saw growth of 14%, mainly driven by
specialty in Europe. The ongoing investment we are making into technology is
supporting the digitisation of our underwriting processes as well as the
distribution of specialty insurance solutions, to the small business segment
which is the backbone of economies around the world.
Marine, Accident and Political ("MAP") Risks
We are seeing a positive rating environment as demand for our specialist
insurance remains strong in the ongoing uncertain geopolitical environment.
The division experienced a reduction to premium of 3% in 2024 (2023: decrease
of 5%) driven by our planned platform changes within the Group in 2023 and
2024.
The value of our products has been clearly demonstrated in recent months. The
tragic events in relation to the Middle East and the Baltimore Bridge incident
in March show how a well functioning marketplace, like the Lloyd's marine
community, in which we are a leader, can act to ensure that claims are
effectively processed and new cover quickly put in place, allowing business
and trade to continue.
Property Risks
The first half of 2024 saw continued strong growth in our property business,
at 25% (2023: 65%), albeit, as we expected, at a more moderate pace than the
year before. We are seeing competitors that stepped back last year re-enter
the market, but we have not yet seen a dramatic influx of capacity as the
fundamental challenges of climate change, rising property valuations and
inflation, together with the potential for an active hurricane season, temper
competition.
By building relationships with brokers and clients for the long-term,
particularly in the US E&S market with our onshore carrier, we are gaining
positive feedback and developing brand loyalty for our consistent and
disciplined approach to specialty property underwriting.
Specialty Risks
Growth in our niches remains strong, focused on demand led areas such as
Environmental Liability and Programs, or Safeguard, which supports
institutions to mitigate and recover from the impacts of a safeguarding
incident.
We continue to be cautious and exercise robust cycle management in the
Directors & Officers (D&O) segment, although we may finally be seeing
some nascent signs of plateauing of rates in D&O. Nevertheless we remain
absolutely focused on ensuring rate adequacy after the challenging rating
landscape of the last two and half years.
During the year, the terms of one of our major reinsurance contracts for the
division were adjusted and we accrued for both additional premiums and a
reduction of recoveries in the first six months contributing to an expense on
the amount recoverable from reinsurers.
Reserving
Beazley has a consistent reserving philosophy, with initial reserves being set
to include a risk adjustment that may be released over time as and when any
uncertainty reduces. We maintain a preferred confidence level range of between
the 80th and 90th percentile. This metric gives an indication about where the
reserves sit compared to the best estimate and the capital requirement.
As at 30 June 2024, our reserve confidence level was at the 88th percentile
(30 June 2023: 89th percentile, 31 December 2023: 85th percentile), which is
towards the upper end of our preferred confidence level range.
Insurance written premiums/ Net insurance written premiums
6 months ended 30 June 2024 6 months ended 30 June 2023
Insurance written premiums Net insurance written premiums Insurance written premiums Net insurance written premiums
$m $m $m $m
Cyber Risks 577.8 454.3 541.4 426.2
Digital 126.8 111.9 110.8 97.2
MAP Risks 506.9 435.3 522.4 429.2
Property Risks 1,008.4 784.8 805.2 643.0
Specialty Risks 903.4 800.2 941.3 754.0
Total 3,123.3 2,586.5 2,921.1 2,349.6
Cumulative rate change
2019 2020 2021 2022 2023 2024HY
Cyber Risks -% 8% 103% 185% 170% 153%
Digital -% -% 9% 31% 32% 29%
MAP Risks -% 12% 22% 27% 35% 37%
Property Risks -% 14% 27% 40% 72% 77%
Specialty Risks -% 20% 34% 36% 35% 36%
All divisions -% 15% 43% 62% 84% 85%
Investments
Our investment team enjoyed an excellent six monthly performance, delivering a
strong return of $251.7m, or 2.4% in the first half of 2024 (30 June 2023:
$143.9m, or 1.5%). The higher yield environment which began to benefit
our returns last year remains in place and continues to support improved
investment returns. However, risk-free yields have risen further this year, as
expectations for lower interest rates were deferred, and this has generated
some mark to market losses in the short-term. As a result, the overall return
on our fixed income investments in the first half of 2024 is lower
than yields would imply, at 1.8%. We reduced the duration of our fixed income
investments at the beginning of the year, to 1.6 years, to help us manage
asset/liability interest rate risks, and this helped protect our fixed income
return in the period. Our capital growth investments have performed strongly,
producing a return of 6.7%, led by our equity investments, which returned
more than 14% in this period. We added to our equity, credit and hedge fund
exposures during the first half and these changes have had a positive impact
on our overall investment return. Looking ahead, the current yield of
our fixed income investments, at 5.0%, provides an encouraging outlook for
returns, although macro-economic risks remain elevated.
Investment performance
30 June 2024 30 June 2024 30 June 2023 30 June 2023
$m % $m %
Cash and cash equivalents 945.6 8.9 964.3 10.0
Fixed and floating rate debt securities
- Government 4,166.6 39.0 4,724.1 49.0
- Corporate bonds
- Investment grade 3,589.9 33.6 2,500.9 25.9
- High yield 632.4 5.9 362.7 3.8
Syndicate loans 28.8 0.3 33.2 0.3
Derivative financial assets 9.6 0.1 6.8 0.1
Core portfolio 9,372.9 87.8 8,592.0 89.1
Equity funds 432.2 4.1 251.2 2.6
Hedge funds 645.2 6.1 564.5 5.8
Illiquid credit assets 212.6 2.0 236.4 2.5
Capital growth assets 1,290.0 12.2 1,052.1 10.9
Investment portfolio total 10,662.9 100.0 9,644.1 100.0
30 June 2024 30 June 2024 annualised return 30 June 2023 30 June 2023 annualised return
$m % $m %
Core portfolio 171.9 3.6 100.7 2.5
Capital growth assets 79.8 13.4 43.2 9.1
Overall return 251.7 4.8 143.9 3.0
Expenses
The expense ratio, which under IFRS 17 includes only expenses directly
attributed to insurance activities, decreased to 32% for the first half of the
year (30 June 2023: 35%). For the first six months of the year, non-directly
attributable expenses of $160.4m (30 June 2023: $137.6m) fall outside the
insurance result. Total expenses for the first six months of the year were
$918.0m (30 June 2023: $863.6m).
We continue to focus on our total expense base and are pleased that net
insurance revenue growth has outpaced total expense growth showing our
commitment to growing profitably.
Interest rate sensitivity
The Group has conducted a sensitivity analysis of its financial assets
(specifically debt and fixed income holdings) and its (re)insurance contract
liabilities (being the net of reinsurance contract assets and insurance
contract liabilities) to estimate the immediate impact of the movement in
interest rates on profit after tax / equity for the period:
Financial assets
30 June 31 December 2023
2024
$m $m
Shift in yield (basis points)
150 basis point increase (161.1) (190.6)
100 basis point increase (107.4) (127.1)
50 basis point increase (53.7) (63.5)
50 basis point decrease 53.7 63.5
100 basis point decrease 107.4 127.1
150 basis point decrease 161.1 190.6
(Re)insurance contract liabilities
30 June 31 December 2023
2024
$m $m
Shift in yield (basis points)
150 basis point increase 118.6 114.3
100 basis point increase 80.0 77.1
50 basis point increase 40.5 39.1
50 basis point decrease (41.5) (40.0)
100 basis point decrease (84.0) (81.0)
150 basis point decrease (127.6) (123.0)
Capital
We have a number of requirements for capital at a Group and subsidiary level.
Capital is required to support underwriting at Lloyd's, within the US and
through our European insurance company and is subject to prudential regulation
by local regulators (PRA, Lloyd's, CBI, and the US state level supervisors).
Further capital requirements come from rating agencies who provide ratings for
BICI, BAIC, BESI and BIdac. Beazley aims to manage its capital and leverage
levels to obtain the ratings necessary to trade with its preferred client
base.
The amount of surplus capital held is considered on an ongoing basis. We aim
to maintain a Group Solvency II ratio in excess of 170% of Solvency Capital
Requirement ("SCR"). A number of additional factors are considered including
the opportunities to deploy capital by investing in sustainable profits which
hit our ROE target of 15% cross cycle in a way that helps build a balanced and
diversified business. We also contemplate peak risks to equity, including
natural catastrophe and cyber risks, which are reflected in our capital
sensitivities, when deciding on the level of capital to hold.
As at 31 December 2023, our Solvency II coverage ratio post-dividend and share
buyback was 219%. We estimate our 30 June 2024 Solvency II ratio to be at 245%
(including total estimated amount of the share buyback announced in March
2024). As at 30 June, we have bought back £137m worth of shares through the
share buyback. We generally expect half year Solvency II ratios to be higher
than those at the end of the year, due to the end of year ratios including a
projection for the following year's growth.
The half year ratio is a result of good underwriting performance and a strong
return on investments driving significant own funds generation, while capital
requirements are aligned with 2023 year end and represent the current year
business plan.
30 June 31 December
2024 Estimate 2023 Actual
$m $m
Eligible Tier-1 capital after foreseeable distributions 4,503.4 3,980.9
Eligible Tier-2 capital - subordinated debt 539.6 520.8
Total Solvency II Eligible own funds 5,043.0 4,501.7
Capital requirement 2,058.2 2,058.2
Group Solvency II ratio 245% 219%
In the second half of the year, our capital requirements will be recalculated
to reflect the growth expected in the business during 2025 as well as own fund
generation in the period. When considered together, these factors are expected
to increase our capital requirements, which will result in a decreased
Solvency II ratio at 31 December 2024 when compared to 30 June 2024.
Scenario sensitivity analysis
The table below shows the impact on the Group's estimated Solvency II ratio in
the event of the following scenarios as at 30 June 2024.
Impact on solvency II ratio
Cyber 1-in-250 scenario (31)%
Nat Cat 1-in-250 combined scenario (26)%
50 bps decrease in interest rates (10)%
Outlook
Using integrated insurance and risk management expertise that delivers
solutions to the technology, geopolitical and climate threats that businesses
face, is how Beazley adds value and builds resilience for its clients. As we
progress through 2024, we believe this makes us increasingly relevant to our
brokers and clients and is driving significant opportunities for us and you,
our investors.
We remain confident in the ability of our multi-platform distribution
capabilities, combined with our robust approach to cycle management, to
continue to deliver sustainable and strong results.
We see opportunities in the remainder of the year and are on track to deliver
on our high single digit growth guidance. We are also pleased to improve our
undiscounted combined ratio guidance for the full year to around 80%.
Adrian Cox
Chief Executive Officer
Condensed consolidated statement of profit or loss for the six months ended 30
June 2024
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023(1) 2023(1)
Note $m $m $m
Insurance revenue 3 2,730.6 2,628.1 5,442.4
Insurance service expenses 4 (1,824.9) (2,080.5) (3,592.6)
Allocation of reinsurance premium 5 (335.3) (538.6) (1,127.3)
Amounts recoverable from reinsurers for incurred claims 5 (12.4) 333.2 528.5
Insurance service result 558.0 342.2 1,251.0
Net investment income 6 251.7 143.9 480.2
Finance income/(expense) from insurance contracts issued 6 25.2 2.8 (169.3)
Finance income/(expense) from reinsurance contracts held 6 12.3 (4.2) 15.9
Net insurance and financial result 847.2 484.7 1,577.8
Other income 7 69.3 36.9 78.5
Operating expenses 8 (160.4) (137.6) (365.8)
Foreign exchange (losses)/gains (7.7) 3.7 4.5
Results from operating activities 748.4 387.7 1,295.0
Finance costs 9 (19.5) (21.3) (40.6)
Profit before tax 728.9 366.4 1,254.4
Tax expense 10 (157.3) (82.3) (227.6)
Profit after tax for the period 571.6 284.1 1,026.8
Earnings per share (cents per share):
Basic 11 86.8 42.8 154.7
Diluted 11 84.8 42.1 151.4
Earnings per share (pence per share):
Basic 11 68.7 34.9 124.8
Diluted 11 67.1 34.3 122.1
Condensed consolidated statement of comprehensive income for the six months
ended 30 June 2024
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Profit after tax for the period 571.6 284.1 1,026.8
Items that will never be reclassified to profit or loss:
Loss on remeasurement of retirement benefit obligations - - (0.1)
Tax credit on defined benefit obligation - 0.7 0.7
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation gains 7.9 4.0 5.7
Total other comprehensive income 7.9 4.7 6.3
Total comprehensive income recognised 579.5 288.8 1,033.1
Condensed consolidated statement of changes in equity for the six months ended
30 June 2024
Share Share Foreign currency translation reserve Other Retained Total
earnings(2)
capital premium reserves
$m $m $m $m $m $m
Balance as at 1 January 2023 46.6 9.7 (109.8) (7.6) 3,015.1 2,954.0
Total comprehensive income - - 4.0 - 284.8 288.8
Dividends paid - - - - (107.7) (107.7)
Issue of shares 0.1 0.3 - - - 0.4
Equity settled share based payments - - - 12.9 - 12.9
Acquisition of own shares held in trust - - - (27.2) - (27.2)
Tax on share option vesting - - - 0.6 1.8 2.4
Transfer of shares to employees - - - (9.1) 9.1 -
Balance as at 30 June 2023 46.7 10.0 (105.8) (30.4) 3,203.1 3,123.6
Total comprehensive income/(expense) - - 1.7 - 742.6 744.3
Issue of shares - 0.6 - - - 0.6
Equity settled share based payments - - - 23.3 - 23.3
Acquisition of own shares held in trust - - - (6.4) - (6.4)
Tax on share option vesting - - - 0.1 (3.4) (3.3)
Transfer of shares to employees - - - 0.6 (0.6) -
Balance as at 31 December 2023 46.7 10.6 (104.1) (12.8) 3,941.7 3,882.1
Total comprehensive income - - 7.9 - 571.6 579.5
Dividends paid - - - - (120.5) (120.5)
Share buyback(1) (1.2) - - 1.2 (174.4) (174.4)
Issue of shares 0.1 0.2 - - - 0.3
Equity settled share based - - - 12.3 - 12.3
payments
Acquisition of own shares held in trust - - - (2.3) - (2.3)
Tax on share option vesting - - - 2.9 0.7 3.6
Transfer of shares to employees - - - (10.1) 10.1 -
Balance as at 30 June 2024 45.6 10.8 (96.2) (8.8) 4,229.2 4,180.6
1 Refer to Note 15 for further details, including the value of the
capital redemption reserve as at 30 June 2024.
2 Includes $6.4m of treasury shares held as at 30 June 2024, all of
which were cancelled by 3 July 2024.
Condensed consolidated statement of financial position as at 30 June 2024
30 June 30 June 31 December
2024 2023(1) 2023(1)
Note $m $m $m
Assets
Intangible assets 178.4 134.8 165.3
Plant and equipment 21.4 15.3 15.9
Right-of-use assets 55.1 62.4 59.4
Deferred tax asset 10 105.9 35.7 46.9
Retirement benefit asset 4.6 4.7 4.5
Insurance contract assets 14 116.0 92.2 101.5
Reinsurance contract assets 14 2,422.7 2,492.8 2,426.7
Financial assets at fair value 13 9,717.3 8,679.8 9,665.5
Other assets 561.3 370.7 354.2
Current tax asset 35.0 6.4 13.2
Cash and cash equivalents 945.6 964.3 812.3
Total assets 14,163.3 12,859.1 13,665.4
Equity
Share capital 45.6 46.7 46.7
Share premium 10.8 10.0 10.6
Foreign currency translation reserve (96.2) (105.8) (104.1)
Other reserves 15 (8.8) (30.4) (12.8)
Retained earnings 4,229.2 3,203.1 3,941.7
Total equity 4,180.6 3,123.6 3,882.1
Liabilities
Deferred tax liability 10 245.6 112.0 202.2
Financial liabilities 13 554.4 559.5 554.6
Lease liabilities 72.5 77.7 76.6
Insurance contract liabilities 14 8,118.7 7,858.3 7,992.2
Reinsurance contract liabilities 14 389.8 293.6 333.5
Current tax liability 82.4 30.7 13.7
Other liabilities 519.3 803.7 610.5
Total liabilities 9,982.7 9,735.5 9,783.3
Total equity and liabilities 14,163.3 12,859.1 13,665.4
Condensed consolidated statement of cash flows for the six months ended 30
June 2024
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
Notes $m $m $m
Cash flows from operating activities:
Profit before tax 728.9 366.4 1,254.4
Adjustments for non-cash items:
Interest and dividends receivable on financial assets 6 (152.8) (103.5) (215.3)
Finance costs payable 9 19.5 21.3 40.6
Net fair value gains on financial assets 6 (29.1) (44.5) (325.2)
Other non-cash items(1) 15.2 (13.9) 45.7
Changes in operational assets and liabilities:
Increase in net insurance and reinsurance contracts 14 172.3 315.3 545.9
(Decrease)/increase in other liabilities (91.2) 279.7 86.5
Increase in other assets (207.1) (166.5) (150.0)
Purchase of investments (4,108.6) (3,216.5) (7,115.9)
Proceeds from sale of investments 4,096.5 2,971.2 6,129.8
Repayment of syndicate loan 13 7.7 - -
Interest and dividends received on financial assets 6 147.6 99.4 207.4
Tax paid (109.6) (14.9) (110.7)
Net cash inflows from operating activities 489.3 493.5 393.2
Cash flows from investing activities:
Purchase of plant and equipment (7.2) (1.8) (4.3)
Expenditure on software development and other intangible assets (17.0) (12.5) (50.9)
Net cash outflows from investing activities (24.2) (14.3) (55.2)
Cash flows from financing activities:
Acquisition of own shares in trust (2.3) (27.2) (33.6)
Payment of lease liabilities (12.1) (6.6) (12.0)
Share buyback (171.5) - -
Finance costs paid 9 (18.0) (19.5) (37.5)
Dividend paid 12 (120.5) (107.7) (107.7)
Net cash outflows from financing activities (324.4) (161.0) (190.8)
Net increase in cash and cash equivalents 140.7 318.2 147.2
Opening cash and cash equivalents 812.3 652.5 652.5
Effect of exchange rate changes on cash and cash equivalents (7.4) (6.4) 12.6
Closing cash and cash equivalents 945.6 964.3 812.3
1 Other non-cash items includes amounts relating to depreciation, amortisation
and foreign exchange differences.
1 Statement of accounting policies
Beazley plc ("the Group") is a company incorporated in England and Wales. The
condensed consolidated interim financial statements of the Group for the six
months ended 30 June 2024 comprise the parent company, its subsidiaries and
the Group's interest in associates. These condensed consolidated interim
financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting, the UK-adopted International Accounting Standard, and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
With the exception of the new and amended standards and interpretations
outlined below, the accounting policies and methods of computation applied by
management in preparing the condensed consolidated interim financial
statements are the same as those applied to the consolidated financial
statements as at and for the year to 31 December 2023. Note that whilst the
performance of individual business lines may be seasonal, particularly with
respect to exposure to insurance claims, the Group does not consider its
overall result to be impacted by seasonality.
The information in these interim condensed consolidated financial statements
is unaudited and does not constitute annual accounts within the meaning of
Section 434 of the Companies Act 2006. The external auditor's report on the
Group's annual report and accounts for the year to 31 December 2023 was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
include a statement under s.498(2) or (3) of the Companies Act 2006.
The preparation of condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates. The significant judgements and key sources of estimation
uncertainty were the same as those applied to the consolidated financial
statements as at and for the year to 31 December 2023.
a. New and amended standards and interpretations
Effective at the reporting date
In these condensed consolidated financial statements, the Group has applied
amendments to IFRS issued by the International Accounting Standards Board
("IASB") and endorsed by the UK Endorsement Board ("UKEB") that are
mandatorily effective for accounting periods that begin on or after 1 January
2024. The new effective amendments are:
• Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current & Non-current Liabilities with Covenants;
• Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback; and
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements:
Disclosures.
None of the amendments issued by the IASB and endorsed by the UKEB have had a
material impact on the Group.
Not yet effective
The following new standards and amendments to existing standards have been
issued by the IASB at the reporting date:
• Amendment to IAS 21 - Lack of exchangeability (UKEB endorsed,
effective 1 January 2025);
• IFRS 18 - Presentation and Disclosure in Financial Statements (not yet
endorsed by UKEB, effective 1 January 2027); and
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures (not
yet endorsed by UKEB, effective 1 January 2027).
Beazley is in the process of reviewing the new standards and amendments and
determining the impact on the consolidated financial statements.
b. Principal risks and uncertainties
The Group's principal risks and uncertainties are outlined in the risk
management and compliance section of the Group's annual report and accounts
2023 (pages 69 to 74). These are insurance, market, credit, group, liquidity,
regulatory and legal, operational, and strategic. The Group's exposure to and
management of these risks has not changed since the last reporting date.
Additionally, further discussion of climate change risk and how it interacts
with the principal risks and uncertainties is discussed in the Task Force on
Climate-Related Financial Disclosures Section of Group's annual report and
accounts 2023 (pages 22 to 44).
c. Going concern
The Board has reviewed the Group's current and forecast solvency and liquidity
positions for the 12 months from the date that the financial statements are
authorised for issue, and no material uncertainty in relation to going concern
has been identified. In addition, as verified by the most recent regulatory
submission, the Group's capital ratios and its total capital resources are
comfortably in excess of regulatory solvency requirements.
Based on the going concern assessment performed, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence over a period of 12 months from the date of this report
being authorised for issue, and therefore believe that the Group is well
placed to manage its business risks successfully. Accordingly, the condensed
consolidated financial statements of Beazley plc have been prepared on a going
concern basis.
2 Segmental reporting
The Group's reporting segments and the basis of measurement of its segmental
profit or loss are consistent with those applied in the consolidated financial
statements for the year ended 31 December 2023. Information on the
underwriting performance of each segment in the period has been included
below.
Cyber Risks
Cyber has continued to perform favourably during the first half of 2024, with
a lower claims ratio than in the same period in 2023. Despite an increase in
ransomware activity, there has not been a material change in ransomware
frequency in our book and with the significant rate change achieved in recent
years, we continue to be satisfied with the margin within this book.
Digital
Digital continues to perform well, with best estimate reserves and risk
adjustments development as expected.
MAP Risks
During 2024, MAP has seen a favourable claims environment, particularly within
Political, Hull, Terrorism and Aviation. This has contributed to improvements
within the best estimates. There have been structural changes to the intra
group reinsurance arrangements within MAP risks, leading to a lower allocation
of RI premium.
Property Risks
The half year 2024 Property claims ratio is comparable to that seen at half
year 2023 representing continuing favourable experience within the segment.
There have been reductions in gross claims estimates on some of the large
losses that are currently within the reinsurance programme and this has
contributed to a reduction in reinsurance recoveries. Under IFRS 17, the
revenue within Property is recognised with the seasonality of the risk and
thus there will be a higher insurance revenue and allocation of reinsurance
premium within the second half of the year.
Specialty Risks
Overall, Specialty Risks has performed slightly adversely compared to half
year 2023 from a claims perspective. During the year, the terms of one of our
aggregate reinsurance contracts for the division were adjusted which resulted
in a one-off reduction to our claims recoveries on this contract. This has led
to an expense on the amount recoverable from reinsurers and has negatively
impacted upon the combined ratio. We continue to monitor and make allowances
for the current high economic & social inflation environment.
6 months ended 30 June 2024
Cyber Risks Digital MAP Risks Property Risks Specialty Risks Total
2024 $m $m $m $m $m $m
Insurance revenue 603.6 112.6 452.0 644.3 918.1 2,730.6
Insurance service expenses (394.0) (71.8) (264.9) (369.6) (724.6) (1,824.9)
Current and incurred past service claims (274.9) (28.2) (111.1) (184.6) (470.7) (1,069.5)
Insurance acquisition cash flows and directly attributable cash flows (119.1) (43.6) (153.8) (185.0) (253.9) (755.4)
Allocation of reinsurance premium (89.7) (15.2) (37.7) (112.4) (80.3) (335.3)
Amounts recoverable from reinsurers for incurred claims 39.7 2.7 6.6 (48.8) (12.6) (12.4)
Current claims recovered and past service movements 40.5 2.7 7.4 (49.0) (11.8) (10.2)
Current expense recovered and past service movements (0.8) - (0.8) 0.2 (0.8) (2.2)
Insurance service result 159.6 28.3 156.0 113.5 100.6 558.0
Net investment income 46.5 7.6 29.7 47.1 120.8 251.7
Finance (expense)/income from insurance contracts issued (4.3) 1.5 5.2 6.4 16.4 25.2
Finance income/(expense) from reinsurance contracts held 1.9 0.2 0.3 11.2 (1.3) 12.3
Net insurance and financial result 203.7 37.6 191.2 178.2 236.5 847.2
Other income 15.3 2.9 11.5 16.4 23.2 69.3
Other operating expenses (32.7) (14.4) (20.3) (17.4) (75.6) (160.4)
Foreign exchange losses (1.7) (0.3) (1.3) (1.8) (2.6) (7.7)
Segment result 184.6 25.8 181.1 175.4 181.5 748.4
Finance costs (19.5)
Profit before tax 728.9
Tax expense (157.3)
Profit after tax 571.6
Claims ratio 46% 26% 25% 44% 58% 45%
Expense ratio 23% 45% 37% 35% 30% 32%
Combined ratio 69% 71% 62% 79% 88% 77%
6 months ended 30 June 2023
Cyber Risks Digital MAP Risks Property Risks Specialty Risks Total
2023 $m $m $m $m $m $m
Insurance revenue 602.1 113.4 498.5 454.4 959.7 2,628.1
Insurance service expenses (447.7) (86.6) (383.1) (293.3) (869.8) (2,080.5)
Current and incurred past service claims (332.5) (42.5) (217.1) (156.2) (607.1) (1,355.4)
Insurance acquisition cash flows and directly attributable cash flows (115.2) (44.1) (166.0) (137.1) (262.7) (725.1)
Allocation of reinsurance premium (118.2) (14.0) (152.5) (75.1) (178.8) (538.6)
Amounts recoverable from reinsurers for incurred claims 89.1 6.8 38.9 (16.8) 215.2 333.2
Current claims recovered and past service movements 89.2 6.9 39.1 (16.6) 215.5 334.1
Current expense recovered and past service movements (0.1) (0.1) (0.2) (0.2) (0.3) (0.9)
Insurance service result 125.3 19.6 1.8 69.2 126.3 342.2
Net investment income 26.4 5.0 16.7 22.0 73.8 143.9
Finance expense from insurance contracts issued 2.6 3.9 4.5 6.7 (14.9) 2.8
Finance (expense)/income from reinsurance contracts held (3.0) (0.4) 0.1 (1.2) 0.3 (4.2)
Net insurance and financial result 151.3 28.1 23.1 96.7 185.5 484.7
Other income 5.5 3.3 10.8 4.5 12.8 36.9
Other operating expenses (21.9) (11.2) (27.7) (24.9) (51.9) (137.6)
Foreign exchange gains 0.9 0.2 0.7 0.6 1.3 3.7
Segment result 135.8 20.4 6.9 76.9 147.7 387.7
Finance costs (21.3)
Profit before tax 366.4
Tax expense (82.3)
Profit after tax 284.1
Claims ratio 50% 36% 52% 46% 50% 49%
Expense ratio 24% 44% 47% 36% 34% 35%
Combined ratio 74% 80% 99% 82% 84% 84%
Year to 31 December 2023
Cyber Risks Digital MAP Risks Property Risks Specialty Risks Total
2023 $m $m $m $m $m $m
Insurance revenue 1,174.9 224.7 1,015.4 1,145.2 1,882.2 5,442.4
Insurance service expenses (802.1) (144.0) (635.5) (643.9) (1,367.1) (3,592.6)
Current and incurred past service claims (576.7) (54.2) (340.8) (362.1) (899.8) (2,233.6)
Insurance acquisition cash flows and directly attributable cash flows (225.4) (89.8) (294.7) (281.8) (467.3) (1,359.0)
Allocation of reinsurance premium (308.5) (24.3) (236.1) (198.5) (359.9) (1,127.3)
Amounts recoverable from reinsurers for incurred claims 210.1 7.1 23.9 26.4 261.0 528.5
Current claims recovered and past service movements 210.8 7.3 24.6 26.9 262.5 532.1
Current expense recovered and past service movements (0.7) (0.2) (0.7) (0.5) (1.5) (3.6)
Insurance service result 274.4 63.5 167.7 329.2 416.2 1,251.0
Net investment income 86.6 14.8 53.5 75.2 250.1 480.2
Finance expense from insurance contracts issued (17.5) (2.9) (12.6) (10.9) (125.4) (169.3)
Finance (expense)/income from reinsurance contracts held (1.3) 0.5 2.1 (13.7) 28.3 15.9
Net insurance and financial result 342.2 75.9 210.7 379.8 569.2 1,577.8
Other income 16.9 3.2 14.8 16.5 27.1 78.5
Other operating expenses (52.7) (19.9) (68.1) (42.5) (182.6) (365.8)
Foreign exchange gains 1.0 0.2 0.8 0.9 1.6 4.5
Segment result 307.4 59.4 158.2 354.7 415.3 1,295.0
Finance costs (40.6)
Profit before tax 1,254.4
Tax expense (227.6)
Profit after tax 1,026.8
Claims ratio 42% 23% 41% 35% 42% 39%
Expense ratio 26% 45% 38% 30% 31% 32%
Combined ratio 68% 68% 79% 65% 73% 71%
3 Insurance revenue
Insurance revenue represents the total changes in the liability for remaining
coverage that relate to services for which the Group expects to receive
consideration. This includes the difference between the claims and other
expenses expected at the beginning of the year versus those actually incurred
(per Note 4), after the loss component allocation.
6 months ended 30 June 2024 6 months ended 30 June 2023 Year to 31 December 2023
$m $m $m
Amounts relating to the changes in the liability for remaining coverage:
- Expected incurred claims and other expenses after loss component allocation 1,502.7 1,400.8 3,015.7
- Change in risk adjustment for non-financial risk for the risk expired after 137.2 146.2 316.8
loss component allocation
- Contractual service margin ("CSM") recognised in profit or loss for services 349.7 320.1 691.4
provided
- Other amounts including experience adjustments 248.0 314.8 503.7
Insurance acquisition cash flows recovery 493.0 446.2 914.8
Total insurance revenue 2,730.6 2,628.1 5,442.4
4 Insurance service expenses
The table below shows the insurance service expenses recognised on groups of
insurance contracts issued by the Group. These are recognised in the statement
of profit or loss as they are incurred.
6 months ended 6 months ended Year to
30 June
30 June
31 December
2024 2023 2023
$m $m $m
Current & incurred past service claims 1,069.5 1,355.4 2,233.8
Insurance acquisition cash flows and directly attributable cash flows 755.4 725.1 1,358.8
Total insurance service expenses 1,824.9 2,080.5 3,592.6
5 Net expenses from reinsurance contracts held
The table below shows the net expenses from reinsurance contracts held,
comprised of the allocation of reinsurance premium and amounts recoverable
from reinsurers for incurred claims.
6 months ended 6 months ended Year to
30 June
30 June
31 December
2024 2023 2023
$m $m $m
Amounts relating to changes in the remaining coverage:
- Expected claims and other expenses recovery (228.2) (377.7) (740.5)
- Changes in the risk adjustment recognised for the risk expired (32.4) (51.7) (105.2)
- CSM recognised for the services received (71.9) (208.6) (290.8)
- Other amounts including experience adjustments (2.8) 99.4 9.2
Allocation of reinsurance premium (335.3) (538.6) (1,127.3)
Current claims recovered and past service movements (10.2) 334.1 532.1
Current expense recovered and past service movements (2.2) (0.9) (3.6)
Amounts recoverable from reinsurers for incurred claims (12.4) 333.2 528.5
Total net expenses from reinsurance contracts held (347.7) (205.4) (598.8)
6 Net financial result
Finance income/(expense) from insurance contracts issued and reinsurance
contracts held represents the interest accreted and the effect of changes in
discount rates and other financial assumptions. The net financial result is
comprised of the Group's net investment income/(loss) and its net insurance
finance income/(expense).
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Interest and dividends on financial assets at fair value 152.8 101.4 215.3
Interest on cash and cash equivalents 15.7 2.1 16.8
Net realised fair value gains/(losses) on financial assets at FVTPL 59.3 (49.7) (69.2)
Net unrealised fair value gains on financial assets at FVTPL 29.1 94.2 325.2
Investment income from financial assets 256.9 148.0 488.1
Investment management expenses (5.2) (4.1) (7.9)
Net investment income 251.7 143.9 480.2
Interest accreted (175.8) (162.8) (379.1)
Effect of changes in financial assumptions 201.0 165.6 209.8
Net finance income/(expense) from insurance contracts issued 25.2 2.8 (169.3)
Interest accreted 42.5 39.3 84.4
Effect of changes in financial assumptions (30.2) (43.5) (68.5)
Net finance income/(expense) from reinsurance contracts held 12.3 (4.2) 15.9
Net insurance finance income/(expense) 37.5 (1.4) (153.4)
Net financial result 289.2 142.5 326.8
Investment income by category of financial asset
The tables below show the Group's investment income, split by category of
financial asset. Note that 'Other financial assets' includes cash and cash
equivalents & derivative financial assets.
Debt securities and syndicate loans Capital growth assets Other financial assets Total
6 months ended 30 June 2024 $m $m $m $m
Interest and dividends received 142.9 5.6 20.0 168.5
Net realised gains 3.4 54.7 1.2 59.3
Net unrealised fair value gains/(losses) 13.2 19.8 (3.9) 29.1
Total investment income from financial assets 159.5 80.1 17.3 256.9
Debt securities and syndicate loans Capital growth assets Other financial assets Total
6 months ended 30 June 2023 $m $m $m $m
Interest and dividends received 94.5 3.3 5.7 103.5
Net realised (losses)/gains (50.9) 5.4 (4.2) (49.7)
Net unrealised fair value gains 54.3 36.0 3.9 94.2
Total investment income from financial assets 97.9 44.7 5.4 148.0
Debt securities and syndicate loans Capital growth assets Other financial assets Total
Year to 31 December 2023 $m $m $m $m
Interest and dividends received 208.4 3.7 20.0 232.1
Net realised (losses)/gains (117.8) 52.6 (4.0) (69.2)
Net unrealised fair value gains 291.2 34.0 - 325.2
Total investment income from financial assets 381.8 90.3 16.0 488.1
7 Other income
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
Commissions received by Beazley service companies 19.4 22.8 42.8
Profit commissions and other income received from syndicates 45.2 8.8 29.9
Managing agent fees from third party syndicates 4.7 4.8 3.6
Other income - 0.5 2.2
Total other income 69.3 36.9 78.5
8 Operating expenses
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
Administrative expenses 526.3 456.7 928.8
Recharged to third party syndicates (86.6) (54.0) (115.5)
Expenses reclassified within the insurance service result (279.3) (265.1) (447.5)
Total operating expenses 160.4 137.6 365.8
9 Finance costs
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
Interest expense on financial liabilities 15.7 15.7 31.6
Interest and charges related to letters of credit 2.3 3.8 5.9
Interest expense on lease liabilities 1.5 1.8 3.1
Total finance costs 19.5 21.3 40.6
10 Tax expense
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
Current tax expense 152.7 54.5 121.8
Prior year adjustment 8.5 0.8 1.5
Pillar Two tax expense(1) 8.7 - -
Current tax expense 169.9 55.3 123.3
Origination and reversal of temporary differences (13.8) 18.7 97.3
Impact of change in UK tax rates - 1.1 6.8
Prior year adjustments 1.2 7.2 0.2
Deferred tax (credit)/expense (12.6) 27.0 104.3
Tax charge 157.3 82.3 227.6
1 Pillar Two tax expense relates to Qualified Domestic Minimum Top-Up Tax
("QDMTT") in Ireland.
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
Deferred tax asset 105.9 35.7 46.9
Deferred tax liability (245.6) (112.0) (202.2)
Net deferred tax liability (139.7) (76.3) (155.3)
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
$m $m $m
UK (180.5) (65.5) (152.8)
US 105.9 34.4 46.7
Ireland (51.7) (39.8) (38.7)
Other¹ (13.4) (5.4) (10.5)
Net deferred tax liability (139.7) (76.3) (155.3)
1 Includes Canada, France, Germany, Spain and Switzerland.
The Organisation for Economic Co-Operation and Development Pillar Two
framework seeks to ensure that large multinational enterprises pay a minimum
corporate income tax rate of 15% in the countries in which they operate. In
2023 the UK government enacted legislation implementing the rules. Also in
2023, the Irish government enacted a QDMTT which applies a 15% minimum tax
rate to in-scope companies. Both sets of rules apply to the Group for the
first time from 1 January 2024.
We expect to pay additional tax in Ireland of $8.7m for this period under the
QDMTT. We do not expect to pay additional tax in relation to other
jurisdictions in which the Group operates as the tax rates in those
jurisdictions are above 15%.
The Group has applied the temporary mandatory exemption from accounting for
deferred taxes under the Pillar Two rules. Therefore no deferred taxes have
been recognised by the Group in relation to the Pillar Two rules.
11 Earnings per share
6 months 6 months Year to
ended ended 31 December
30 June 30 June 2023
2024 2023
Profit after tax ($m) 571.6 284.1 1,026.8
Weighted average number of shares in issue (millions) 658.3 664.3 663.8
Adjusted weighted average number of shares in issue (millions) 673.9 675.0 678.3
Basic (cents) 86.8c 42.8c 154.7c
Diluted (cents) 84.8c 42.1c 151.4c
Basic (pence) 68.7p 34.9p 124.8p
Diluted (pence) 67.1p 34.3p 122.1p
Basic earnings per share is calculated by dividing profit after tax by the
weighted average number of shares in issue. Diluted earnings per share is
calculated by dividing profit after tax by the adjusted weighted average
number of shares in issue. This assumes conversion of dilutive potential
ordinary shares, being shares from equity settled employee compensation
schemes. Note that both calculations exclude the shares held in the Employee
Share Options Plan of 8.8m as at 30 June 2024 (30 June 2023: 7.5m; 31
December 2023: 9.8m) until such time as they vest unconditionally with the
employees.
When calculating the weighted average number of shares in issue over the
reporting period, the purchases under the share buyback scheme (see Note 15)
were considered on a daily basis. The overall effect of the buyback was a
reduction by 6.4m in the average number of shares on both a basic and diluted
basis, offset by the purchase of 1.9m shares relating to employee share
schemes and the Beazley employee benefit trust on a basic basis (3.1m
diluted).
Further details of equity compensation plans can be found in the Group's
annual report and accounts 2023. Refer to Note 24 as well as in the
Directors' remuneration report on pages 127 to 145.
12 Dividends per share
No dividend has been declared in respect of the six months ended 30 June 2024
(6 months ended 30 June 2023: nil).
A dividend of 14.2p per ordinary share was paid to eligible shareholders on 03
May 2024 in respect of the year ended
31 December 2023.
13 Financial assets and liabilities
13a Carrying values of financial assets and liabilities
Set out below are the carrying values of the Group's 'financial assets at fair
value' and 'financial liabilities' per the statement of financial position.
These amounts exclude the following financial assets and liabilities which are
presented separately:
• Cash and cash equivalents carried at amortised cost; and
• Other receivables, lease liabilities, and other payables
carried at amortised cost.
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Debt securities:
- Government issued 4,166.6 4,724.1 4,469.1
- Corporate
- Investment grade 3,589.9 2,500.9 3,578.3
- High yield 632.4 362.7 489.0
Syndicate loans 28.8 33.2 34.1
Total debt securities and syndicate loans 8,417.7 7,620.9 8,570.5
Equity funds 432.2 251.2 282.7
Hedge funds 645.2 564.5 582.2
Illiquid credit assets 212.6 236.4 220.1
Total capital growth assets 1,290.0 1,052.1 1,085.0
Total financial investments at fair value through statement of profit or loss 9,707.7 8,673.0 9,655.5
Derivative financial assets 9.6 6.8 10.0
Total financial assets at fair value 9,717.3 8,679.8 9,665.5
Investment corporate bonds are rated BBB-/Baa3 or higher by at least one major
rating agency, while high yield corporate bonds have lower credit ratings.
Hedge funds are investment vehicles pursuing alternative investment
strategies, structured to have minimal correlation to traditional asset
classes. Equity funds are investment vehicles which invest in equity
securities and provide diversified exposure to global equity markets. Illiquid
assets are investment vehicles that predominantly target private lending
opportunities, often with longer investment horizons.
The fair value of these assets at 30 June 2024 excludes an unfunded commitment
of $30.2m (30 June 2023: $30.6m, 31 December 2023: $32.0m).
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Tier 2 subordinated debt (2026) 249.6 249.4 249.5
Tier 2 subordinated debt (2029) 298.9 298.7 298.8
Derivative financial liabilities 5.9 11.4 6.3
Total financial liabilities 554.4 559.5 554.6
13b Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy
described as follows. If the inputs used to measure the fair value of an asset
or a liability could be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety
in the same level of the fair value hierarchy as the lowest level input that
is significant to the entire measurement.
Fair value is the price at which an orderly transaction to sell an asset or to
transfer a liability would take place between market participants at the
measurement date. Fair value is a market-based measure and in the absence of
observable market prices in an active market, it is measured using the
assumptions that market participants would use when pricing the asset or
liability.
The best evidence of the fair value of a financial instrument at initial
recognition is the transaction price, i.e. the fair value of the
consideration given or received, unless the fair value of that instrument is
evidenced by comparison with other observable current market transactions in
the same instrument (i.e. without modification or repackaging) or based
on a valuation technique whose variables include only data from observable
markets. When the transaction price provides the best evidence of fair value
at initial recognition, the financial instrument is initially measured at the
transaction price and any difference between this price and the value
initially obtained from a valuation model is subsequently recognised in profit
or loss depending on the individual facts and circumstances of the transaction
but before the valuation is supported wholly by observable market data or the
transaction is closed out.
Level 1 - Valuations based on quoted prices in active markets for identical
instruments. An active market is a market in which transactions for the
instrument occur with sufficient frequency and volume on an ongoing basis such
that quoted prices reflect prices at which an orderly transaction would take
place between market participants at the measurement date.
Level 2 - Valuations based on quoted prices in markets that are not active, or
based on pricing models for which significant inputs can be corroborated by
observable market data, directly or indirectly (e.g. interest rates and
exchange rates). Level 2 inputs include:
• Quoted prices for similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in
markets that are not active, the prices are not current, or price quotations
vary substantially either over time or among market makers, or in which little
information is released publicly;
• Inputs other than quoted prices that are observable for the asset or
liability (for example, interest rates and yield curves observable at commonly
quoted intervals, implied volatilities and credit spreads); and
• Market corroborated inputs. Included within level 2 are government
bonds and treasury bills, equity funds and corporate bonds which are not
actively traded, hedge funds and senior secured loans.
Level 3 - Valuations based on inputs that are unobservable or for which there
is limited market activity against which to measure fair value. The
availability of financial data can vary for different financial assets and is
affected by a wide variety of factors, including the type of financial
instrument, whether it is new and not yet established in the marketplace, and
other characteristics specific to each transaction. To the extent that
valuation is based on models or inputs that are unobservable in the market,
the determination of fair value requires more judgement. Accordingly the
degree of judgement exercised by management in determining fair value is
greatest for instruments classified in level 3. The Group uses prices and
inputs that are current as of the measurement date for valuation of these
instruments.
Valuation approach - level 2 instruments
a) For the Group's level 2 debt securities, our fund administrator obtains the
prices used in the valuation from independent pricing vendors. The independent
pricing vendors derive an evaluated price from observable market inputs. These
inputs are verified in their pricing assumptions such as weighted average
life, discount margins, default rates, and recovery and prepayments
assumptions for mortgage securities.
b) For our hedge funds, the pricing and valuation of each fund is undertaken
by administrators in accordance with each underlying fund's valuation policy.
Individual fund prices are communicated by the administrators to all investors
via the monthly investor statements. The fair value of the hedge fund
portfolios are calculated by reference to the underlying net asset values of
each of the individual funds. Our hedge funds are managed by Falcon Money
Management Holdings Limited, an associate of the Group.
c) Subordinated debt and tier 2 subordinated debt fair value are based on
quoted market prices.
Valuation approach - level 3 instruments
a) Our illiquid fund investments are generally closed ended limited
partnerships or open ended funds. The Group relies on a third party fund
manager to manage these investments and provide valuations. Note that while
the funds report with full transparency on their underlying investments, the
investments themselves are predominantly in private and unquoted instruments.
The valuation techniques used by the fund managers to establish the fair
values therefore require a degree of estimation. For example, these may
incorporate discounted cash flow models or a more market-based approach,
whilst the main inputs might include discount rates, fundamental pricing
multiples, recent transaction prices, or comparable market information to
create a benchmark multiple.
b) Syndicate loans are non-tradeable instruments provided by our Group
syndicates to the Central Fund at Lloyd's in respect of the 2019 (repaid by
Lloyd's during the period) and 2020 underwriting years. These are valued
internally using discounted cash flow models provided by Lloyd's to the
market, designed to appropriately reflect the credit and illiquidity risk of
the instruments. Valuation outputs are then validated using a control model,
with the following inputs and assumptions. Note that these internally valued
instruments are deemed by management to be inherently more subjective than
external valuations.
• Cash flows are comprised of the notional cost of the loans, annual
interest income, and the final repayment of the loans at the end of the 5-year
term. The weighted average interest rate applicable across the two tranches of
syndicate loans is 3.7% (30 June 2023: 3.8%, 31 December 2023: 3.8%).
• A discount rate of 9.2% (30 June 2023: 8.5%, 31 December 2023: 7.0%)
is applied. This is calculated using a combination of the long-term treasury
bond risk-free rate, the industry/geographic average regression beta, and
a selected risk premium.
A 10% decrease in the fair value of the Group's level 3 financial assets would
have an impact of ($18.9m) on profit after tax / equity (30 June 2023:
($20.9m), 31 December 2023: ($20.8m)).
There were no changes in the valuation techniques during the year compared to
those described in the Group's 2023 Annual Report and Accounts.
13c Fair values of financial assets and liabilities
The following tables show the fair values of financial assets and financial
liabilities, including their levels in the fair value hierarchy. The Group's
cash and cash equivalents, other receivables, lease liabilities, and other
payables have been excluded from these tables. These instruments are measured
at amortised cost, and their carrying values are deemed to be reasonable
approximations of fair values at the reporting date.
Level 1 Level 2 Level 3 Total
30 June 2024 $m $m $m $m
Financial assets carried at fair value
Fixed and floating rate debt securities
- Government issued 2,948.9 1,217.7 - 4,166.6
- Corporate
- Investment grade 2,552.1 1,037.8 - 3,589.9
- High yield 632.4 - - 632.4
Syndicate loans - - 28.8 28.8
Equity funds 432.2 - - 432.2
Hedge funds - 645.2 - 645.2
Illiquid credit assets - - 212.6 212.6
Derivative financial assets 9.6 - - 9.6
Total financial assets carried at fair value 6,575.2 2,900.7 241.4 9,717.3
Financial liabilities carried at fair value
Derivative financial liabilities 5.9 - - 5.9
Total financial liabilities carried at fair value 5.9 - - 5.9
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026) - 245.7 - 245.7
Tier 2 subordinated debt (2029) - 287.1 - 287.1
Total fair value of financial liabilities carried at amortised cost - 532.8 - 532.8
Level 1 Level 2 Level 3 Total
30 June 2023 $m $m $m $m
Financial assets carried at fair value
Fixed and floating rate debt securities
- Government issued 3,544.9 1,179.2 - 4,724.1
- Corporate
- Investment grade 1,656.0 844.9 - 2,500.9
- High yield 76.8 285.9 - 362.7
Syndicate loans - - 33.2 33.2
Equity funds 251.2 - - 251.2
Hedge funds - 564.5 - 564.5
Illiquid credit assets - - 236.4 236.4
Derivative financial assets 6.8 - - 6.8
Total financial assets carried at fair value 5,535.7 2,874.5 269.6 8,679.8
Financial liabilities carried at fair value
Derivative financial liabilities 11.4 - - 11.4
Total financial liabilities carried at fair value 11.4 - - 11.4
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026) - 240.8 - 240.8
Tier 2 subordinated debt (2029) - 275.8 - 275.8
Total fair value of financial liabilities carried at amortised cost - 516.6 - 516.6
Level 1 Level 2 Level 3 Total
31 December 2023 $m $m $m $m
Financial assets carried at fair value
Fixed and floating rate debt securities
- Government issued 3,291.9 1,177.2 - 4,469.1
- Corporate
- Investment grade 1,596.7 1,981.6 - 3,578.3
- High yield 488.1 0.9 - 489.0
Syndicate loans - - 34.1 34.1
Equity funds 282.7 - - 282.7
Hedge funds - 582.2 - 582.2
Illiquid credit assets - - 220.1 220.1
Derivative financial assets 10.0 - - 10.0
Total financial assets carried at fair value 5,669.4 3,741.9 254.2 9,665.5
Financial liabilities carried at fair value
Derivative financial liabilities 6.3 - - 6.3
Total financial liabilities carried at fair value 6.3 - - 6.3
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026) - 241.7 - 241.7
Tier 2 subordinated debt (2029) - 271.9 - 271.9
Total fair value of financial liabilities carried at amortised cost - 513.6 - 513.6
13d Transfers
The Group determines whether transfers have occurred between levels in the
fair value hierarchy by assessing categorisation at the end of the reporting
period. The following transfers between levels 1 & 2 for the period ended
30 June 2024 reflect the level of trading activities including frequency and
volume derived from market data obtained from an independent external
valuation tool. There were no transfers into or out of Level 3 in the 6 months
ended 30 June 2024 (30 June 2023: nil, 31 December 2023: nil).
Level 1 Level 2
30 June 2024 vs 31 December 2023 transfer from level 2 to level 1 $m $m
- Corporate Bonds - Investment grade 1,011.3 (1,011.3)
Level 1 Level 2
30 June 2024 vs 31 December 2023 transfer from level 1 to level 2 $m $m
- Corporate Bonds - Investment grade (284.8) 284.8
- Government issued (71.0) 71.0
The values shown in the transfer tables above are translated using foreign
exchange rates as at 30 June 2024.
13e Level 3 investment reconciliations
The table below shows a reconciliation from opening to closing of the Group's
level 3 investments. All realised and unrealised gains/(losses) are recognised
through net investment income in the statement of profit or loss (refer to
Note 6).
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Opening position as at 1 January 254.2 255.4 255.4
Purchases 20.7 16.3 21.8
Sales (35.0) (12.6) (37.4)
Repayment of syndicate loan (7.7) - -
Realised gain 10.5 7.0 20.2
Unrealised (loss)/gain (2.0) 2.8 (6.6)
Foreign exchange gain 0.7 0.7 0.8
Closing position 241.4 269.6 254.2
14 Insurance and reinsurance contract assets and liabilities
14a Analysis by measurement component
i) Insurance contracts issued
The tables below set out the estimated present value of future cash flows, the
risk adjustment for non-financial risk and the contractual service margin
("CSM") for insurance contracts issued.
Present value of future cash flows Risk adjustment for non-financial risk CSM Total
$m $m $m $m
Insurance contract assets 123.5 (12.9) (26.5) 84.1
Insurance contract liabilities (6,324.0) (711.3) (314.5) (7,349.8)
Net balance at (6,200.5) (724.2) (341.0) (7,265.7)
1 January 2023
Insurance contract assets 99.3 (1.7) (5.4) 92.2
Insurance contract liabilities (6,624.6) (883.0) (350.7) (7,858.3)
Net balance at 30 June 2023 (6,525.3) (884.7) (356.1) (7,766.1)
Insurance contract assets 103.8 (1.2) (1.1) 101.5
Insurance contract liabilities (6,874.5) (774.8) (342.9) (7,992.2)
Net balance at 31 December 2023 (6,770.7) (776.0) (344.0) (7,890.7)
Insurance contract assets 117.5 (1.0) (0.5) 116.0
Insurance contract liabilities (6,916.1) (748.9) (453.7) (8,118.7)
Net balance at 30 June 2024 (6,798.6) (749.9) (454.2) (8,002.7)
ii) Reinsurance contracts held
The tables below set out the estimates of the present value of future cash
flows, risk adjustment for non-financial risk and CSM for reinsurance
contracts held.
Present value of future cash flows Risk adjustment for non-financial risk CSM Total
$m $m $m $m
Reinsurance contract assets 1,853.3 184.6 137.4 2,175.3
Reinsurance contract liabilities (193.8) 12.7 19.9 (161.2)
Net balance at 1 January 2023 1,659.5 197.3 157.3 2,014.1
Reinsurance contract assets 2,000.0 288.3 204.5 2,492.8
Reinsurance contract liabilities (298.3) (3.5) 8.2 (293.6)
Net balance at 30 June 2023 1,701.7 284.8 212.7 2,199.2
Reinsurance contract assets 2,143.4 166.2 117.1 2,426.7
Reinsurance contract liabilities (404.4) 58.4 12.5 (333.5)
Net balance at 31 December 2023 1,739.0 224.6 129.6 2,093.2
Reinsurance contract assets 2,108.3 153.3 161.1 2,422.7
Reinsurance contract liabilities (487.2) 21.1 76.3 (389.8)
Net balance at 30 June 2024 1,621.1 174.4 237.4 2,032.9
14b Analysis of the liability for remaining coverage and the liability for
incurred claim
i) Insurance contracts issued
The tables below analyse insurance contract assets and liabilities between the
liability for remaining coverage ("LRC") and the liability for incurred claims
("LIC") for insurance contracts issued.
LRC LIC Total
Excluding Loss Component Loss Component
$m $m $m $m
Insurance contract assets 87.2 - (3.1) 84.1
Insurance contract liabilities (824.7) (10.1) (6,515.0) (7,349.8)
Net balance at 1 January 2023 (737.5) (10.1) (6,518.1) (7,265.7)
Insurance contract assets 92.0 - 0.2 92.2
Insurance contract liabilities (717.8) (9.7) (7,130.8) (7,858.3)
Net balance at 30 June 2023 (625.8) (9.7) (7,130.6) (7,766.1)
Insurance contract assets 101.7 - (0.2) 101.5
Insurance contract liabilities (848.8) (8.3) (7,135.1) (7,992.2)
Net balance at 31 December 2023 (747.1) (8.3) (7,135.3) (7,890.7)
Insurance contract assets 115.0 - 1.0 116.0
Insurance contract liabilities (873.5) (2.7) (7,242.5) (8,118.7)
Net balance at 30 June 2024 (758.5) (2.7) (7,241.5) (8,002.7)
ii) Reinsurance contracts held
The tables below analyse reinsurance contract assets and liabilities between
the asset for remaining coverage and asset for incurred claims for reinsurance
contracts held.
Remaining coverage Incurred claims Total
$m $m $m
Reinsurance contract assets 24.9 2,150.4 2,175.3
Reinsurance contract liabilities (254.7) 93.5 (161.2)
Net balance at 1 January 2023 (229.8) 2,243.9 2,014.1
Reinsurance contract assets 189.6 2,303.2 2,492.8
Reinsurance contract liabilities (359.3) 65.7 (293.6)
Net balance at 30 June 2023 (169.7) 2,368.9 2,199.2
Reinsurance contract assets 758.4 1,668.3 2,426.7
Reinsurance contract liabilities (1,080.3) 746.8 (333.5)
Net balance at 31 December 2023 (321.9) 2,415.1 2,093.2
Reinsurance contract assets 181.2 2,241.5 2,422.7
Reinsurance contract liabilities (422.2) 32.4 (389.8)
Net balance at 30 June 2024 (241.0) 2,273.9 2,032.9
14c Future CSM release
The tables below show when the Group expects to release the closing CSM to the
profit or loss, in appropriate future time bands which are based on calendar
years (i.e 1 January to 31 December). It is presented for both insurance
contracts issued and reinsurance contracts held.
30 June 30 June 31 December
2024 2023 2023
Insurance contracts issued $m $m $m
Number of years until expected to be recognised
1 294.2 241.6 299.0
2 116.1 82.7 14.7
3 15.9 10.4 10.5
4 10.8 7.4 7.6
5 7.0 5.5 5.1
6-10 10.2 8.5 7.1
Total 454.2 356.1 344.0
30 June 30 June 31 December
2024 2023 2023
Reinsurance contracts held $m $m $m
Number of years until expected to be recognised
1 127.3 113.8 118.7
2 100.0 82.2 3.7
3 3.9 4.9 2.6
4 2.4 3.3 1.8
5 1.6 2.6 1.2
6-10 2.2 5.9 1.6
Total 237.4 212.7 129.6
14d Changes in accounting estimates
Insurance and reinsurance contract assets and liabilities included within the
Group's statement of financial position are made up of multiple components.
The liability for remaining coverage includes an element of the present value
of future cash flows, a risk adjustment for non-financial risk and the CSM.
The liability for incurred claims includes the remainder of the present value
of future cash flows and a risk adjustment for non-financial risk. For
portfolios of issued insurance contracts that are onerous, a loss component is
included within the LRC and recognised in profit or loss upon initial
recognition. No loss component is recorded for reinsurance contracts held.
The present value of future cash flows is sensitive to changes in accounting
estimates, in particular the estimation of future cash flows which are made on
a best estimate basis, and discount rates. As estimates of premiums, expenses
and claims change, this is reflected within the present value of future cash
flows, in addition to the incorporation of cash flows relating to new business
and crystallisation of expected cash flows relating to in-force business. The
risk adjustment changes as amounts are released from in-force business, offset
by the recognition of new business and any changes to the cost of capital
applied. An explanation of how amounts have moved in the year is set out in
Note 2. This includes an accrual for additional premiums and a reduction of
recoveries contributing to an overall expense on the amount recoverable from
reinsurers for incurred claims following a change in accounting estimate in
relation to one of our major reinsurance contracts in the Specialty Risks
division.
Future cash flows
The Group has estimated the amount, timing and probability of future cash
flows. Estimates are formed by applying assumptions about past events, current
conditions and forecasts of future conditions. These have been outlined below:
• Future expected premium cash flows are based on data entered into
underwriting systems. These have a level of estimate embedded for certain
contracts, with payment/settlement patterns used to determine timing.
• Gross and reinsured claims payments are determined using an approach
whereby cash flows are set at a Year of Account and reserving class level
based on the latest quarterly reserving exercise.
• Expenses are deemed to be within the contract boundary, and therefore
included in the cash flows, when these are directly attributable to fulfilling
insurance contracts.
• Lapses/cancellations are projected by applying assumptions determined
through statistical measures based on the Group's experience. These vary by
product type, policy duration and sales trends.
Discount rates
The discount rates applied to expected future cash flows in measuring
insurance contract liabilities have been determined using the bottom-up
approach. This method takes the risk-free rates and adjusts for an illiquidity
premium. Risk-free rates are derived using government yield curves denominated
in the same currency as the product being measured. The illiquidity premium
represents the differences in the liquidity characteristics between the
financial assets used to derive the risk-free yield and the insurance contract
liability characteristics. Judgement has been applied by management in
determining these liquidity characteristics. The illiquidity premium is
sourced from Moody's and adjusted to reflect the Group's own asset portfolio.
The discount rates applied in determining the Group's IFRS 17 results are as
follows:
30 June 2024 1 Year 3 Year 5 Year
USD 5.4 % 4.9 % 4.7 %
CAD 5.1 % 4.5 % 4.3 %
GBP 5.0 % 4.6 % 4.4 %
EUR 3.5 % 3.1 % 3.0 %
30 June 2023 1 Year 3 Year 5 Year
USD 5.7 % 5.0 % 4.6 %
CAD 5.7 % 5.0 % 4.5 %
GBP 6.1 % 5.8 % 5.4 %
EUR 3.8 % 3.4 % 3.2 %
31 December 2023 1 Year 3 Year 5 Year
USD 5.1 % 4.5 % 4.3 %
CAD 5.3 % 4.4 % 4.1 %
GBP 4.9 % 4.0 % 3.8 %
EUR 3.5 % 2.7 % 2.6 %
Risk adjustment
Estimation of the risk adjustment for non-financial risk is based on the
underwriting risk element of the Solvency II internal model which captures all
of the material exposure elements for the Group. IFRS 17 does not prescribe a
specific methodology for the calculation of the risk adjustment for
non-financial risk and the Group has elected to use a cost of capital
approach. The Group's cost of capital represents the return required to
compensate for the exposure to non-financial risk, in order to comply with
internal economic capital requirements. Under this method the risk adjustment
is determined by applying a cost rate to the present value of projected
capital relating to non-financial risk. The risk adjustment for insurance
contracts is expected to have a reserve confidence level in the 80th to 90th
percentile range.
As at 30 June 2024, the reserve confidence level was at the 88th percentile
(30 June 2023: 89th percentile, 31 December 2023: 85th percentile), which is
based on the outcomes of the recent Q1 2024 reserve review exercise. The
results of this reserve review underpin the HY24 IFRS 17 financials.
15 Other reserves
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Employee share options reserve 47.5 27.0 50.7
Employee share trust reserve (57.5) (57.4) (63.5)
Capital redemption reserve 1.2 - -
Total other reserves (8.8) (30.4) (12.8)
On 7 March 2024, Beazley plc announced to the market its intention to return
up to $325.0m of surplus capital to its shareholders through a share
repurchase programme running to 31 December 2024. Purchases began on 8 March
2024 and at the balance sheet date, 20.5m ordinary shares had been purchased
for total consideration of $173.1m, of which 0.8m were held as treasury shares
pending cancellation. At 30 June 2024, there were 654.9m ordinary shares in
issue.
The price of shares purchased as part of the buyback scheme is recognised
through retained earnings. On their cancellation, the nominal value of the
ordinary shares is deducted from share capital and the equivalent amount is
recognised within the capital redemption reserve.
16 Related party transactions
Aside from the changes noted below, the related party transactions of the
Group are consistent in nature and scope with those disclosed in Note 32 of
the Group's consolidated financial statements for the year ended 31 December
2023.
• From 1 January 2024, the reinsurance agreement between syndicates 2623
and 623 with 6107 was amended so that only Cyber business was ceded to
syndicate 6107.
• From 1 January 2024, syndicate 3623 entered into a reinsurance
agreement with syndicate 6107 to cede a portion of Cyber business to that
syndicate.
• From 1 January 2024, syndicates 623 and 2623 entered into an agreement
to cede a portion of its Property Treaty business to the Group's internal
reinsurer, Beazley Insurance dac.
• For the 2024 Year of Account, the Group is providing 20% capacity to
syndicate 5623.
17 Subsequent events
From 1 July 2024 until the approval of these interim financial statements on 7
August 2024, Beazley plc purchased 9.0m of its ordinary shares for a
consideration of $76.1m pursuant to the Share Buyback programme announced on 8
March 2024. Of these shares, 7.8m were cancelled by 7 August 2024. The
remaining 1.2m are held in treasury and will be cancelled in due course.
On 6 August 2024, Beazley plc announced that effective immediately, the Board
had appointed Carolyn Johnson as a member of the Nomination and Risk
Committees and Bob Stuchbery as a member of the Nomination Committee.
Alternative performance measures ("APMs")
Beazley plc uses APMs to help explain its financial performance and position.
These measures are not defined under IFRS. The Group is of the view that the
use of these measures enhances the usefulness of our financial reporting and
allows for improved comparison to industry peers.
Information on APMs used by the Group is set out below. Unless otherwise
stated, amounts are disclosed in millions of dollars ($m).
Insurance written premiums & net insurance written premiums
Insurance written premiums ($m) is calculated by deducting the reinstatement
premiums and profit commissions from the gross premiums written. Net
insurance written premiums ($m) is calculated by adding insurance ceded
premiums to this result. These APMs represent management's view of premiums
written in each period, similar to the previous "Gross premiums written"
metric reported under IFRS 4. The primary difference between insurance written
premiums and insurance revenue relates to the deferral and earning of income
over the period in which coverage is provided.
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Insurance written premiums 3,123.3 2,921.1 5,601.4
Earnings adjustment (392.7) (293.0) (159.0)
Insurance revenue 2,730.6 2,628.1 5,442.4
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Insurance ceded premiums (536.8) (571.5) (905.2)
Earnings adjustment 201.5 32.9 (222.1)
Allocation of reinsurance premiums (335.3) (538.6) (1,127.3)
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
$m $m $m
Insurance written premiums 3,123.3 2,921.1 5,601.4
Add insurance ceded premiums (536.8) (571.5) (905.2)
Net insurance written premiums 2,586.5 2,349.6 4,696.2
Contractual Service Margin ("CSM") sustainability index
The CSM reflects the expected profit of contracts within the liability for
remaining coverage. The sustainability index (%) is calculated by dividing
the closing CSM by the opening CSM at each period. A ratio of 100% and above
shows that the expected profit within the LRC is higher than the previous
valuation.
6 months ended 6 months ended 6 months ended 6 months ended Year to Year to
30 June 30 June 30 June 30 June 31 December 31 December
2024 2024 2023 2023 2023 2023
Gross Net Gross Net Gross Net
Closing CSM ($m) 454.2 216.8 356.1 143.4 344.0 214.4
Divided by opening CSM ($m) 344.0 214.4 341.0 183.7 341.0 183.7
CSM sustainability index 132% 101% 104% 78% 101% 117%
Claims, expense & combined ratios
Claims ratio (%) is calculated as insurance service expenses less directly
attributable expenses, net of reinsurance recoveries, divided by insurance
revenue net of reinsurance ceded revenue. Expense ratio (%) is calculated as
the sum of insurance acquisition cash flows amortisation and other directly
attributable expenses, divided by insurance revenue net of reinsurance ceded
revenue. Combined ratio (%) is calculated as insurance service expenses net of
reinsurance recoveries, divided by the insurance revenue net of reinsurance
ceded revenue. This is also the sum of the claims and expense ratios. The
combined ratio below is shown with and without the impact of discounting.
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
Insurance service expenses ($m) 1,824.9 2,080.5 3,592.6
Less other directly attributable expenses ($m)(1) (757.6) (726.0) (1,362.6)
Less current claims recovered and past service movements ($m) 10.2 (334.1) (532.1)
Net claims ($m) 1,077.5 1,020.4 1,697.9
Insurance revenue ($m) 2,730.6 2,628.1 5,442.4
Less allocation of reinsurance premium ($m) (335.3) (538.6) (1,127.3)
Divided by net insurance revenue ($m) 2,395.3 2,089.5 4,315.1
Claims ratio 45% 49% 39%
Directly attributable expenses ($m)(1) 757.6 726.0 1,362.6
Divided by net insurance revenue ($m) 2,395.3 2,089.5 4,315.1
Expense ratio 32% 35% 32%
Combined ratio (discounted) 77% 84% 71%
Effect of discounting 4% 4% 3%
Combined ratio (undiscounted) 81% 88% 74%
1 Directly attributable expenses are comprised of insurance acquisition cash
flows amortisation, other directly attributable expenses, and current expense
recovered and past service movements per Note 2.
Net assets per share & net tangible assets per share
Net assets per share is the ratio (in pence and cents) calculated by dividing
the net assets or total equity of the Group by the number of shares in issue
at the end of the period, excluding those held by the employee benefits trust.
Net tangible assets per share excludes intangible assets from net assets in
the above calculation.
The basis of this calculation has not changed as a result of the share
buyback. The share buyback has resulted in a reduction of 19.7m shares in
issue over the period (offset by 3.1m of allotments relating to employee share
schemes and releases from the EBT). The impact of the share buyback on net
assets can be seen in the Condensed Consolidated Statement of Changes in
Equity.
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
Net assets ($m) 4,180.6 3,123.6 3,882.1
Less intangible assets ($m) (178.4) (134.8) (165.3)
Net tangible assets ($m) 4,002.2 2,988.8 3,716.8
Divided by the shares in issue at the period end (millions)1: 646.1 663.5 662.7
Net assets per share (cents) 647.1 470.8 585.8
Net tangible assets per share (cents) 619.4 450.5 560.9
Converted at spot rate: 0.78 0.80 0.80
Net assets per share (pence) 504.7 376.6 468.6
Net tangible assets per share (pence) 483.1 360.4 448.7
1 Shares in issue at the period end exclude those held by the employee
benefits trust.
Return on equity
Return on equity (%) is calculated by dividing the consolidated profit after
tax by the average equity for the period, calculated as the average of the
opening and closing equity positions. The basis of this calculation remains
unchanged from previous periods following the share buyback.
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
Profit after tax ($m) 571.6 284.1 1,026.8
Divided by average total equity ($m) 4,031.4 3,038.8 3,418.6
Annualised return on equity 28% 18% 30%
Investment return
Investment return (%) is calculated by dividing the net investment income by
the average financial assets at fair value and cash and cash equivalents held
by the Group over the period.
6 months ended 6 months ended Year to
30 June 30 June 31 December
2024 2023 2023
Net investment income ($m) 251.7 143.9 480.2
Opening invested assets:
Financial assets at fair value ($m) 9,665.5 8,345.6 8,345.6
Cash and cash equivalents ($m) 812.3 652.5 652.5
Invested assets at the beginning of the period ($m): 10,477.8 8,998.1 8,998.1
Closing invested assets:
Financial assets at fair value ($m) 9,717.3 8,679.8 9,665.5
Cash and cash equivalents ($m) 945.6 964.3 812.3
Invested assets at the end of the period ($m): 10,662.9 9,644.1 10,477.8
Divided by average invested assets ($m) 10,570.4 9,321.1 9,738.0
Annualised investment return 4.8% 3.0% 4.9%
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PRMMTMTJMTAIRecent news on Beazley
See all newsREG - Beazley PLC - Transaction in Own Shares
AnnouncementREG - Beazley PLC - Transaction in Own Shares
AnnouncementREG - Beazley PLC - Transaction in Own Shares
AnnouncementREG - Beazley PLC - Transaction in Own Shares
AnnouncementREG - Beazley PLC - Transaction in Own Shares
Announcement