REG - Beazley PLC - Trading statement

BeazleyAnnouncement

11/11/2022 08:15

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RNS Number : 0758G  Beazley PLC  11 November 2022

Beazley remains on track for high 80s FY 2022 combined ratio

 

London, 11 November 2022

 

Beazley plc trading statement for the nine months ended 30 September 2022

 

 

Overview

·      Gross premiums written increased by 22% to $3,980m (Q3 2021:
$3,271m)

 

·      Premium rates on renewal business increased by 17% (Q3 2021: 23%)

 

·      Initial Hurricane Ian loss estimate of $120m net of reinsurance

 

·      Mark to market investment loss of $289m or 3.6% year to date (Q3
2021: income of $99m or 1.4%)

 

·      High 80s combined ratio guidance remains for 2022 full year

 

 

 

Adrian Cox, Chief Executive Officer, said:

 

"We have had a strong underwriting performance over the quarter with all
divisions continuing to grow. As expected overall rates have moderated,
however we are seeing increased demand across many lines of business which
supports our growth ambitions.

 

Whilst mark to market losses have occurred due to rising yields in our fixed
income portfolio, rising yields also mean we anticipate significant future
investment returns.

 

We remain confident of our guidance of high 80s combined ratio assuming claims
experience is as expected for the remainder of the year.

 

 

 

 

                                 30 September 2022  30 September 2021  % increase
 Gross premiums written ($m)     3,980              3,271              22

 Investments and cash ($m)       8,093              7,453              9

 Year to date investment return  (3.6%)               1.4%

 Rate increase                   17%                23%

 

 

 

Premiums

 

 

Our performance to the end of September 2022 by business division is as
follows:

 

                  Gross premiums written  Gross premiums written  % increase  Year to date Rate change

                  30 September 2022       30 September 2021

                  $m                      $m                      %           %

 Cyber Risks      838                     505                     66%         51%
 Digital          160                     139                     15%         16%
 MAP Risks        830                     659                     26%         5%
 Property Risks   700                     642                     9%          10%
 Specialty Risks  1,452                   1,326                   10%         3%
 OVERALL          3,980                   3,271                   22%         17%

 

We have seen growth across all divisions. Key points to highlight are as
follows:

 

Cyber Risks: in the year to date we have seen rate increases of 51%, albeit
this trend moderated somewhat in Q3. We have been taking advantage of new
business opportunities and have put more exposure on the book this year, as
planned, resulting in premium growth of 66%. We expect continued growth into
2023 and beyond.

 

Property Risks: given the change in market sentiment in Q3 we expect growth to
accelerate.  We are now beginning to see positive movement on rates and as
material hardening occurs with outsized returns available, we would expect to
deploy more capital across our primary property and reinsurance books.

 

Specialty Risks: The D&O market has been more competitive than we
originally thought at the start of 2022.  As a result, growth is slightly
less than expected within Specialty Risks, however, it is still strong at 10%.

 

 

 

Claims update

 

Total natural catastrophes so far this year have been within the margins held
in our reserves for such events, with an initial Hurricane Ian estimate of
around $120m net of reinsurance.

 

The improving trajectory on the frequency of our ransomware claims in our
cyber portfolio has continued following the remediation action we have been
taking since October 2020. The latest data shows frequency reductions of 35%
per policy, and 70% when premium rate changes are also allowed for.

 

We continue to monitor inflation to ensure adequate pricing and remain
cautious in areas where our product set is most exposed. The impact of
inflation on our claims environment has been as expected.

 

 

 

Investments

Our portfolio allocation was as follows:

 

                                                           30 September 2022      30 September 2021
                                                           Assets     Allocation  Assets     Allocation
                                                           $m         %           $m         %
 Cash and cash equivalents                                 625        7.7         444        6.0
 Fixed and floating rate debt securities
 -     Government, quasi-government and supranational      4,443      54.9        3,775      50.6
 -     Corporate bonds
 -     Investment grade                                    1,876      23.2        1,824      24.5
 -     High yield                                          297        3.7         440        5.9
 Syndicate loans                                           31         0.4         41         0.5
 Derivative financial assets                               1          -           7          0.1
 Core portfolio                                            7,273      89.9        6,531      87.6
 Equity funds                                              107        1.3         229        3.1
 Hedge funds                                               506        6.2         455        6.1
 Illiquid credit assets                                    207        2.6         238        3.2
 Capital growth assets                                     820        10.1        922        12.4
 Total                                                     8,093      100.0       7,453      100.0

 

Our investments returned a loss of 1.2%, or $96m in the third quarter of 2022,
bringing the year-to-date loss to 3.6%, or $289m. This is a consequence of the
unprecedented increase in interest rates, in the first nine months of the
year, generating mark to market losses in our fixed income portfolio. Risk
assets have also seen weakness, as global equity markets fell by more than
25%. At 30 September, our fixed income portfolio had a duration of 1.9 years
and a market yield of 4.6%, which is indicative of the much higher returns we
hope to achieve in future periods, once yields stabilise.

 

 

Conference call

 

We will be hosting a conference call at 8am this morning, dial in details are
below, please join 5 minutes before the start:

 

Webcast URL:
https://www.investis-live.com/beazley/63454c3e6a85cc120078eb08/ertf
(https://www.investis-live.com/beazley/63454c3e6a85cc120078eb08/ertf)

 

 

ENDS

For further information, please contact:

Beazley plc

Sarah Booth, Head of Investor Relations

 

+44 (0) 207 6747582

 

 

 

 

 

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 2021, underwrote gross premiums
worldwide of $4,618.9 million. 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. In the surplus lines market, coverage is provided by the Beazley
syndicates at Lloyd's.

 

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/)

 

 

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