Beazley PLC

Earnings Release • Nov 8, 2019

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RNS Number : 7189S

Beazley PLC

08 November 2019

Press

Release

Beazley plc trading statement for the nine months ended 30 September 2019

London, 8 November 2019

Overview

·      Gross premiums written increased by 12% to $2,192m (Q3 2018: $1,958m)

·      Premium rates on renewal business increased by 6%

·      Strong investment return of $215m (Q3 2018: $26m)

Andrew Horton, Chief Executive Officer, said: 

"We continue to see strong, double digit premium growth across our business as a whole, driven by organic growth and rate rises across many lines of business.

We have continued to experience heightened claims activity with our exposure to catastrophes in Q3 estimated to be $80m net of reinsurance and reinstatement premium.

We have been anticipating a more difficult claims environment in areas such as directors & officers, employment practice liability and healthcare liability in recent years. As such we have been adjusting our underwriting for several years in these areas and began opening at a higher reserve position at the start of 2018.

Our investment team has delivered another strong performance in Q3, bringing our year to date net investment income to $215m or 4.0%."

	30 September 2019	30 September 2018	% increase
Gross premiums written ($m)	2,192	1,958	12
Investments and cash ($m)	5,657	5,012	13
Year to date investment return	4.0%	0.5%
Rate increase	6%	3%

Premiums

Gross premiums written for the nine months ended 30 September 2019 increased by 12% year on year to $2,192m. Growth has been achieved in most of our divisions.

Our property division saw a slight decrease in premium as a result of our decision to cease writing construction and engineering business in 2019. With this business excluded, growth in our property division was 7%.

Our new specialty lines division saw premium growth of 24% to $662m, including our market facilities business which contributed $34m. Underlying growth for the division excluding market facilities was 18%. We also saw an increase in business written through our international financial lines platform, growing 59% year on year.

Our newly created cyber & executive risk division achieved premium growth of 16%. A strong performance across our US platform aided in the growth of this division, alongside rate rises of 4%.

Our political, accident & contingency division achieved premium growth of 11% year on year, writing $204m in the nine months to 30 September 2019 driven by our personal accident direct and life teams.

Our reinsurance and marine division both saw small increases in premium of 2% and 5% respectively. Both divisions have seen rate increases in 2019 which has facilitated this growth.

Our performance to the end of September 2019 by business division is:

	Gross premiums written 30 September 2019	Gross premiums written 30 September 2018	% increase/ (decrease)	Q3 2019 Rate change
	$m	$m	%	%
Cyber & executive risk	567	490	16%	4%
Marine	231	221	5%	8%
Political, accident & contingency	204	183	11%	-
Property	337	340	(1%)	11%
Reinsurance	191	188	2%	5%
Specialty lines	662	536	24%	5%
OVERALL	2,192	1,958	12%	6%

Business update

In September, the group issued $300m of Tier 2 subordinated debt from our subsidiary Beazley Insurance dac. The issuance of this debt will aid Beazley in financing future growth.

Also in September Beazley Ireland Holdings Limited repaid its £75m retail bond.

We continue to diversify our product offerings and in Q3 we launched our cyber and financial lines products within Italy and our virtual care product in the UK. We also continue to invest in our market facilities business through our smart tracker syndicate 5623.

Claims update

We have recently concluded our nine month claims review, and the initial estimate of the costs of typhoons Faxai and Hagibis and hurricane Dorian is approximately $80m net of reinsurance and reinstatements premiums. We have seen an increase in claims within our directors & officers, employment practice liability and healthcare liability books and whilst we expect to deliver overall reserve releases from our specialty lines and cyber & executive risk divisions, we anticipate that these will be at a lower level than in previous years.  As a result we are expecting a full year combined ratio of between 100% and 102% assuming normalised claims levels for the remainder of the year.

Investments

As at the end of September our portfolio allocation was as follows:

	30 September 2019		30 September 2018
	Assets	Allocation	Assets	Allocation
	$m	%	$m	%
Cash and cash equivalents	423	7.4	388	7.7
Sovereign, quasi-sovereign and supranational	2,003	35.4	1,304	26.0
Corporate debt -     Investment grade	2,419	42.8	2,499	49.9
-     High yield	182	3.2	60	1.2
Senior secured loans	-	-	135	2.7
Derivative asset	3	0.1	3	0.1
Core portfolio	5,030	88.9	4,389	87.6
Equity linked funds	105	1.9	89	1.8
Hedge funds	311	5.5	352	7.0
Illiquid credit assets	211	3.7	182	3.6
Overall portfolio	5,657	100.0	5,012	100.0

The year to date investment return to 30 September 2019 was $215m, or 5.3% annualised. Falling yields have generated gains on our fixed income portfolio and this, together with good performance from equities, has helped to deliver a strong overall return after nine months.

The weighted average duration of our fixed income portfolio was 1.9 years at 30 September 2019 (30 September 2018: 1.8 years). 

ENDS

For further information, please contact:

Beazley plc

Sally Lake

+44 (0) 207 6747375

Note to editors:

Beazley plc (BEZ.L) is the parent company of specialist insurance businesses with operations in Europe, United States, Canada, Latin America and Asia. Beazley manages seven Lloyd's syndicates and, in 2018, underwrote gross premiums worldwide of $2,615.3 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, property, marine, reinsurance, accident and life, and political risks and contingency business.

For more information please go to: www.beazley.com

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