Beazley plc | Interim report 2015 Versatile specialists
Beazley Interim report 2015 Versatile specialists Beazley plc is the parent company of our specialist Beazley’s specialist expertise derives insurance business with operations in Europe, the US, in many cases from long experience in Latin America, Asia, the Middle East and Australia. Beazley is a proud participant in the Lloyd’s market, one our chosen lines of business. of the largest and oldest insurance markets in the world. The value of this experience to clients Through the Lloyd’s broker network and the market’s trading licences, we are able to access a wide range of was demonstrated in May, when we insurance and reinsurance business from around the world. settled claims arising from the Hatton Many of the lines of business we underwrite, such as marine and energy, political risks and contingency, were pioneered Garden robbery within a month of at Lloyd’s. the heist, one of the most audacious Beazley manages six Lloyd’s syndicates: syndicates 2623 to occur in Britain since the 1963 and 623 underwrite a broad range of insurance and Great Train Robbery. We have reinsurance business worldwide; syndicate 3623 focuses on been underwriting jewellers’ block personal accident and sport business along with providing reinsurance to Beazley Insurance Company, Inc. in the US; insurance for 23 years and were well 3622 is a dedicated life syndicate; 6107, a special purpose aware that, for our jeweller clients, syndicate, writes reinsurance business; and 6050, another special purpose syndicate, which reinsures syndicates 623 the contents of the deposit boxes stolen and 2623. at Hatton Garden held inventory that We also underwrite business directly in the US admitted represented their livelihoods. market through Beazley Insurance Company, Inc., an admitted carrier licensed to write in all 50 states. In 2009 we incorporated an Irish reinsurer, Beazley Re Limited, which reinsures a proportion Contents of the group’s business. 1 Highlights and key performance indicators 3 Interim results statement Further information about us is available at: 6 Beazley timeline www.beazley.com 8 Performance by division 10 Condensed consolidated statement of profjt or loss 11 Condensed consolidated statement of comprehensive income 11 Condensed consolidated statement of changes in equity 12 Condensed consolidated statement of fjnancial position 13 Condensed consolidated statement of cash fmows 14 Notes to the condensed consolidated interim fjnancial statements 35 Responsibility statement of the directors in respect of the interim report 36 Independent review report to Beazley plc 37 Glossary 40 Company information www.beazley.com
Highlights and interim results Performance by division Financial statements Beazley Interim report 2015 1 Highlights and key performance indicators A strong underwriting performance with profjt before tax rising 16% over the same period in 2014. Highlights 6 months 6 months Full year 2015 2014 2014 Gross premiums written ($m) 1,099.7 1,077.7 2,021.8 Net premiums written ($m) 879.2 889.2 1,732.7 Net earned premiums ($m) 857.7 804.5 1,658.9 Profjt before income tax ($m) 154.5 132.9 261.9 Claims ratio 49% 51% 49% Expense ratio 37% 39% 40% Combined ratio 86% 90% 89% Basic earnings per share (cents) 26.1 22.6 43.1 Net assets per share (cents) 263.4 249.7 265.7 Net tangible assets per share (cents) 245.8 231.5 247.0 Basic earnings per share (pence) 17.2 13.5 26.1 Net assets per share (pence) 167.8 146.0 170.3 Net tangible assets per share (pence) 156.6 135.4 158.3 Proposed dividend per share (pence) 3.3 3.1 21.1 Return on equity (annualised) 20% 17% 17% Premium renewal rate change (2%) (1%) (2%) Annualised investment return 2.0% 2.1% 1.9% www.beazley.com
2 Beazley Interim report 2015 Highlights and key performance indicators continued KPIs Financial highlights Earnings per share (c) Net assets per share (c) Gross premiums written ($m) 60 300 2,500 17.6 18.7 18.2 50 250 2,000 247.0 245.8 2,021.8 231.5 40 200 43.1 1,500 30 150 1,000 20 26.1 100 1,099.7 1,077.7 22.6 500 10 50 0 0 0 HY2015 HY2014 FY2014 HY2015 HY2014 FY2014 HY2015 HY2014 FY2014 Tangible Intangible Dividends per share (p) Return on equity (%) Combined ratio (%) 25 25 100 90 89 86 20 20 80 20 15 15 17 17 60 39 37 40 11.8 51 10 10 40 49 49 9.3 5 5 20 3.3 3.1 0 0 0 HY2015 HY2014 FY2014 HY2015 HY2014 FY2014 HY2015 HY2014 FY2014 Interim and final Special Claims ratio Expense ratio www.beazley.com
Highlights and interim results Performance by division Financial statements Beazley Interim report 2015 3 Interim results statement The breadth and balance of Beazley’s underwriting portfolio helped us to deliver a strong performance in the fjrst half of 2015. Our business underwritten at Lloyd’s continues to generate approximately 68% of our total gross premiums written. Here the market has been highly competitive for some time and rates continue to fall for catastrophe exposed lines such as large scale commercial property, energy and reinsurance. However, we have been adjusting the size of this book downwards as competition continues to grow, fuelled both by new capacity and by a low incidence of major losses. This dynamic management of our portfolio is characteristic of the approach we adopt across our business lines. Specialty lines, our largest division, accordingly grew by 15% to $441.9m (2014: $385.3m) supported by rates that rose by 2%. In reinsurance and in marine we continue to experience rating pressure, which contributed to reductions in premiums written in both divisions. Andrew Horton Claims continued to be fairly benign, with the normal caveat Chief executive that the north Atlantic hurricane season only began in June – one important reason why full year results may differ markedly from half year results. In addition to the current year benign claims environment, prior year claims have developed favourably in the fjrst six months of 2015 and we were able to release $74.5m (30 June 2014: $72.9m) from prior year Beazley delivered a strong performance in the fjrst half of 2015, reserves. reporting a profjt before tax of $154.5m, up 16% on the same After 23 years at Beazley, Jonathan Gray retired in June 2015. period in 2014 despite increased competition in many lines of business. Gross premiums written rose by 2% to $1,099.7m Jonathan established our property division in 1992, writing premiums in 1993, the division’s fjrst full year, of approximately (2014: $1,077.7m). $30.0m. By last year, that fjgure had grown to $344.7m, protecting clients ranging from Fortune 1000 companies This result refmects the breadth and balance of Beazley’s underwriting portfolio as well as a steady investment return. to homeowners. The engine of our growth in the fjrst half was our locally Our open market property team, which focuses on large scale underwritten US businesses, where managed premiums rose complex risks, will henceforth be led by Simon Jackson, who to $296.9m (2014: $238.2m). These tend to be smaller risks joined us – along with another senior colleague, John Brown – than those underwritten in London, but in largely the same at the beginning of the year. lines of business. We have found competitive conditions to be more favourable for smaller risks and the growth rate for our locally underwritten US business has accelerated in the fjrst six months of 2015 to 25%, having grown 14% in the fjrst half of 2014 relative to the fjrst half of 2013. Also contributing to our US growth was our life, accident and health division, which in the US underwrites a range of ‘gap protection’ products to supplement the core health benefjts packages offered by employers. After a long period in which uncertainty about the effects of the Affordable Care Act slowed growth in this business, our underwriters are now gaining traction and we underwrote $13.8m in the fjrst half of 2015 (2014: $1.2m). www.beazley.com
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