Results for the six months ended 30 June 2019 Tuesday, 23 July 2019 - - PowerPoint PPT Presentation

▶
results for the six months ended 30 june 2019
SMART_READER_LITE
LIVE PREVIEW

Results for the six months ended 30 June 2019 Tuesday, 23 July 2019 - - PowerPoint PPT Presentation

Sep 16, 2022 162 likes •487 views

Cover Results for the six months ended 30 June 2019 Tuesday, 23 July 2019 1 Disclaimer notice Certain statements made in this presentation, both oral and written, are or may constitute forward looking statements with respect to the

slide-1
SLIDE 1

1

Cover

Results for the six months ended 30 June 2019

Tuesday, 23 July 2019

slide-2
SLIDE 2

Disclaimer notice

2

Certain statements made in this presentation, both oral and written, are or may constitute “forward looking statements” with respect to the operation, performance and financial condition of the Company and/or the

  • Group. These forward looking statements are not based on historical facts but rather reflect current beliefs and

expectations regarding future events and results. Such forward looking statements can be identified from words such as “anticipates”, “may”, “will”, “believes”, “expects”, “intends”, “could”, “should”, “estimates”, “predict” and similar expressions in such statements or the negative thereof, or other variations thereof or comparable

  • terminology. These forward looking statements appear in a number of places throughout this document and involve

significant inherent risks, uncertainties and other factors, known or unknown, which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Given these uncertainties, such forward looking statements should not be read as guarantees of future performance or results and no undue reliance should be placed on such forward looking statements. A number of factors could cause actual results to differ materially from the results discussed in these forward looking statements. The information and opinions contained in this presentation, including any forward looking statements, are provided, and reflect knowledge and information available, as at the date of this presentation and are subject to change without notice. There is no intention, nor is any duty or obligation assumed by the Company, the Group or the Directors to supplement, amend, update or revise any of the information, including any forward looking statements, contained in this presentation. All subsequent written and oral forward looking statements attributable to the Company and/or the Group or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this document.

slide-3
SLIDE 3

Contents

Pages Overview 4-6 Business update 6 Financials 7-13 Performance 8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus: Broker relations at Beazley 14-18 The Outlook 19-22 Appendix 23-32

3

slide-4
SLIDE 4

Generic title white

Overview

slide-5
SLIDE 5

Overview – strong premium growth

  • Gross premiums written increased by 12% to $1,483.6m (30 June 2018: $1,323.8m)
  • Profit before income tax of $166.4m (30 June 2018: $57.5m)
  • Combined ratio 100% (30 June 2018: 95%)
  • Rate change on renewal business 5% (30 June 2018: 3%)
  • Prior year reserve releases of $3.4m (30 June 2018: $48.1m)
  • Investment return of $170.3m (30 June 2018: $8.0m)
  • Annualised return on equity of 19% (30 June 2018: 6%)
  • Interim dividend up 5% to 4.1p (30 June 2018: 3.9p)

5

slide-6
SLIDE 6
  • Growth across all platforms
  • Specialty lines split into specialty lines and cyber and executive risk
  • Management changes:
  • Martin Bride succeeded by Sally Lake
  • Mark Bernacki succeeded by Richard Montminy
  • Claims experience has been elevated in discrete areas
  • Pockets of US Liability within SL and CyEx particularly in healthcare and D&O
  • Loss creep on certain catastrophes
  • Aggregate excess of loss policies
  • US Trucking
  • Pricing discipline and rate rises continue

Business update

6

slide-7
SLIDE 7

Generic title white

Financials

slide-8
SLIDE 8

Six months financial performance

6 months ended 30 June 2019 6 months ended 30 June 2018 % increase

Gross premiums written ($m)

1,483.6 1,323.8 12%

Net premiums written ($m)

1,225.5 1,105.3 11%

Net earned premiums ($m)

1,118.0 990.2 13%

Profit before income tax ($m)

166.4 57.5 189%

Earnings per share (pence)

20.4 6.6

Dividend per share (pence)

4.1 3.9

Net assets per share (pence)

232.3 210.4

Net tangible assets per share (pence)

214.2 191.6

8

slide-9
SLIDE 9

Strong investment return in first half

9 $m Investment Return Annualised investment return

46.8 43.5 62.7 79.4 8.0 170.3 36.2 14.1 30.4 58.9 33.1

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 2014 2015 2016 2017 2018 2019HY 1st half 2nd half Return

slide-10
SLIDE 10

Minor changes to optimise portfolio

10

30 June 2019 31 December 2018

Cash and Cash Equivalents 5.7% Government Quasi Government Supranational 31.8% Investment Grade Credit 47.7% Other Credit, 2.9% Equity Funds, 2.2% Hedge Funds, 5.5% Illiquid Credit Assets, 4.2% Cash and Cash Equivalents 6.7% Government Quasi Government Supranational 27.9% Investment Grade Credit 50.0% Other Credit, 0.7% Senior Secured Loans, 2.6% Equity Funds, 1.7% Hedge Funds, 6.7% Illiquid Credit Assets, 3.7%

slide-11
SLIDE 11

Lower than average releases

11

  • 3.0%
  • 2.0%
  • 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

  • 60
  • 40
  • 20

20 40 60 80 100 120 140 160 180 200 220 2014 2015 2016 2017 2018 2018HY 2019HY

% of NEP $m

Specialty lines CyEx PAC Marine Property Reinsurance % of NEP

slide-12
SLIDE 12

Whole account reserve strength within our target range

12 Preferred upper end

slide-13
SLIDE 13

Underwriting capital – remains in a strong position

13

Projected 31 Dec 2019 $m Year ended 31 Dec 2018 $m Lloyd’s economic capital requirement (ECR) 1,745.7 1,594.5 Capital for US insurance company 173.4 173.4 1,919.1 1,767.9

  • Group capital requirement:
  • Expect to be at 19% of Lloyd’s ECR, which is within our target range of 15% - 25%
  • Double digit underwriting capital growth envisaged in our 5 year plan
  • $225m LOC facility has been renewed and remains unutilised
  • Update on debt strategy
  • Full redemption of £75m retail bond in September 2019
  • Considering new debt issuance in 2019
  • Continue to grow regular dividend by 5%-10% per annum in line with our capital strategy
slide-14
SLIDE 14

In focus Broker relations at Beazley

slide-15
SLIDE 15

15

Broker Relations at Beazley: Our role

  • Lead Beazley’s distribution strategy
  • Assist in building long-term broker relationships
  • Provide consistent support to underwriters as we expand footprint
  • Help create and facilitate opportunities to cross-sell Beazley products
  • Build distribution around needs of specific industries/sectors
  • Engage clients & brokers on managing new and emerging risks
slide-16
SLIDE 16

16

Responding to change: Technology & Insurance

Technology…………

  • supports ambition to grow in smaller commercial lines market
  • drives efficient distribution across global markets
  • supports bifurcation of lead vs follow capacity
  • enables digitalisation of risk placement
  • encourages collaboration with insurtech
slide-17
SLIDE 17

17

Broker consolidation - A threat and an opportunity

  • Ongoing across retail & wholesale insurance markets
  • BR instrumental in managing, through transitions
  • Potential for increased pressure around commissions
  • Avoiding over-reliance on one intermediary
  • Emergence of new brokers means opportunities
  • Creates new client opportunities
slide-18
SLIDE 18

18

Tracking progress: Broker survey

  • Conduct annual formal feedback surveys
  • Finding our blind spots
  • Different things matter to brokers in each region
  • Our claims reputation matters most
  • Expertise is a most important driver of satisfaction
  • Service/responsiveness
slide-19
SLIDE 19

Generic title white

The Outlook

slide-20
SLIDE 20

Cumulative rate change since 2015

20 Rate change (%) 80% 85% 90% 95% 100% 105% 110% 115% 120% 2015 2016 2017 2018 2019HY Marine Property Specialty Lines CyEx Reinsurance PAC All divisions

slide-21
SLIDE 21
  • Continued double digit growth
  • Expect combined ratio in the high nineties for 2019
  • Expect investment return to follow running yield of 2.4%
  • Beazley supportive of Lloyd’s prospectus and initiatives
  • Pricing discipline and rate rises continue

Outlook

21

slide-22
SLIDE 22

Questions?

Any questions?

slide-23
SLIDE 23

Generic title white

Appendix

slide-24
SLIDE 24

US interest rates

24 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% US 10 Year Index US 5 Year Index US 2 Year Index

slide-25
SLIDE 25

TMB gross premium growth

25 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 projected GWP (USD$m) Tech E&O BBR InfoSec Vector

slide-26
SLIDE 26

Portfolio management achieves consistent combined ratio through market cycles

26 Combined ratio (%) 20 40 60 80 100 120 140 160 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019HY

slide-27
SLIDE 27

Cyber & executive risk

  • 18% growth in gross

premiums written

  • Expense ratio at 32%

(2018: 34%) 6 months ended 30 June 2019 2018 Gross premiums written ($m) 348.1 294.3 Net premiums written ($m) 303.9 258.3 Net earned premiums ($m) 296.1 261.6 Claims ratio 63% 52% Rate change on renewals 4% (2%) Percentage of business led 100% 98%

27

slide-28
SLIDE 28

Marine

6 months ended 30 June 2019 2018 Gross premiums written ($m) 165.1 158.0 Net premiums written ($m) 138.4 133.6 Net earned premiums ($m) 134.2 125.0 Claims ratio 68% 59% Rate change on renewals 7% 2% Percentage of business led 60% 68%

28

  • Combined ratio at 108%

(2018: 99%)

  • Consistent expense ratio of

40% (2018: 40%)

slide-29
SLIDE 29

Political, accident & contingency

  • Gross premiums written

growth of 22%

  • Combined ratio 94% (2018:

101%) 6 months ended 30 June 2019 2018 Gross premiums written ($m) 145.9 120.0 Net premiums written ($m) 126.0 101.8 Net earned premiums ($m) 109.4 86.2 Claims ratio 51% 55% Rate change on renewals (1%) (2%) Percentage of business led 71% 56%

29

slide-30
SLIDE 30

Property

  • 5% decline in gross

premiums written due to withdrawal from construction and engineering business

  • Improved combined ratio of

92% (2018: 116%) 6 months ended 30 June 2019 2018 Gross premiums written ($m) 230.9 243.4 Net premiums written ($m) 180.7 198.0 Net earned premiums ($m) 176.8 163.9 Claims ratio 51% 76% Rate change on renewals 9% 10% Percentage of business led 79% 64%

30

slide-31
SLIDE 31

Reinsurance

  • Gross premiums written

growth of 6%

  • Combined ratio increased to

140% (2018: 68%) 6 months ended 30 June 2019 2018 Gross premiums written ($m) 161.4 152.5 Net premiums written ($m) 97.8 95.5 Net earned premiums ($m) 57.2 59.1 Claims ratio 97% 30% Rate change on renewals 4% 7% Percentage of business led 49% 44%

31

slide-32
SLIDE 32

Specialty lines

  • 22% growth in gross

premiums written

  • Improved expense ratio at

40% (2018: 42%) 6 months ended 30 June 2019 2018 Gross premiums written ($m) 432.2 355.6 Net premiums written ($m) 378.7 318.1 Net earned premiums ($m) 344.3 294.4 Claims ratio 62% 50% Rate change on renewals 4% 1% Percentage of business led 88% 94%

32