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REG - Beazley PLC - Interim Management Statement

12 May, 2010
RNS Number : 7607L
Beazley PLC
12 May 2010
 

Beazley plc Interim management statement for the 3 months ended 31st March
2010

Dublin, 12 May 2010


Overview
 
·      Premiums up 19% to $438.2m (2009 $368.9m)

·      Average rates decreased by 1%

·      Claims costs on track in spite of high profile market losses

·      Annualised investment yield of 0.6%
 


Andrew Horton, Chief Executive Officer, said: 


"The business continued to grow in the early stages of 2010. The expansion
of our shorter tail lines provides balance to our portfolio and the market
continues to provide profitable opportunities for Beazley. The outlook for
investment markets remains unclear and we believe that capital preservation
is a priority as we look to create further profitable underwriting growth."
 

                                    31 March  2010  31 March 2009 % increase
 
Gross premiums written ($m)         438.2           368.9         19%
 
Investments and cash ($m)           3,581           2,870         25%
 
Investment income / (loss) ($m)     5.0             (3.9)
 
Investment return / (loss) -        0.6%            (0.6)%        -
annualised (%)
 
Rate (decrease) / increase          (1%)            2%            -
 

Premiums


The first three months of 2010 has seen premium growth when compared with
the equivalent period of 2009. Reporting for the first time in US dollars,
premium growth equates to 19% year on year and has been mainly driven by the
acquisitions in our property and reinsurance lines of business. Premium
rates are down by 1% on average across the portfolio which is within the
range we anticipated.


Below is an extract of our performance to the end of March 2010 by business
division:


                 Gross         Gross premiums % increase /    Q1 2010      
                 premiums      written        (decrease)      Rate change
                 written       (*)                                                    
 
                 31 March      31March
                 2010          2009
                  
                 $m            $m             %               %
 
Marine           66.0          59.2           11              (3)
 
Political risk   24.8          36.4           (32)            (2)
and contingency
 
Property         83.1          52.3           59              (1)
 
Reinsurance      110.6         78.8           40              -
 
Specialty lines  153.7         142.2          8               (1)
 
 
 
OVERALL          438.2         368.9          19              (1)


The significant increase in property premium is driven by additional
premiums written by the First State underwriting team that joined Beazley in
Q2 2009.  This, alongside an increase in catastrophe risk appetite
reflected in the increase in premiums for our marine and reinsurance
divisions, has continued to provide improved balance between our short and
medium tail business.

 

Beazley's accident and health business (included within reinsurance) has
continued to develop well writing $27.6m in the first quarter compared to
$12.8m in the equivalent period of 2009.


US operations

Locally underwritten US premium grew to $91.0m in the first quarter of 2010
compared to $63.2m in the equivalent period last year. Of this growth $26.9m
is attributable to property business written by the First State team that
joined Beazley in April 2009.


Claims update

Our estimate of the claims cost from the Chile earthquake remains in the
range of $55m to $75m based on market wide losses in the range of $5bn to
$8bn, with no change from the press release on 7 April. We expect that these
losses will be covered by the reserves for the 2009 and 2010 underwriting
years that are set aside to meet catastrophe claims.
 

The estimated net cost to Beazley of the Deepwater Horizon oil rig explosion
in the Gulf of Mexico is approximately $6m.  The outlook for the
development of the 2009 underwriting year of the energy account and for 2010
reserve releases from the overall marine account remains strong.

 
Claims are developing in line with our expectations in all other areas of
our business.


Investment performance

Investment income for the three months to 31 March was $5.0m equivalent to
an annualised return of 0.6%, compared with a year to date loss of $3.9m
over the same period in 2009.


Investment portfolio

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

                                31 March 2010        31 March 2009        
                                $m           %       $m           %       
 
       Cash and cash
       equivalents           486             14      648          24
 
       Government, Agency    1,552           44      1,034        36
       and Supranational
 
       AAA                   971             27      458          16
 
       AA+ to AA-            151             4       157          5
 
       A+ to A-              82              2       326          11
 
       BBB+ to BBB-          2               -       96           3
 
Core portfolio               3,244           91      2,719        95      
 
Capital growth assets        337             9       152          5       
 
Total                        3,581           100     2,871        100     
 
 

Investment Return

Comparison of return by major asset class:


                      31 March 2010 31 March 2010      31 March 31 March
                                    annualised return  2009     2009
                                                                annualised
                                                                return
 
                      $m            %                  $m       %
 
Core portfolio        3.6           0.5                (6.3)    (0.9)
 
Capital growth assets 1.4           1.7                2.4      7.5
 
Overall return        5.0           0.6                (3.9)    (0.6)
 

Capital

During the year to date Beazley plc has acquired 3.2m of its own shares to
be held in treasury at an average price of 108.6p.

In April we exited the interest rate and cross currency swaps giving the
group an effective annual finance cost of 5.9% on its £150m bonds which is
fixed until 2016.ENDS

 
(*) The gross premium written figure quoted for 2009 has been translated at
the first quarter 2009 prevailing exchange rates. In our 2010 financial
statements, we will be following the guidance under International Accounting
Standard 21 (foreign currency translation), where all 2009 comparative
information will be converted at the exchange rate as at the transition date
when we changed our functional currency to US dollars.For further information, please contact:

Beazley plc

Sian Coope

+353 (0)1 854 4700


Note to editors:

Beazley plc (BEZ.L), is the parent company of specialist insurance
businesses with operations in Europe, the US, Asia and Australia.  Beazley
manages five Lloyd's syndicates and, in 2009, underwrote gross premiums
worldwide of £1,115.5 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 is a market leader in many of its chosen lines, which include
professional indemnity, property, marine, reinsurance, accident and life,
and political risks and contingency business.

For more information please go to: www.beazley.com
This information is provided by RNS
The company news service from the London Stock Exchange
 
END 
 
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