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REG - Beazley PLC -Trading statement

11 Nov, 2022
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

 

30 September 2022

 

Gross premiums written

 

30 September 2021

 

% increase

Year to date Rate change


$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

 

 

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 EuropeNorth AmericaLatin 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

 

 

 

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