Beazley PLC Trading Statement for the 3 months ended 31/3/17 (7913E)

TIDMBEZ

RNS Number : 7913E

Beazley PLC

11 May 2017

Press

Release

Beazley plc trading statement for the three months ended 31 March 2017

London, 11 May 2017

Overview

   --      Gross premiums written reduced by 2% to $573m (2016: $583m) 
   --      Premium rates on renewal business decreased by 1% 
   --      Year to date investment return of 0.9% 

Andrew Horton, Chief Executive Officer, said:

"In February we announced the acquisition of Creechurch Underwriters in Canada, expanding our specialty lines presence in that country. This forms part of our longer term strategy to develop our non-US specialty lines business, in parallel with our continuing growth in the US.

Our first quarter premium and investment income numbers represent a solid start to 2017."

 
                            31 March   31 March   %(decrease)/ 
                                2017       2016       increase 
-------------------------  ---------  ---------  ------------- 
 Gross premiums written 
  ($m)                           573        583            (2) 
-------------------------  ---------  ---------  ------------- 
 
 Investments and 
  cash ($m)                    4,551      4,329              5 
-------------------------  ---------  ---------  ------------- 
 
 Year to date investment 
  return                        0.9%       0.7% 
-------------------------  ---------  ---------  ------------- 
 
 Rate decrease                  (1%)       (1%) 
-------------------------  ---------  ---------  ------------- 
 

Premiums

Gross premiums written for the three months ended 31 March 2017 reduced by 2% to $573m when compared to the equivalent period of 2016.

Specialty lines, our largest division, achieved premium growth of 6% year on year, writing $277m in the first three months of 2017. In Q1 2016, the division had a one-off premium related to the acquisition of an international healthcare portfolio and, that aside, continues to achieve double digit growth. Excluding the impact of this one-off premium, the group's gross premiums written have increased 5% year on year at constant exchange rates.

Our performance to the end of March 2017 by business division is:

 
                                Gross premiums          Gross premiums            % increase /   Q1 2017 Rate change 
                                       written                 written              (decrease) 
 
 
                                 31 March 2017           31 March 2016 
                                            $m                      $m                       %                     % 
 
 Marine                                     69                      74                     (7)                   (3) 
 Political, accident & 
  contingency*                              59                      78                    (24)                   (4) 
 Property                                   84                      81                       4                   (1) 
 Reinsurance                                84                      89                     (6)                   (2) 
 Specialty lines                           277                     261                       6                     1 
----------------------  ----------------------  ----------------------  ----------------------  -------------------- 
 OVERALL                                   573                     583                     (2)                   (1) 
----------------------  ----------------------  ----------------------  ----------------------  -------------------- 
 

* This division was previously life, accident and health (LAH) and political risk and contingency (PCG)

In political, accident and contingency, premium income from our US admitted gap medical product decreased by $15m following a regulatory change which resulted in the non-renewal of one large client in January 2017.

Rates on renewal business decreased by 1% across the portfolio as a whole. The rating environment remains very challenging, particularly in areas such as terrorism, war and catastrophe exposed lines. Specialty lines saw rates on renewal business increase by 1% overall in the first quarter of the year, with the main rate increases coming from our private enterprise business.

Business update

From 1 January 2017 we have decided to bring our life, accident and health (LAH) and political risks and contingency (PCG) divisions together to create a larger combined trading division, political, accident and contingency (PAC). By bringing these trading divisions together we are hoping to build upon the synergies between these two lines of business and to enhance natural cross-selling opportunities.

In February we acquired Creechurch Underwriters, a specialist managing general agent based in Canada. Since its founding, Creechurch has built a strong reputation for providing tailored insurance programmes to small and medium enterprises in a range of industries and professions. This acquisition is the foundation for Beazley Canada, which we plan to develop in the coming years.

We continue to make good progress with our application to obtain approval from the Central Bank of Ireland for Beazley Re dac to become a European insurance company.

Claims update

In the absence of any major natural catastrophe losses before 30 June 2017, we expect our combined ratio for the first half of the year to be broadly in line with our long term average.

Investments

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

 
                                       31 March 2017          31 March 2016 
                                     Assets   Allocation   Assets    Allocation 
                                         $m            %        $m            % 
 Cash and cash 
  equivalents                           472         10.3       474         10.9 
 Sovereign, 
  quasi-sovereign 
  and supranational                   1,042         22.9     1,433         33.1 
      Corporate 
       debt 
        *    Investment grade 
 
 
        *    Non-investment grade     2,266         49.8     1,722         39.7 
 
                                         88          1.9        76          1.8 
       Senior secured 
       loans 
       Asset backed                      94          2.1        86          2.0 
       securities 
                                          5          0.1         7          0.2 
       Derivative 
       asset                              3          0.1         -            - 
                                    -------  -----------  --------  ----------- 
 Core portfolio                       3,970         87.2     3,798         87.7 
                                    -------  -----------  --------  ----------- 
 Equity linked 
  funds                                 118          2.6        97          2.2 
 Hedge funds                            320          7.0       331          7.7 
 Illiquid credit 
  assets                                143          3.2       103          2.4 
                                    -------  -----------  --------  ----------- 
 Overall portfolio                    4,551        100.0     4,329        100.0 
                                    -------  -----------  --------  ----------- 
 

Investment income for the three months to 31 March 2017 was $42.5m, or 0.9% (2016 full year investment return: $93.1m, 2.0%). This outcome is ahead of our expectations as declining corporate credit spreads and rising equity markets have generated capital gains on our investments in this period.

The weighted average duration of our fixed income portfolio was 1.9 years at 31 March 2017 (31 December 2016: 1.2 years).

ENDS

For further information, please contact:

Beazley plc

Christine Oldridge

[phone]

Note to editors:

Beazley plc (BEZ), is the parent company of specialist insurance businesses with operations in Europe, North America, Latin America, Asia, the Middle East and Australia. Beazley manages six Lloyd's syndicates and, in 2016, underwrote gross premiums worldwide of $2,195.6 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

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May 11, 2017 02:00 ET (06:00 GMT)