Beazley PLC Trading statement for 9 months ended 30 Sept 17 (9755V)

TIDMBEZ

RNS Number : 9755V

Beazley PLC

09 November 2017

Press

Release

Beazley plc trading statement for the nine months ended 30 September 2017

London, 9 November 2017

Overview

   --      Gross premiums written increased by 6% to $1,762m (2016: $1,666m) 
   --      Premium rates on renewal business decreased by 1% 
   --      Year to date investment return of 2.4% 

Andrew Horton, Chief Executive Officer, said:

"The third quarter of 2017 was defined by the high frequency and severity of natural catastrophes. Beazley is in the catastrophe insurance business and paying natural catastrophe claims is part of what we do. Our focus is currently on providing the support and resources necessary to help our policyholders recover as quickly as possible.

These events will naturally affect our full year results but our diverse underwriting portfolio continues to serve us well. We also expect to see rate increases across some lines of business in the coming months."

 
                            30 September   30 September   % increase 
                                    2017           2016 
-------------------------  -------------  -------------  ----------- 
 Gross premiums written 
  ($m)                             1,762          1,666            6 
-------------------------  -------------  -------------  ----------- 
 
 Investments and 
  cash ($m)                        4,829          4,506            7 
-------------------------  -------------  -------------  ----------- 
 
 Year to date investment 
  return                            2.4%           2.0% 
-------------------------  -------------  -------------  ----------- 
 
 Rate decrease                      (1%)           (2%) 
-------------------------  -------------  -------------  ----------- 
 

Premiums

Gross premiums written for the nine months ended 30 September 2017 increased by 6% year on year to $1,762m. This has been facilitated by our diverse portfolio, which allows us to grow in areas in which we see opportunities and pull back in areas where profitable underwriting is becoming harder to achieve.

Specialty lines, our largest division, achieved strong premium growth of 12% year on year, writing $925m in the first nine months of 2017.

In our political, accident and contingency division, the non-renewal of a large client has reduced premium income from our US admitted gap medical product by $15m. Our decision to cease writing business in Australia also had a negative impact on premium of approximately $10m during the period.

Our reinsurance division experienced a decrease in premium of 11% year on year as we actively reduced the business written by this division in light of continued rate decreases.

Despite the challenging market conditions faced by many areas of the marine division, growth of 11% has been achieved. This is largely a result of increased business volume within the US marine liability account.

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

 
                                 Gross premiums   Gross premiums written            % increase /   Q3 2017 Rate change 
                                        written                                       (decrease) 
                                                       30 September 2016 
                              30 September 2017 
                                             $m                       $m                       %                     % 
-----------------------  ----------------------  -----------------------  ----------------------  -------------------- 
 
 Marine                                     205                      184                     11%                  (4%) 
 Political, accident & 
  contingency*                              175                      197                   (11%)                  (4%) 
 Property                                   281                      263                      7%                  (1%) 
 Reinsurance                                176                      198                   (11%)                  (2%) 
 Specialty lines                            925                      824                     12%                     - 
-----------------------  ----------------------  -----------------------  ----------------------  -------------------- 
 OVERALL                                  1,762                    1,666                      6%                  (1%) 
-----------------------  ----------------------  -----------------------  ----------------------  -------------------- 
 

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

Rates on renewal business decreased by 1% across the portfolio as a whole. This is reflective of the rating environment for the first 9 months of 2017, where rates continued to be challenged in areas such as terrorism, energy and war.

With the high claim activity in the last three months we expect to benefit from positive rate momentum on catastrophe exposed business going into the fourth quarter.

Business update

On 12 July 2017, we secured the approval from the Irish regulatory authorities for our European insurance company based in Dublin. Beazley Insurance dac will provide access to the European insurance markets to complement our well-established Lloyd's market and US platforms.

Claims update

We have updated our view of the natural catastrophe events in the second half of 2017 to include the California wildfires and expect claims in the region of $200-300m net of reinsurance with an impact, at the midpoint of these losses, of $175m on profit before tax.

Our expectation is that our combined ratio for the full year 2017 will be around 100%.

Investments

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

 
                                 30 September 2017      30 September 2016 
                                 Assets   Allocation    Assets   Allocation 
                                     $m            %        $m            % 
 Cash and cash 
  equivalents                       496         10.3       502         11.1 
 Sovereign, 
  quasi-sovereign 
  and supranational               1,231         25.5     1,098         24.3 
      Corporate 
       debt 
        *    Investment grade 
 
 
        *    High yield 
 
                                  2,148         44.5     2,107         46.7 
 
       Senior secured               108          2.2       182          4.0 
       loans 
                                    100          2.1        88          2.0 
       Asset backed 
       securities 
                                      2            -         -            - 
       Derivative 
       asset                          7          0.1       (5)            - 
                                -------  -----------  --------  ----------- 
 Core portfolio                   4,092         84.7     3,972         88.1 
                                -------  -----------  --------  ----------- 
 Equity linked 
  funds                             211          4.4       115          2.6 
 Hedge funds                        349          7.2       290          6.4 
 Illiquid credit 
  assets                            177          3.7       129          2.9 
                                -------  -----------  --------  ----------- 
 Overall portfolio                4,829        100.0     4,506        100.0 
                                -------  -----------  --------  ----------- 
 

Total investment return for the nine months to 30 September 2017 was $116.4m, or 3.2% annualised (30 September 2016: $89.0m, 2.6% annualised). 2017 returns continue to exceed our expectations as equity markets rally and corporate credit spreads decline.

The weighted average duration of our fixed income portfolio was 2.0 years at 30 September 2017 (30 September 2016: 1.9 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 and Asia. 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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November 09, 2017 02:00 ET (07:00 GMT)