Beazley Share Discussion Threads

[tournesol] 27/7/2021 18:22

Hi MB

I take your point but I think we are talking slightly past each other.

Car insurance or home insurance is a commodity. Those policies are churned out by the million by a large number of companies whose policies are created by cookie cutter technology following simplified underwriting rules. These companies do try to differentiate themselves to some extent in terms of market segment - so one insures old people and another does young people - or by adding bells and whistles. But essentially its a mass market product for clients whose needs are fundamentally very similar.

But as I understand it Beazley makes its living by selling non-standardised unique policies which are not simply carbon copies of each other. So for instance they might insure a football tournament which includes a load of matches in different countries with a combination of complex inter-related risk factors. Heatwave in a world cup in the desert? Terrorism? Disease? Political difficulties?

Of course other specialist insurers would quote for the same business but there are real differentiating factors between the insurers, their track records and their abilities to compute risks and exposures. That's what I was trying to say.

And of course when specialist insurers develop very niche products/skills eg ransomware cover, then they can achieve a competitive advantage and a real point of differentiation.

That's my line of thinking wrt Beazley.

[medieval blacksmith] 27/7/2021 17:27

tournesol

Most insurance requirements are unique from the client's perspective but that doesn't make it unique from the insurer. A client can take its insurance needs to many companies in this space and get a quote for cover and eventually it will come down to cheapest quoted price versus confidence in claims delivery. If you offer a bespoke service then the more bespoke it is the more expensive your cost base is going to be. I think as investors we should be very careful not to take on the wishful thinking that insurance companies would like us to take at face value in that they sell unique product and that it is bespoke and therefore has durable competitive advantage and healthy margins. If the sector is witnessing healthy margins and excellent growth then it will, without a doubt, move towards commoditisation - like for example when hedge funds bundled into reinsurance. At the end of the day the competitive advantage (or not) with the likes of Beasley will be accuracy of their risk management in delivering the quote and not in the fact they have a unique product - which they don't.

[tournesol] 27/7/2021 13:34

I think that most if not all of their policies are bespoke or at least extensively tailored/adapted. They aren't belting out bog standard policies sold en masse to retail markets. They are insuring a lot of risks which are unique. Hence the importance of genius level underwriters and risk assessment as opposed to standardised premiums as applies in say car insurance.

(apologies if egg sucking being explained here)

[alex1621] 27/7/2021 12:16

I think some of their insurance products are bespoke, designed specifically for the client, as opposed to commoditised insurance like car and home.

[medieval blacksmith] 27/7/2021 11:48

Thanks tournesol for the posts.

Not quite sure how one can make the comment "non-commoditised" but still worth considering.

[tournesol] 27/7/2021 06:50

Berenberg comment

"Beazley is clearly ahead of peers in the fastest growing, increasingly complex and non-commoditised product line in insurance; we think this presents a rare opportunity for profitable and sustainable growth," said Berenberg, which also raised its target price on the stock from 410.0p to 460.0p.

The German bank added that Beazley also confirmed in its interim results that not only had its $340.0m Covid-19 loss estimate for 2020-21 remained "robust", but also that it had not incurred the additional $50.0m expected loss related to events in the second half, as US and European economies have largely opened up.

source: Hargreaves Lansdown

[tournesol] 26/7/2021 22:05

Berenberg upgrades from 'hold' to 'buy' and raises target price from 410.0p to 460.0p;

RBC stays at 'outperform' but raises target price from 475.0p to 500.0p.

source:- sharecast.com/news/broker-recommendations

[tournesol] 26/7/2021 18:14

The co I wish I could buy is the one that Andrew Horton is moving to - QBE. Horton was CEO at BEZ for 13 years and before that was the CFO. He has done an outstanding job and has presided over a fantastic long term success at BEZ which has consistently topped the league tables of its peers. He is off to try his hand at QBE which consistently been at the bottom of the league of its peers and has not made a profit in yonks. If he does even half as well at QBE as he did at Bez then shares in QBE will soar. Unfortunately my broker (HL) won't allow me to buy QBE (an Aussie share). Which is a real shame.

[suetballs] 26/7/2021 11:25

Tempted here - I worked in lloyd's when Beazley Furlonge and Hiscox set up Syndicate 623. I was a member of syndicate 623 and the results have generally always been sound.
tbh I am surprised that this outfit hasn't been taken over as have a lot of other Lloyd's operations.
Suet

[ianb5004] 26/7/2021 10:52

Berenberg raises Beazley to Buy

[npp62] 24/7/2021 19:27

That's put the mockers on it then!

[aloafofbread1] 24/7/2021 17:48

Not one for predictions, wrong too many times, but... I think £5 by Christmas is very achievable.

[ianb5004] 24/7/2021 11:03

Featured in investors Chronicle yesterday with buy recommendation

[topvest] 23/7/2021 22:10

Yes, very good. Making 2.4% per annum on the float and low 90s combined ratio. Quality outfit. It was a bargain a few weeks ago.

[ianb5004] 23/7/2021 14:52

JP MORGAN broker ratings target - they raised target price 2 weeks ago 425 - 452p today raised again to 473p

[ianb5004] 23/7/2021 11:28

Excellent results, ive been banging the drum for the value in bez since buying at 295p.
Fully expect divi reinstating end of year and then share price should recover quicker. £6 pre covid and i see no reasons it cant get back there if the recovery in business continues.

[huncher] 23/7/2021 10:10

Looks good but as usual in this sector PY reserve releases play a part - never really know where you are.

[spooky] 23/7/2021 09:13

My mistake, i misread the post, i thought it said 'Very hard to reintroduce'.

[kirkie001] 23/7/2021 09:05

Spooky - what on earth is inaccurate about it? They're not allowed to make inaccurate statements to the market???

[spooky] 23/7/2021 08:12

A very strange and a very inaccurate statement.

[aloafofbread1] 23/7/2021 08:00

Very hard to not reintroduce the dividend at year end now. Only four months.

[bg23] 23/7/2021 07:31

To my untrained eye these results look very good. I guess the market reaction will tell me if I'm correct.

Personally, I'm not surprised to see the dividend decision being delayed until end of year although it may upset some.

Good to see the co's initial estimates for Covid are still sufficient.

Overall, quite impressed

[ttny2004] 23/7/2021 07:07

Excellent results IMHO with dividend considered to ge reintroduced at year end.Beazley plc results for period ended 30 June 2021-- Profit before tax of $167.3m (30 June 2020: Loss before tax of $13.8m)-- Return on equity (annualised) of 15% (30 June 2020: (1%)) -- Gross premiums written increased by 22% to $2,035.3 (30 June 2020: $1,663.9m) -- Combined ratio of 94% (30 June 2020: 107%) -- Rate increase on renewal portfolio of 20% (30 June 2020: increase of 11%) -- Prior year reserve releases of $95.7m (30 June 2020: $58.6m) -- Net investment income of $83.6m (30 June 2020: $83.2m) -- No interim dividend (30 June 2020: nil)

[ianb5004] 22/7/2021 16:29

Last trading update was strong so should be good H1

[ttny2004] 22/7/2021 15:57

Tomorrow we will find out at interim results how Beazley have faired and forward guidance.