Beazley PLC Trading Statement (6990G)

TIDMBEZ

RNS Number : 6990G

Beazley PLC

08 November 2018

Press

Release

Beazley plc trading statement for the nine months ended 30 September 2018

London, 8 November 2018

Overview

   --      Gross premiums written increased by 11% to $1,958m (2017: $1,762m) 
   --      Premium rates on renewal business increased by 3% 

Andrew Horton, Chief Executive Officer, said:

"Our business continues to deliver double digit premium growth and has been aided by higher rates in some classes following last year's catastrophe losses. Geographically, the main engine of our premium growth continues to be the US market, where we saw premiums rise 18% relative to the first nine months of last year. We expect this positive momentum to continue and are aiming to deliver high single digit growth for the group again in 2019."

 
                             30 September   30 September   % increase/(decrease) 
                                     2018           2017 
--------------------------  -------------  -------------  ---------------------- 
 Gross premiums written 
  ($m)                              1,958          1,762                      11 
 
 Investments and cash 
  ($m)                              5,012          4,829                       4 
 
 Year to date investment 
  return                             0.5%           2.4%                    (79) 
 
 Rate increase/(decrease)              3%           (1%) 
--------------------------  -------------  -------------  ---------------------- 
 

Premiums

Gross premiums written for the nine months ended 30 September 2018 increased by 11% year on year to $1,958m. Growth has been achieved across all our divisions.

Specialty lines, our largest division, grew by 11% to $1,026m. This was driven by a strong performance in the US.

Our political, accident and contingency division has achieved premium growth of 5% year on year, writing $183m in the nine months to 30 September 2018. The growth was driven by a strong performance of the accident & health portfolio in the US and was in spite of a continued rate decrease primarily in terrorism.

The property team continue to benefit from the positive rate change as a result of last year's catastrophe events. Premiums have increased by 21% year on year to $340m.

Our performance to the end of September 2018 by business division is:

 
                                    Gross premiums written   Gross premiums written   % increase   Q3 2018 Rate change 
 
                                         30 September 2018        30 September 2017 
                                                        $m                       $m            %                     % 
---------------------------------  -----------------------  -----------------------  -----------  -------------------- 
 
 Marine                                                221                      205           8%                    2% 
 Political, accident & 
  contingency                                          183                      175           5%                  (2%) 
 Property                                              340                      281          21%                   11% 
 Reinsurance                                           188                      176           7%                    6% 
 Specialty lines                                     1,026                      925          11%                     - 
---------------------------------  -----------------------  -----------------------  -----------  -------------------- 
 OVERALL                                             1,958                    1,762          11%                    3% 
---------------------------------  -----------------------  -----------------------  -----------  -------------------- 
 

Business update

We continue to invest in growth and have recently launched new SL international products in a number of European countries. We are also working with Lloyd's to ensure a smooth transition for customers in all Brexit outcomes.

We have taken the decision to cease underwriting construction and engineering business. This business accounted for approximately 10% of our property division's premiums in 2017. After careful analysis, we concluded it was unlikely to satisfy our cross-cycle profitability requirements in the foreseeable future.

Our business plan for our Lloyd's syndicates for 2019 has been approved by Lloyd's together with the accompanying capital requirements. Taking these into account we expect to have surplus capital (on a Solvency II basis) of 23% of the projected year end ECR.

Claims update

We have concluded our nine month claims review and the development in our specialty lines book is in line with expectations. There has been a series of natural catastrophe events and individual risk losses that in aggregate have generated material incurred losses in our short tail lines. Our initial estimate of the cost of the hurricanes Florence and Michael and the typhoons Jebi and Trami is around $105m net of reinsurance and reinstatement premiums.

Investments

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

 
                                              30 September 2018                30 September 2017 
                                      Assets          Allocation         Assets        Allocation 
                                          $m                   %             $m                 % 
------------------------------  ------------  ------------------  -------------  ---------------- 
 Cash and cash 
  equivalents                            388                 7.7            496              10.3 
 Sovereign, quasi-sovereign 
  and supranational                    1,304                26.0          1,231              25.5 
      Corporate debt 
        *    Investment grade          2,499                49.9          2,148              44.5 
 
        *    High yield                   60                 1.2            108               2.2 
 Senior secured 
  loans                                  135                 2.7            100               2.1 
 Asset backed                              -                   -              2                 - 
  securities 
 Derivative asset                          3                 0.1              7               0.1 
------------------------------  ------------  ------------------  -------------  ---------------- 
 Core portfolio                        4,389                87.6          4,092              84.7 
------------------------------  ------------  ------------------  -------------  ---------------- 
 Equity linked 
  funds                                   89                 1.8            211               4.4 
 Hedge funds                             352                 7.0            349               7.2 
 Illiquid credit 
  assets                                 182                 3.6            177               3.7 
------------------------------  ------------  ------------------  -------------  ---------------- 
 Overall portfolio                     5,012               100.0          4,829             100.0 
------------------------------  ------------  ------------------  -------------  ---------------- 
 

The year to date investment return to 31 October 2018 was $26.0m (0.5% year to date), or 0.6% annualised. Rising yields and volatile markets have adversely impacted the value of many of our investments, leading to a return below our expectations in this period. However, higher yields are an encouraging sign for future returns.

The weighted average duration of our fixed income portfolio was 1.8 years at 30 September 2018 (30 September 2017: 2.0 years).

ENDS

For further information, please contact:

Beazley plc

Martin Bride

[phone]

Note to editors:

Beazley plc (BEZ.L), is the parent company of specialist insurance businesses with operations in Europe, United States, Canada, Latin America and Asia. Beazley manages seven Lloyd's syndicates and, in 2017, underwrote gross premiums worldwide of $2,343.8 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

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November 08, 2018 02:00 ET (07:00 GMT)