Beazley plc - Interim Management Statement

RNS Number : 7201Q

Beazley PLC

09 November 2012

 



Press

Release

Beazley plc interim management statement for the 9 months ended 30 September 2012.

Dublin, 9 November 2012

Overview

·      Premium rates on renewal business increased by 3%

·      Premiums increased by 9% to $1,470m (2011: $1,352m)

·      Annualised investment yield of 2.1%

Andrew Horton, Chief Executive Officer, said: 

"Our current focus is on ensuring we support those of our customers who have been affected by Superstorm Sandy.  Our business grew strongly in the third quarter as premium rates continued to rise across our portfolio.  We continue to invest in new product lines that offer the potential for attractive cross-cycle underwriting returns."

	30 Sep 2012	30 Sep 2011	% increase
Gross premiums written ($m)	1,470	1,352	9%
Investments and cash ($m)	4,350	4,031	8%
Investment return - annualised (%)	2.1%	1.0%	-
Rate increase	3%	1%	-

Premiums

Gross premiums written for the nine months ended 30 September increased by 9% when compared with the equivalent period of 2011. This was driven by growth in most lines with the most significant increases being in the marine division, where growth is driven by additional premium in our energy business, and in our specialty lines division where growth was driven by our new product lines and positive rate increases.

Below is an extract of our performance to the end of September 2012 by business division:

	Gross premiums written 30 Sep 2012	Gross premiums written 30 Sep 2011	% increase / (decrease)	Q3 2012 Rate change
	$m	$m	%	%
Life, accident and health	72	66	9	-
Marine	251	216	16	-
Political risk and contingency	89	78	14	(1)
Property	297	288	3	6
Reinsurance	177	182	(3)	5
Specialty lines	584	522	12	3
OVERALL	1,470	1,352	9	3

Rate change on renewals is 3% across the portfolio.  We continue to see rate increases on property and reinsurance renewal business.  Specialty lines are seeing a 3% average increase in renewal rates, with the most notable increases in professional indemnity for architects and engineers (9%) and for lawyers (5%).

Business update

In August, we established BBR Services, a business unit dedicated to helping clients that have suffered a data breach manage the consequences swiftly and effectively -  a first for the insurance industry. In September our data breach product, Beazley Breach Response, was awarded the 'Initiative of the year' accolade at the Insurance Insider awards. 

Claims update

Sandy has just occurred and will result in a material loss to the insurance industry.  It is not possible to quantify the impact on Beazley at this stage.

In all other areas, the claims environment during 2012 has been relatively benign with lower than average levels of claim notifications.

Assuming any claims Beazley incurs from Sandy are covered by catastrophe margins, we anticipate achieving a combined ratio for the year around 90%.

Investments

Investment income for the nine months to 30 September 2012 was $65.2m, an annualised return of 2.1%.

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

	30 Sep 2012		30 Sep 2011
	Assets	Allocation	Assets	Allocation
	$m	%	$m	%
Cash and cash equivalents	776	17.9	1,081	26.8
Fixed income: sovereign and supranational	2,174	50.0	2,264	56.2
Investment grade credit	675	15.5	187	4.6
Other credit	296	6.8	83	2.1
Core portfolio	3,922	90.2	3,615	89.7
Capital growth assets	428	9.8	416	10.3
Overall return	4,350	100.0	4,031	100.00

The annualised investment return for the period was 2.1% (2011: 1.0%).  The weighted average duration of the core portfolio was 22 months at 30 September 2012 (30 September 2011: 16 months) and the weighted average yield to maturity of our overall portfolio was 1.0% (30 September 2011: 0.8%).

Capital management

During September we announced the issue of a sterling denominated retail bond which raised £75m for the group.  Furthermore, our $225m letter of credit facility remains undrawn.

On 29 October we bought in a further tranche of the £150m subordinated debt issued in 2006 (call date 2016, maturity date 2026). £17.3m was acquired at a price of 96 per cent of par. This follows the acquisition of £30m of the debt in May 2012 which was acquired at a price of 85 per cent of par. The amount of subordinated debt in issuance following these transactions is £102.7m.

We continue to manage our capital actively, and as we said at the time of our interims, we will provide a further update on the group's capital position with the year end results.  

ENDS

 For further information, please contact:

Beazley plc

Sian Coope

 [phone]

Note to editors:

Beazley plc (BEZ.L), is the parent company of specialist insurance businesses with operations in Europe, the US, Asia and Australia.  Beazley manages five Lloyd's syndicates and, in 2011, underwrote gross premiums worldwide of $1,712.5 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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