Beazley plc results for period ended 30 June 2015

RNS Number : 9636T

Beazley PLC

24 July 2015

 

Press Release

Beazley delivers strong performance in a competitive market

Dublin, 24 July 2015

Beazley plc results for period ended 30 June 2015

·      Profit before income tax of $154.5m (30 June 2014: $132.9m)

·      Return on equity of 20% (30 June 2014: 17%)

·      Gross premiums written increased by 2% to $1,099.7m (30 June 2014: $1,077.7m)

·      Combined ratio of 86% (30 June 2014: 90%)

·      Rate decrease on renewal portfolio of 2% (30 June 2014: decrease of 1%)

·      Prior year reserve releases of $74.5m (30 June 2014: $72.9m)

·      Net investment income of $43.5m (30 June 2014: $46.8m)

·      First interim dividend of 3.3p (30 June 2014: 3.1p)

	Period ended 30 June 2015	Period ended 30 June 2014	% movement
Gross premiums written ($m)	1,099.7	1,077.7	2%
Net written premiums ($m)	879.2	889.2	(1%)
Profit before income tax ($m)	154.5	132.9	16%
Earnings per share (pence)	17.2	13.5
Net assets per share (pence)	167.8	146.0
Net tangible assets per share (pence)	156.6	135.4
Dividend per share (pence)	3.3	3.1

Andrew Horton, Chief Executive Officer, said:

"This was an excellent first half for Beazley with premiums and profits both rising. Premiums generated by our US underwriters rose by 25%, counterbalancing the highly competitive conditions elsewhere.

In London, we are still witnessing downward pressure on rates for large risk and short tail classes of business, the effect of which has been masked by subdued claims activity.

I am confident that our strategy and the composition of our portfolio will continue to position us well in the event of more challenging market conditions."

For further information, please contact:

Beazley plc	Finsbury
Martin Bride	Guy Lamming/James Fearnley
Tel: [phone]	Tel: [phone]

Note to editors:

Beazley plc (BEZ.L), is the parent company of specialist insurance businesses with operations in Europe, the US, Latin America, Asia, the Middle East and Australia. Beazley manages six Lloyd's syndicates and, in period ending 30 June 2015, underwrote gross premiums worldwide of $1,099.7 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

Interim results statement

Overview

Beazley delivered a strong performance in the first half of 2015, reporting a profit before tax of $154.5m, up 16% on the same period in 2014 despite increased competition in many lines of business. Gross premiums written rose by 2% to $1,099.7m (2014: $1,077.7m).

This result reflects the breadth and balance of Beazley's underwriting portfolio as well as a steady investment return. The engine of our growth in the first half was our locally underwritten US businesses, where managed premiums rose to $296.9m (2014: $238.2m). These tend to be smaller risks than those underwritten in London, but in largely the same lines of business. We have found competitive conditions to be more favourable for smaller risks and the growth rate for our locally underwritten US business has accelerated in the first six months of 2015 to 25%, having grown 14% in the first half of 2014 relative to the first half of 2013.

Also contributing to our US growth was our life, accident and health division, which in the US underwrites a range of 'gap protection' products to supplement the core health benefits packages offered by employers. After a long period in which uncertainty about the effects of the Affordable Care Act slowed growth in this business, our underwriters are now gaining traction and we underwrote $13.8m in the first half of 2015 (2014: $1.2m).

Our business underwritten at Lloyd's continues to generate approximately 68% of our total gross premiums written. Here the market has been highly competitive for some time and rates continue to fall for catastrophe exposed lines such as large scale commercial property, energy and reinsurance. However, we have been adjusting the size of this book downwards as competition continues to grow, fuelled both by new capacity and by a low incidence of major losses.

This dynamic management of our portfolio is characteristic of the approach we adopt across our business lines. Specialty lines, our largest division, accordingly grew by 15% to $441.9m (2014: $385.3m) supported by rates that rose by 2%. In reinsurance and in marine we continue to experience rating pressure, which contributed to reductions in premiums written in both divisions.

The following table shows the cumulative rate changes (%) since 2001 by business division.

	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015HY
Life, accident & health	-	-	-	-	-	-	-	-	100	100	101	101	100	108	106
Marine	100	117	128	128	130	141	131	123	131	128	128	127	121	114	105
Political risks & contingency	100	120	122	115	108	101	94	90	89	87	85	84	83	81	78
Property	100	128	133	126	124	141	138	129	135	131	134	142	146	144	139
Reinsurance	100	144	150	150	151	194	203	191	208	201	208	219	213	192	177
Specialty lines	100	138	167	175	177	178	169	159	158	155	154	159	163	164	168
All divisions	100	132	146	146	147	156	150	141	144	141	142	146	147	144	141

Claims continued to be fairly benign, with the normal caveat that the north Atlantic hurricane season only began in June - one important reason why full year results may differ markedly from half year results. In addition to the current year benign claims environment, prior year claims have developed favourably in the first six months of 2015 and we were able to release $74.5m (30 June 2014: $72.9m) from prior year reserves.

After 23 years at Beazley, Jonathan Gray retired in June 2015. Jonathan established our property division in 1992, writing premiums in 1993, the division's first full year, of approximately $30.0m. By last year, that figure had grown to $344.7m, protecting clients ranging from Fortune 1000 companies to homeowners.

Our open market property team, which focuses on large scale complex risks, will henceforth be led by Simon Jackson, who joined us - along with another senior colleague, John Brown - at the beginning of the year.

Elsewhere we have also continued to invest in the talented underwriters and claims professionals that are critical to Beazley's future success. In March we recruited Ron Beauregard to head our excess and surplus lines (E&S) property team in the US. We see growth opportunities in this segment of the market, focusing on commercial property risks that require skilled underwriting but are slightly smaller in scale than those we underwrite in London.

Whenever possible, we like to make internal appointments and promotions - a major benefit of the company's growth in recent years has been that it has broadened the career opportunities available to our most talented people. In January we promoted Gavin Hayes, a senior underwriter on our healthcare team, to lead our strategic initiative to develop profitable business in Asia, working closely with Byran Lee in our Singapore office. Gavin is now based in Singapore, which continues to develop as an insurance hub for the region.

In May, we were delighted to enter into an agreement with Korean Re, South Korea's largest reinsurer and one of the largest reinsurance companies in the world, to develop business together and to establish a special purpose syndicate at Lloyd's, syndicate 6050. Under the agreement, syndicate 6050 will write a whole account quota share of Beazley syndicates 623 and 2623 and Beazley will take a quota share of Korean Re's commercial lines book. This equates to a reinsurance swap of approximately $20m a year in gross premium between Beazley and Korean Re.

In strategic terms we see the agreement with Korean Re as valuable because it will allow Beazley and Korean Re to work together and identify opportunities to grow profitability. To support this, the two companies are implementing a programme of employee secondments to build experience in their respective products and markets.

In our 2014 annual report, we stated that the board was considering re-domiciling the company to the United Kingdom, a move which would have no material impact to the operating activities or the financial position of the group. The company continues to explore its options in relation to any potential re-domiciliation to the United Kingdom and will provide further updates in due course.

Investment performance

Our investments returned $43.5m, or 1.0% in the first half of 2015 (30 June 2014: $46.8m, 1.1%). Investment dispositions have not changed materially during 2015; we have moderately shortened the duration of our fixed income assets, in anticipation of an increase in yields. We have also made progress in moving a proportion of our capital growth investments from hedge funds to selected illiquid credit opportunities.

The breakdown of our investment portfolio at 30 June 2015 was:

	30 June 2015		30 June 2014
	$m	%	$m	%
Cash and cash equivalents	439.3	10.1	372.6	8.5
Sovereign, quasi-sovereign and supranational	1,768.0	40.6	1,913.4	43.7
Asset backed securities	179.5	4.1	435.8	10.0
Corporate debt
- Investment grade credit	1,196.6	27.5	1,055.7	24.0
- Non-investment grade credit	194.6	4.5	73.0	1.7
Derivative financial instruments	2.4	0.1	4.3	0.1
Core portfolio	3,780.4	86.9	3,854.8	88.0
Equity linked funds	138.0	3.2	152.3	3.5
Hedge funds (uncorrelated strategies)	355.0	8.1	374.5	8.5
Illiquid credit assets	78.5	1.8	-	-
Total capital growth assets	571.5	13.1	526.8	12.0
Total	4,351.9	100.0	4,381.6	100.0

At 30 June 2015 the average duration of our fixed income portfolios was 1.4 years (31 December 2014:1.8 years) and the average credit rating of these exposures was AA-.

Investment return by major asset class

Analysis of returns on major asset classes are set out below:

	30 June 2015		30 June 2014
	$m	%	$m	%
Core portfolio	21.5	1.1	33.4	1.7
Capital growth assets	22.0	7.7	13.4	5.1
Overall return	43.5	2.0	46.8	2.1

Capital position

We continue to manage our capital actively, as demonstrated through the payment of the special dividend announced in the 2014 results, whilst retaining the flexibility to capitalise on attractive investment opportunities.

Beazley maintains a robust capital position at the half year. The board will review the balance sheet capital position and consider whether any capital action is appropriate at the end of the year when the 2016 capital requirements and the 2015 full year result are certain.

The following table sets out the group's sources of funds:

	30 June 2015 $m	30 June 2014 $m
Shareholders' funds	1,347.0	1,262.0
Tier 2 subordinated debt (2026)	122.4	135.1
Retail bond (2019)	116.7	126.7
Long -term subordinated debt (2034)	18.0	18.0
	1,604.1	1,541.8

Our funding comes from a mixture of our own equity (on a Solvency II basis) alongside $122.4m of tier 2 subordinated debt, $18.0m subordinated long term debt and a $116.7m retail bond. We also havean undrawn banking facility of $225.0m.

The following table sets out the group's capital requirement:

	30 June 2015 $m	30 June 2014 $m
Lloyd's economic capital requirement (ECR)	1,370.3	1,319.1
Capital for US insurance company	107.7	107.7
	1,478.0	1,426.8

At 30 June 2015, we have surplus capital of 31% of ECR, including expected Solvency II adjustments.

Dividend

The board has declared a first interim dividend of 3.3 pence (2014: 3.1 pence), in line with our strategy of delivering 5-10% dividend growth. This will be paid on 4 September 2015 to shareholders on the register at 5.00pm on 7 August 2015.

Outlook

Since 2012, which was in many respects a vintage year for our industry, we have seen - and have consistently anticipated - growing competition and falling premium rates in many lines of business. Through careful management of our underwriting portfolio, and aided by a favourable large loss experience, we have nonetheless succeeded in delivering strong profits in this ever more challenging environment.

Our future success will continue to rely upon our ability to reduce our exposure swiftly to lines of business and geographies that do not meet our profitability requirements in favour of others that do. Our continued investments in talent and service capabilities are designed to support this flexibility.

Andrew Horton

Chief executive

23 July 2015

Condensed consolidated statement of profit or loss for the six months ended 30 June 2015

	Unaudited 6 months ended 30 June 2015 $m	Unaudited  6 months ended 30 June 2014 $m	Audited Year to 31 December 2014 $m
Gross premiums written	1,099.7	1,077.7	2,021.8
Written premiums ceded to reinsurers	(220.5)	(188.5)	(289.1)
Net premiums written	879.2	889.2	1,732.7
Change in gross provision for unearned premiums	(91.0)	(130.1)	(67.9)
Reinsurer's share of change in the provision for unearned premiums	69.5	45.4	(5.9)
Change in net provision for unearned premiums	(21.5)	(84.7)	(73.8)
Net earned premiums	857.7	804.5	1,658.9
Net investment income	43.5	46.8	83.0
Other income	14.2	10.6	26.6
	57.7	57.4	109.6
Revenue	915.4	861.9	1,768.5
Insurance claims	465.5	453.0	899.5
Insurance claims recoverable from reinsurers	(47.8)	(41.8)	(81.6)
Net insurance claims	417.7	411.2	817.9
Expenses for the acquisition of insurance contracts	222.7	221.3	441.2
Administrative expenses	101.1	92.7	217.7
Foreign exchange loss/(gain)	11.7	(4.5)	12.3
Operating expenses	335.5	309.5	671.2
Expenses	753.2	720.7	1,489.1
Share of loss in associates	(0.2)	(0.1)	(1.1)
Results of operating activities	162.0	141.1	278.3
Finance costs	(7.5)	(8.2)	(16.4)
Profit before income tax	154.5	132.9	261.9
Income tax expense	(21.5)	(18.8)	(44.1)
Profit after income tax - all  attributable to equity shareholders	133.0	114.1	217.8
Earnings per share (cents per share):
Basic	26.1	22.6	43.1
Diluted	25.2	21.9	41.8
Earnings per share (pence per share):
Basic	17.2	13.5	26.1
Diluted	16.6	13.1	25.3

Condensed consolidated statement of comprehensive income for the six months ended 30 June 2015

	Unaudited 6 months ended 30 June 2015 $m	Unaudited 6 months ended 30 June 2014 $m	Audited Year to 31 December 2014 $m
Profit after income tax	133.0	114.1	217.8
Other comprehensive income
Items that will never be reclassified to profit or loss:
Loss on remeasurement of retirement benefit obligations	-	-	(1.6)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences	(0.4)	1.2	(2.6)
Total other comprehensive income	(0.4)	1.2	(4.2)
Total comprehensive income recognised	132.6	115.3	213.6

Condensed consolidated statement of changes in equity for the six months ended 30 June 2015

		Share capital $m	Share premium $m	Foreign currency translation reserve $m	Other reserves $m	Retained earnings $m	Total $m
Balance at 1 January 2014		41.6	12.0	(83.1)	(37.8)	1,406.0	1,338.7
Total comprehensive income recognised		-	-	1.2	-	114.1	115.3
Dividends paid		-	-	-	-	(186.6)	(186.6)
Equity settled share based payments		-	-	-	4.3	-	4.3
Acquisition of own shares held in trust		-	-	-	(9.7)	-	(9.7)
Transfer of shares to employees		-	-	-	1.9	(1.9)	-
Balance at 30 June 2014		41.6	12.0	(81.9)	(41.3)	1,331.6	1,262.0
Total comprehensive income recognised		-	-	(3.8)	-	102.1	98.3
Dividends paid		-	-	-	-	(26.0)	(26.0)
Equity settled share based payments		-	-	-	11.0	0.6	11.6
Acquisition of own shares held in trust		-	-	-	(2.8)	-	(2.8)
Transfer of shares to employees		-	-	-	1.0	(1.4)	(0.4)
Balance at 31 December 2014		41.6	12.0	(85.7)	(32.1)	1,406.9	1,342.7
Total comprehensive income recognised		-	-	(0.4)	-	133.0	132.6
Dividends paid		-	-	-	-	(137.9)	(137.9)
Equity settled share based payments		-	-	-	9.7	-	9.7
Acquisition of own shares held in trust		-	-	-	-	-	-
Transfer of shares to employees		-	-	-	7.1	(7.2)	(0.1)
Balance at 30 June 2015		41.6	12.0	(86.1)	(15.3)	1,394.8	1,347.0

Condensed consolidated statement of financial position as at 30 June 2015

	Unaudited 30 June 2015 $m	Unaudited 30 June 2014 $m	Audited 31 December 2014 $m
Assets
Intangible assets	90.2	92.1	94.6
Plant and equipment	4.7	4.9	3.9
Deferred tax asset	8.6	8.3	9.0
Investment in associates	10.2	9.9	10.5
Deferred acquisition costs	241.6	226.4	222.7
Reinsurance assets	1,098.0	1,205.8	1,053.2
Financial assets at fair value	3,912.6	4,009.0	4,077.4
Insurance receivables	685.8	686.5	587.0
Current income tax assets	0.8	-	-
Other receivables	33.5	33.8	20.2
Cash and cash equivalents	439.3	372.6	364.2
Total assets	6,525.3	6,649.3	6,442.7
Equity
Share capital	41.6	41.6	41.6
Share premium	12.0	12.0	12.0
Foreign currency translation reserve	(86.1)	(81.9)	(85.7)
Other reserves	(15.3)	(41.3)	(32.1)
Retained earnings	1,394.8	1,331.6	1,406.9
Total equity	1,347.0	1,262.0	1,342.7
Liabilities
Insurance liabilities	4,604.1	4,776.0	4,547.4
Financial liabilities	259.3	279.8	256.8
Retirement benefit liability	1.1	0.7	2.6
Deferred tax liabilities	1.9	2.3	8.5
Current income tax liability	-	70.6	29.2
Other payables	311.9	257.9	255.5
Total liabilities	5,178.3	5,387.3	5,100.0
Total equity and liabilities	6,525.3	6,649.3	6,442.7

Condensed consolidated statement of cash flows for the six months ended 30 June 2015

	Unaudited 6 months ended 30 June 2015 $m	Unaudited 6 months ended 30 June 2014 $m	Audited year to 31 December 2014 $m
Cash flow from operating activities
Profit before income tax	154.5	132.9	261.9
Adjustments for:
Amortisation of intangibles	2.5	2.2	4.6
Equity settled share based compensation	9.7	4.3	15.3
Net fair value gain on financial assets	(15.4)	(20.1)	(25.6)
Share of loss on associate	0.2	0.1	1.1
Depreciation of plant and equipment	1.1	1.2	2.4
Impairment of reinsurance assets recognised/(written back)	0.3	1.1	(0.4)
Increase/(decrease) in insurance and other liabilities	112.5	151.1	(103.3)
(Increase)/decrease in insurance, reinsurance and other receivables	(157.2)	(89.6)	177.6
Increase in deferred acquisition costs	(18.9)	(20.4)	(16.7)
Financial income	(33.5)	(32.2)	(67.7)
Financial expense	7.5	8.2	16.4
Income tax paid	(57.7)	(29.0)	(89.7)
Net cash from operating activities	5.6	109.8	175.9
Cash flow from investing activities
Purchase of plant and equipment	(1.9)	(0.1)	(0.4)
Expenditure on software development	(1.3)	(2.3)	(5.3)
Purchase of investments	(1,350.7)	(1,494.2)	(2,832.7)
Proceeds from sale of investments	1,530.9	1,548.9	2,824.5
Investment in associate	-	(1.6)	(3.2)
Interest and dividends received	33.5	32.2	67.7
Net cash from investing activities	210.5	82.9	50.6
Cash flow from financing activities
Acquisition of own shares in trust	-	(9.7)	(12.5)
Interest paid	(5.9)	(7.2)	(14.8)
Dividends paid	(137.9)	(186.6)	(212.6)
Net cash (used in) financing activities	(143.8)	(203.5)	(239.9)
Net increase/(decrease) in cash and cash equivalents	72.3	(10.8)	(13.4)
Cash and cash equivalents at beginning of period	364.2	382.7	382.7
Effect of exchange rate changes on cash and cash equivalents	2.8	0.7	(5.1)
Cash and cash equivalents at end of period	439.3	372.6	364.2

1 Statement of accounting policies

Beazley plc is a group incorporated in Jersey and domiciled in Ireland. The condensed consolidated interim financial statements of the group for the six months ended 30 June 2015 comprise the parent company and its subsidiaries and the group's interest in associates.

The condensed consolidated interim financial statements have been prepared and approved by the directors in accordance with IAS 34 Interim Financial Reporting as adopted by the EU ('Adopted IFRS'). The condensed consolidated interim financial statements of Beazley plc have been prepared on a going concern basis.  The directors of the company have a reasonable expectation that the group and the company have adequate resources to continue in operational existence for the foreseeable future.

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at, and for, the year ended 31 December 2014. As required by IFRS 13 (fair value measurement) information relating to the fair value measurement of financial assets and liabilities is outlined in note 9 to the condensed consolidated interim financial statements.

The accounting policies applied in the condensed consolidated interim financial statements are the same as those applied in the group's consolidated financial statements for the year ended 31 December 2014. In addition to changes disclosed in our annual report for the year ended 31 December 2014, the following list of standards or amendments were made effective (as part of the annual improvements to IFRS 2011-2013 cycle) in the EU;

·      IFRS 1 - First-time adoption of IFRS;

·      IFRS 3 - Business combinations;

·      IFRS 13 - Fair value measurement; and

·      IAS 40 - Investment property.

There have been no amendments to the group's accounting policies as a result of the new standards listed above or interpretations that have become effective during 2015.

The financial information included in this document does not comprise statutory financial statements within the meaning of Companies (Jersey) Law 1991. The comparative figures for the financial year ended 31 December 2014 are those for the group and are not the company's statutory financial statements for that financial year. Those financial statements have been reported on by the company's auditors and delivered to the Jersey Financial Services Commission. The report of the auditors was unqualified.

2 Segmental analysis

Segment information is presented in respect of reportable segments. This is based on the group's management and internal reporting structures and represents the level at which financial information is reported to the board, being the chief operating decision maker as defined in IFRS 8.

Finance costs and taxation have not been allocated to operating segments as these items are determined by group level factors and do not relate to operating performance.

30 June 2015	Life, accident & health  $m	Marine $m	Political risks & contingency $m	Property $m	Reinsurance $m	Specialty lines $m	Total  $m
Segment results
Gross premiums written	79.7	162.1	67.9	188.6	159.5	441.9	1,099.7
Net premiums written	67.1	131.4	55.4	151.2	109.3	364.8	879.2
Net earned premiums	56.3	144.2	50.7	147.0	70.4	389.1	857.7
Net investment income	0.7	4.7	1.9	5.1	3.6	27.5	43.5
Other income	0.6	1.8	1.0	2.5	3.1	5.2	14.2
Revenue	57.6	150.7	53.6	154.6	77.1	421.8	915.4
Net insurance claims	33.8	54.7	23.4	55.0	17.9	232.9	417.7
Expenses for the acquisition of insurance contracts	17.3	38.2	14.4	43.6	16.1	93.1	222.7
Administrative expenses	6.7	16.3	9.2	20.2	6.2	42.5	101.1
Foreign exchange loss	0.8	1.7	0.7	2.0	1.8	4.7	11.7
Expenses	58.6	110.9	47.7	120.8	42.0	373.2	753.2
Share of loss of associates	-	-	(0.1)	-	-	(0.1)	(0.2)
Segment result	(1.0)	39.8	5.8	33.8	35.1	48.5	162.0
Finance costs							(7.5)
Profit before income tax							154.5
Income tax expense							(21.5)
Profit after income tax							133.0
Claims ratio	60%	38%	46%	38%	25%	60%	49%
Expense ratio	43%	38%	47%	43%	32%	35%	37%
Combined ratio	103%	76%	93%	81%	57%	95%	86%
Segment assets and liabilities
Segment assets	217.5	1,072.3	776.0	1,010.9	381.4	3,067.2	6,525.3
Segment liabilities	(194.3)	(699.1)	(646.8)	(810.1)	(226.0)	(2,602.0)	(5,178.3)
Net assets	23.2	373.2	129.2	200.8	155.4	465.2	1,347.0

30 June 2014	Life, accident & health  $m	Marine $m	Political risks & contingency $m	Property $m	Reinsurance $m	Specialty lines $m	Total  $m
Segment results
Gross premiums written	81.5	196.7	60.4	190.7	163.1	385.3	1,077.7
Net premiums written	62.9	163.1	47.7	151.8	124.8	338.9	889.2
Net earned premiums	42.9	143.9	42.8	145.9	80.1	348.9	804.5
Net investment income	0.8	5.1	2.2	5.8	4.7	28.2	46.8
Other income	-	1.3	0.5	2.5	1.5	4.8	10.6
Revenue	43.7	150.3	45.5	154.2	86.3	381.9	861.9
Net insurance claims	26.5	52.2	15.0	68.8	36.2	212.5	411.2
Expenses for the acquisition of insurance contracts	13.6	42.1	13.4	42.9	17.7	91.6	221.3
Administrative expenses	6.1	15.3	8.1	16.8	6.9	39.5	92.7
Foreign exchange loss	(0.6)	(0.6)	(0.3)	(1.0)	(1.1)	(0.9)	(4.5)
Expenses	45.6	109.0	36.2	127.5	59.7	342.7	720.7
Share of profit/(loss) of associates	-	-	0.1	-	-	(0.2)	(0.1)
Segment result	(1.9)	41.3	9.4	26.7	26.6	39.0	141.1
Finance costs							(8.2)
Profit before income tax							132.9
Income tax expense							(18.8)
Profit after income tax							114.1
Claims ratio	62%	36%	35%	47%	45%	61%	51%
Expense ratio	46%	40%	50%	41%	31%	37%	39%
Combined ratio	108%	76%	85%	88%	76%	98%	90%
Segment assets and liabilities
Segment assets	224.3	1,110.2	795.4	1,025.1	384.5	3,109.8	6,649.3
Segment liabilities	(195.5)	(740.5)	(639.8)	(862.1)	(270.1)	(2,679.3)	(5,387.3)
Net assets	28.8	369.7	155.6	163.0	114.4	430.5	1,262.0

31 December 2014	Life, accident & health  $m	Marine $m	Political risks & contingency $m	Property $m	Reinsurance $m	Specialty lines $m	Total  $m
Segment results
Gross premiums written	132.2	325.2	123.2	344.7	200.8	895.7	2,021.8
Net premiums written	113.7	289.9	101.2	297.6	153.8	776.5	1,732.7
Net earned premiums	103.0	282.6	96.9	287.9	160.1	728.4	1,658.9
Net investment income	1.0	8.9	3.8	10.2	7.8	51.3	83.0
Other income	1.0	3.4	1.8	6.6	3.8	10.0	26.6
Revenue	105.0	294.9	102.5	304.7	171.7	789.7	1,768.5
Net insurance claims	62.2	106.6	25.7	121.3	60.0	442.1	817.9
Expenses for the acquisition of insurance contracts	33.9	78.3	29.2	87.1	35.6	177.1	441.2
Administrative expenses	13.9	36.8	20.4	39.9	14.9	91.8	217.7
Foreign exchange loss	0.8	2.1	0.7	2.1	1.2	5.4	12.3
Expenses	110.8	223.8	76.0	250.4	111.7	716.4	1,489.1
Share of loss of associates	-	-	(0.3)	-	-	(0.8)	(1.1)
Segment result	(5.8)	71.1	26.2	54.3	60.0	72.5	278.3
Finance costs							(16.4)
Profit before income tax							261.9
Income tax expense							(44.1)
Profit after income tax							217.8
Claims ratio	60%	38%	27%	42%	37%	61%	49%
Expense ratio	47%	40%	51%	44%	32%	37%	40%
Combined ratio	107%	78%	78%	86%	69%	98%	89%
Segment assets and liabilities
Segment assets	216.8	1,048.9	767.9	999.1	372.1	3,037.9	6,442.7
Segment liabilities	(188.8)	(673.7)	(629.6)	(808.2)	(233.2)	(2,566.5)	(5,100.0)
Net assets	28.0	375.2	138.3	190.9	138.9	471.4	1,342.7

3 Net investment income

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Interest and dividends on financial investments at fair value through profit or loss	33.2	32.0	67.1
Interest on cash and cash equivalents	0.3	0.2	0.6
Realised losses on financial investments at fair value through profit or loss	(10.3)	(11.5)	(16.3)
Net unrealised fair value gains on financial investments at fair value through profit or loss	25.7	31.6	41.9
Investment income from financial investments	48.9	52.3	93.3
Fair value gain on derivative financial instruments	-	-	-
Investment income	48.9	52.3	93.3
Investment management expenses	(5.4)	(5.5)	(10.3)
	43.5	46.8	83.0

4 Other income

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Commission income	8.4	6.5	14.2
Profit commissions	5.0	3.0	9.9
Agency fees	0.8	1.1	2.3
Other income	-	-	0.2
	14.2	10.6	26.6

5 Finance cost

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Interest expense	7.5	8.2	16.4
	7.5	8.2	16.4

6 Earnings per share

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Basic (cents)	26.1	22.6	43.1
Diluted (cents)	25.2	21.9	41.8
Basic (pence)	17.2	13.5	26.1
Diluted (pence)	16.6	13.1	25.3

Basic

Basic earnings per share are calculated by dividing profit after income tax of $133.0m (30 June 2014: $114.1m; 31 December 2014: $217.8m) by the weighted average number of shares in issue during the six months of 509.0m (30 June 2014: 505.5m; 31 December 2014: 505.4m). The shares held in the Employee Share Options Plan (ESOP) of 12.4m (30 June 2014: 15.8m; 31 December 2014 16.0m) have been excluded from the calculation until such time as they vest unconditionally with the employees.

Diluted

Diluted earnings per share are calculated by dividing profit after income tax of $133.0m (30 June 2014: $114.1m; 31 December 2014: $217.8m) by the adjusted weighted average number of shares of 526.9m (30 June 2014: 521.9m; 31 December 2014: 521.2m). The adjusted weighted average number of shares assumes conversion of dilutive potential ordinary shares, being shares from the SAYE (Save As You Earn), retention and deferred share schemes. The shares held in the ESOP of 12.4m (30 June 2014: 15.8m; 31 December 2014: 16.0m) have been excluded from the calculation until such time as they vest unconditionally with the employees.

7 Dividends

A first interim dividend of 3.3p per ordinary share (2014: 3.1p) is payable in respect of the six months to 30 June 2015. These financial statements do not provide for this dividend as a liability.

A second interim dividend of 6.2p per ordinary share and a special dividend of 11.8p was paid on 27 March 2015 to shareholders registered at 5.00pm on 27 February 2015 in respect of the six months ended 31 December 2014.

The first interim dividend will be payable on 4 September 2015 to shareholders registered at 5.00pm on 7 August 2015 (save to the extent that shareholders on the register of members on 7 August 2015 are to be paid a dividend of 3.3p by a subsidiary of the company (being Beazley DAS Limited) resident for tax purposes in the United Kingdom pursuant to elections made in which case such shareholders shall have a right to be paid the aforementioned dividend but shall have no right to the first interim dividend).

8 Income tax expense

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Current tax expense
Current year	34.4	82.5	95.6
Prior year adjustments	(7.3)	(1.5)	5.5
	27.1	81.0	101.1
Deferred tax expense
Origination and reversal of temporary differences	(10.4)	(61.0)	(55.2)
Impact of change in UK tax rates	-	0.1	0.4
Prior year adjustments	4.8	(1.3)	(2.2)
	(5.6)	(62.2)	(57.0)
Income tax expense	21.5	18.8	44.1
Profit before tax	154.5	132.9	261.9
Tax calculated at Irish tax rate (12.5%)	19.3	16.6	32.7
Effects of:
- tax rates in foreign jurisdictions	2.9	4.2	4.9
- non-deductible expenses	1.8	0.7	3.5
- tax relief on share based payments - current and future years	-	-	(1.4)
- (Over)/under provided in prior years	(2.5)	(2.8)	3.3
- change in UK tax rates*	-	0.1	0.4
- foreign exchange on tax	-	-	0.7
Tax charge for the period	21.5	18.8	44.1

* The summer budget 2015 announced that the UK corporation tax rate will decrease from the current rate of 20% to 19% in 2017 and to 18% in 2020. These reductions to 19% and 18%, which were not substantively enacted at the balance sheet date, will reduce the company's future current tax charge and the UK deferred tax liability. The UK deferred tax liability on the balance sheet at 30 June 2015 has been calculated using the current enacted UK corporation tax rate of 20%.

9 Financial assets and liabilities

	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Financial assets at fair value
Sovereign issued	872.4	933.4	820.1
Quasi-sovereign	555.7	564.4	585.7
Supranational	339.9	415.6	439.8
Asset backed securities	179.5	435.8	378.6
Corporate debt
-     Investment grade credit	1,196.6	1,055.7	1,111.5
-     Non-investment grade credit	194.6	73.0	181.6
Total fixed and floating rate debt securities	3,338.7	3,477.9	3,517.3
Equity linked funds	138.0	152.3	145.9
Hedge funds (uncorrelated strategies)	355.0	374.5	367.0
Illiquid credit assets	78.5	-	45.9
Total capital growth	571.5	526.8	558.8
Total financial investments at fair value through statement of profit or loss	3,910.2	4,004.7	4,076.1
Derivative financial instruments	2.4	4.3	1.3
Total financial assets at fair value	3,912.6	4,009.0	4,077.4

Quasi-sovereign securities include securities which are issued by government agencies or entities supported by government guarantees. Supranational securities are issued by institutions sponsored by more than one sovereign issuer. Asset-backed securities are backed by financial assets, including mortgage, credit card and auto loan receivables. Investment grade credit assets include corporate debt rated BBB-/Baa3 or higher by one or more major rating agency, while the remainder of our corporate debt is rated below investment credit. Equity linked funds are investment vehicles which are predominantly exposed to equity securities. Our illiquid credit assets are described in further detail below. The fair value of these assets at 30 June 2015 excludes an unfunded commitment of $96.0m (30 June 2014: $34.0m).

The amount expected to mature before and after one year are:	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Within one year	938.4	1,120.1	807.0
After one year	2,402.7	2,362.1	2,711.6
	3,341.1	3,482.2	3,518.6

Our capital growth assets have no defined maturity dates and have thus been excluded from the above maturity table. However, 84% (30 June 2014: 93%) of equity linked funds could be liquidated within two weeks and the balance within six months, 85% (30 June 2014: 88%) of hedge fund assets within six months and the remaining 15% (30 June 2014: 12%) of hedge fund assets within 18 months. Illiquid credit assets are not readily realisable and principal will be returned over the life of these assets, which may be up to ten years.

Financial liabilities	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Retail bond	116.7	126.7	115.8
Subordinated debt	18.0	18.0	18.0
Tier 2 subordinated debt	122.4	135.1	122.5
Derivative financial instruments	2.2	-	0.5
Total financial liabilities	259.3	279.8	256.8

The amount expected to mature before and after one year are:	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Within one year	2.2	-	0.5
After one year	257.1	279.8	256.3
	259.3	279.8	256.8

Fair value measurement

The table below summarises financial assets carried at fair value using a valuation hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Included within level 1 are bonds and treasury bills of government and government agencies which are measured based on quoted prices.

Level 2 - Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant inputs can be corroborated by observable market data (e.g. interest rates, exchange rates). Included within level 2 are government bonds and treasury bills which are not actively traded, corporate bonds, asset backed securities and mortgage-backed securities.

Level 3 - Valuations based on inputs that are unobservable or for which there is limited market activity against which to measure fair value.

The availability of financial data can vary for different financial assets and is affected by a wide variety of factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by management in determining fair value is greatest for instruments classified in level 3. The group uses prices and inputs that are current as of the measurement date for valuation of these instruments.

If the inputs used to measure the fair value of an asset or a liability could be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Level 2 investments

The group has an established control framework and valuation policy with respect to the measurement of fair values. For the group's level 2 debt securities our fund administrator obtains the prices used in the valuation from independent pricing vendors such as Bloomberg, Standard & Poor's, Reuters, Markit and International Data Corporation. The independent pricing vendors derive an evaluated price from observable market inputs. The market inputs include trade data, two-sided markets, institutional bids, comparable trades, dealer quotes, news media, and other relevant market data. These inputs are verified in their pricing engines and calibrated with the pricing models to calculate spread to benchmarks, as well as other pricing assumptions such as Weighted Average life (WM), Discount Margins (DM), Default rates, and recovery and prepayments assumptions for mortgage securities. While such valuations are sensitive to estimates, it is believed that changing one or more of the assumptions to reasonably possible alternative assumptions would not change the fair value significantly.

The group records the unadjusted price provided and validates the price through various tolerance checks, such as comparison with prices provided by investment custodians and investment managers, to assess the reasonableness and accuracy of the price to be used to value each security. In the rare case that a price fails the tolerance test, it is escalated and discussed internally. We would not normally override a price retrospectively, but we would work with the administrator and pricing vendor to investigate the difference. We also review our valuation policy on a regular basis to ensure it is fit for purpose. As at 30 June 2015, no adjustments have been made to the prices obtained from the independent administrator.

For our hedge funds and equity linked funds, pricing and valuation is undertaken by independent administrators in accordance with the valuation policy of each fund. Regulated equity linked fund prices are published on a daily or weekly basis via Bloomberg and other market data providers such as Reuters. Hedge fund values are communicated by the independent administrators to all investors via monthly investor statements.

Additional information is obtained from fund managers relating to the underlying assets within individual hedge funds and equity linked funds. This shows that 70% (30 June 2014: 69%, 31 December 2014: 59%) of these underlying assets were level 1 and the remainder level 2. This enables us to categorise our hedge fund and equity linked fund investments as level 2.

Prior to any new hedge fund investment, extensive due diligence is undertaken on each fund to ensure that pricing and valuation is undertaken by an independent administrator and that each fund's valuation policy is appropriate for the financial instruments the manager will be employing to execute the investment strategy. Fund liquidity terms are reviewed prior to the execution of any investment to ensure that there is no mismatch between the liquidity of the underlying fund assets and the liquidity terms offered to fund investors.

Level 3 investments

The level 3 categorisation applies only to some of our illiquid credit investments. These are generally participations in limited partnership vehicles which hold diverse, typically illiquid, investments. While these funds provide full transparency of their underlying investments, the investments themselves are in many cases private and unquoted, and are therefore classified as level 3 investments.

Valuation inputs can be subjective and may include a discount rate applied to the investment based on market factors and expectations of future cash flows, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance relative to benchmarks, financial condition, and financing transactions subsequent to the acquisition of the investment.

We take the following steps to ensure accurate valuation of these level 3 assets: A substantial part of the pre-investment due diligence process is dedicated to a comprehensive review of each fund's valuation policy and the internal controls of the manager. In addition to this, confirmation that the investment reaches a minimum set of standards relating to the independence of service providers, corporate governance, and transparency is sought prior to approval. Post investment, unaudited capital statements confirming the fair value of the Limited Partner interests are received and reviewed on a quarterly (or more frequent) basis. Audited financial statements are received on an annual basis, with the valuation of each transaction being confirmed.

30 June 2015	Level 1 $m	Level 2 $m	Level 3 $m	Total $m
Financial assets measured at fair value
Sovereign issued	870.1	2.3	-	872.4
Quasi-sovereign	258.8	296.9	-	555.7
Supranational	194.8	145.1	-	339.9
Asset backed securities	-	179.5	-	179.5
Corporate debt
-     Investment grade credit	81.8	1,114.8	-	1,196.6
-     Non-investment grade credit	-	194.6	-	194.6
Equity linked funds	-	138.0	-	138.0
Hedge funds (uncorrelated strategies)	-	355.0	-	355.0
Illiquid credit assets	-	12.2	66.3	78.5
Derivative financial assets	2.4	-	-	2.4
Total financial assets measured at fair value	1,407.9	2,438.4	66.3	3,912.6
Financial liabilities measured at fair value
Derivative financial liabilities	2.2	-	-	2.2
Financial liabilities not measured at fair value
Retail bond	-	121.3	-	121.3
Total subordinated debt	-	145.1	-	145.1
Total financial liabilities not measured at fair value	-	266.4	-	266.4

30 June 2014	Level 1 $m	Level 2 $m	Level 3 $m	Total $m
Financial assets measured at fair value
Sovereign issued	910.0	23.4	-	933.4
Quasi-sovereign	358.4	206.0	-	564.4
Supranational	343.0	72.6	-	415.6
Asset backed securities	-	435.8	-	435.8
Corporate debt
-     Investment grade credit	40.7	1,015.0	-	1,055.7
-     Non-investment grade credit	-	73.0	-	73.0
Equity linked funds	-	152.3	-	152.3
Hedge funds (uncorrelated strategies)	-	374.5	-	374.5
Illiquid credit assets	-	-	-	-
Derivative financial assets	4.3	-	-	4.3
Total financial assets measured at fair value	1,656.4	2,352.6	-	4,009.0
Financial liabilities measured at fair value
Derivative financial liabilities	-	-	-	-
Financial liabilities not measured at fair value
Retail bond	-	132.7	-	132.7
Total subordinated debt	-	157.4	-	157.4
Total financial liabilities not measured at fair value	-	290.1	-	290.1

31 December 2014	Level 1 $m	Level 2 $m	Level 3 $m	Total $m
Financial assets measured at fair value
Sovereign issued	779.7	40.4	-	820.1
Quasi-sovereign	310.3	275.4	-	585.7
Supranational	323.2	116.6	-	439.8
Asset backed securities	-	378.6	-	378.6
Corporate debt
-     Investment grade credit	48.2	1,063.3	-	1,111.5
-     Non-investment grade credit	-	181.6	-	181.6
Equity linked funds	-	145.9	-	145.9
Hedge funds (uncorrelated strategies)	-	367.0	-	367.0
Illiquid credit assets	-	7.9	38.0	45.9
Derivative financial assets	1.3	-	-	1.3
Total financial assets measured at fair value	1,462.7	2,576.7	38.0	4,077.4
Financial liabilities measured at fair value
Derivative financial liabilities	0.5	-	-	0.5
Financial liabilities not measured at fair value
Retail bond	-	124.7	-	124.7
Total subordinated debt	-	145.1	-	145.1
Total financial liabilities not measured at fair value	-	269.8	-	269.8

The table above does not include financial assets and liabilities that are, in accordance with the group's accounting policies, recorded at amortised cost, if the carrying amount of these financial assets and liabilities approximates their fair values at the reporting date.

Unconsolidated structured entities

A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of contractual arrangements.

As part of its standard investment activities the group holds investments in asset backed securities, equity linked funds, hedge funds and illiquid credit assets (the capital growth assets) which in accordance with IFRS 12 are classified as unconsolidated structured entities. The group does not sponsor any of the unconsolidated structured entities. The assets classified as unconsolidated structured entities are held at fair value on the balance sheet.

At 30 June the investments comprising the group's unconsolidated structured entities are as follows:

	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Asset backed securities	179.5	435.8	378.6
Equity linked funds	138.0	152.3	145.9
Hedge funds (uncorrelated strategies)	355.0	374.5	367.0
Illiquid credit assets	78.5	-	45.9
Investments through unconsolidated structured entities	751.0	962.6	937.4

Transfers and level 3 investment reconciliations

There were no transfers in either direction between level 1, level 2 and level 3 in either 2014 or 2015.

The table below shows a reconciliation from the opening balances to the closing balances of level 3 fair values. The total net unrealised gains recognised in the $1.1m (30 June 2014: $nil) are included in the net investment income number of $43.5m (30 June 2014: $46.8m) shown in the condensed consolidated statement of profit or loss.

	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
As at 1 January	38.0	-	-
Purchases	38.7	-	38.0
Sales	(11.5)	-	-
Total net unrealised gains recognised in profit or loss	1.1	-	-
As at 30 June	66.3	-	38.0

The currency exposures of our financial assets held at fair value are detailed below:

30 June 2015	UK £ $m	CAD $ $m	EURO € $m	Subtotal $m	US $ $m	Total $m
Financial assets at fair value
Fixed and floating rate debt securities	344.7	151.5	158.5	654.7	2,684.0	3,338.7
Equity linked funds	54.3	-	47.6	101.9	36.1	138.0
Hedge funds (uncorrelated strategies)	-	-	-	-	355.0	355.0
Illiquid credit assets	-	-	4.5	4.5	74.0	78.5
Derivative financial assets	-	-	-	-	2.4	2.4
Total	399.0	151.5	210.6	761.1	3,151.5	3,912.6

30 June 2014	UK £ $m	CAD $ $m	EURO € $m	Subtotal $m	US $ $m	Total $m
Financial assets at fair value
Fixed and floating rate debt securities	297.3	146.7	212.8	656.8	2,821.1	3,477.9
Equity linked funds	61.0	-	49.2	110.2	42.1	152.3
Hedge funds (uncorrelated strategies)	-	-	6.4	6.4	368.1	374.5
Illiquid credit assets	-	-	-	-	-	-
Derivative financial assets	-	-	-	-	4.3	4.3
Total	358.3	146.7	268.4	773.4	3,235.6	4,009.0

31 December 2014	UK £ $m	CAD $ $m	EURO € $m	Subtotal $m	US $ $m	Total $m
Financial assets at fair value
Fixed and floating rate debt securities	307.3	155.4	182.3	645.0	2,872.3	3,517.3
Equity linked funds	53.1	-	54.7	107.8	38.1	145.9
Hedge funds (uncorrelated strategies)	-	-	2.7	2.7	364.3	367.0
Illiquid credit assets	-	-	-	-	45.9	45.9
Derivative financial assets	-	-	0.1	0.1	1.2	1.3
Total	360.4	155.4	239.8	755.6	3,321.8	4,077.4

The above qualitative and quantitative disclosures, along with the risk management disclosure included in note 2 of the annual report for the year ending 31 December 2014, enables more comprehensive evaluation of Beazley's exposure to risks arising from financial instruments

10 Cash and cash equivalents

	30 June 2015 $m	30 June 2014 $m	31 December 2014 $m
Cash at bank and in hand	377.9	300.3	261.0
Short-term deposits and highly liquid investments	61.4	72.3	103.2
	439.3	372.6	364.2

Total cash and cash equivalents include $50.1m (31 December 2014: $42.2m) held in Lloyd's Singapore trust accounts. These funds are only available for use by the group to meet local claim and expense obligations.

11 Insurance claims

The loss development tables below provide information about historical claims development by the six segments - life, accident and health, marine, political risks and contingency, property, reinsurance and specialty lines. The tables are by underwriting year which in our view provides the most transparent reserving basis. We have supplied tables for both ultimate gross claims ratio and ultimate net claims ratio.

The top part of the table illustrates how the group's estimated claims ratio for each underwriting year has changed at successive year-ends. The bottom half of the table reconciles the gross and net claims to the amount included in the statement of financial position.

While the information in the tables provide a historical perspective on the adequacy of the claims liabilities established in previous years, users of these financial statements are cautioned against extrapolating past redundancies or deficiencies on current claims liabilities. The group believes that the estimates of total claims liabilities as at 30 June 2015 are adequate. However, due to inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to be adequate.

Gross ultimate claims	2005 ae %		2006 %		2007 %	2008 %		2009 %			2010 %		2011 %			2012 %			2013 %	2014 %			2015 %	Total
Life, accident & health
12 months								53.1			52.8		56.0			56.7			63.3	64.4
24 months								52.4			52.5		52.2			68.1			64.7
36 months								45.3			49.0		60.0			65.9
48 months								43.5			48.0		57.2
60 months								42.6			47.5
72 months								41.6
84 months
96 months
108 months
Position at 30 June 2015								41.7			47.0		56.9			65.2			65.2	66.4
Marine
12 months			57.1		58.3	69.2		55.0			50.6		55.0			56.0			56.5	57.6
24 months			42.3		60.2	65.1		51.3			49.7		47.8			46.2			51.9
36 months			32.8		50.7	59.2		44.7			44.0		39.7			34.6
48 months			29.1		48.2	62.9		41.1			42.4		34.3
60 months			28.8		49.5	62.7		40.8			40.8
72 months			26.4		50.2	59.0		49.1
84 months			26.3		47.0	55.3
96 months			25.7		44.2
108 months			25.4
Position at 30 June 2015			25.1		44.2	55.0		48.7			40.7		33.6			32.3			48.5	52.8
Political risks & contingency
12 months			57.1		57.2	57.5		61.1			61.4			58.8			62.5		57.3	56.0
24 months			36.3		39.9	67.5		38.6			40.4			39.4			43.0		42.4
36 months			32.3		56.4	74.6		34.9			33.0			34.4			39.5
48 months			43.6		53.5	87.5		30.3			23.8			28.8
60 months			39.8		53.8	72.3		24.5			22.5
72 months			39.3		49.9	61.4		18.6
84 months			36.3		47.4	58.4
96 months			30.8		49.3
108 months			28.2
Position at 30 June 2015			28.5		47.4	59.6		18.7			21.6			28.0			38.0		42.5	56.0
Property
12 months			58.5		58.3	71.1		53.9			58.7			59.2			55.8		55.3	55.3
24 months			44.2		56.3	66.0		42.5			61.9			51.4			48.0		49.4
36 months			43.2		53.7	64.9		37.4			59.8			49.3			40.4
48 months			50.5		54.4	62.8		36.3			57.1			47.4
60 months			50.7		57.5	61.3		35.2			54.4
72 months			50.4		66.2	60.2		34.2
84 months			49.8		66.4	59.1
96 months			47.6		65.7
108 months			46.6
Position at 30 June 2015			45.8		64.9	58.8		34.0			54.1			47.6			38.0		47.5	49.8
Reinsurance
12 months			52.4		59.7	60.0		60.8			68.0			78.3			62.9		57.3	60.8
24 months			25.4		25.3	52.6		47.6			152.0			77.7			36.4		43.6
36 months			25.0		21.3	43.7		39.7			140.6			72.3			31.1
48 months			23.5		19.7	40.5		39.2			135.1			68.5
60 months			21.6		18.8	40.1		35.1			139.1
72 months			21.3		18.7	40.2		32.2
84 months			21.5		17.1	39.5
96 months			21.0		16.3
108 months			20.4
Position at 30 June 2015			20.4		16.3	39.5		32.2			139.2			68.4			31.1		43.7	41.6
Specialty lines
12 months			72.6		72.8	72.1		72.8			73.9			75.7			74.1		73.5	68.5
24 months			72.7		72.4	72.0		72.7			74.0			75.7			74.1		73.2
36 months			72.6		72.3	72.0		71.9			72.9			76.5			72.2
48 months			72.9		72.3	72.0		71.4			73.3			75.4
60 months			70.9		72.4	71.6		71.6			69.2
72 months			65.8		72.3	72.0		68.1
84 months			61.9		72.3	70.2
96 months			58.3		71.3
108 months			57.0
Position at 30 June 2015			55.0		70.0	71.9		68.1			69.5			76.3			71.3		73.3	68.5
Total
12 months			63.8		64.5	69.3		63.1			64.7			67.3			64.6		63.7	62.1
24 months			54.0		60.1	67.7		57.2			72.9			63.0			58.1		59.1
36 months			51.6		59.0	66.3		53.5			68.9			61.0			53.2
48 months			53.4		58.5	67.6		52.0			67.2			58.4
60 months			52.0		59.4	65.7		51.0			64.8
72 months			49.3		61.2	64.1		49.9
84 months			47.3		60.3	62.1
96 months			44.7		59.3
108 months			43.6
Position at 30 June 2015			42.6		58.4	62.9		49.8			64.9			58.7			51.8		58.2	58.8
Total ultimate losses ($m)	3,988.8		705.0		1,059.7	1,207.7		1,048.8			1,335.8			1,122.3			1,064.8		1,291.8	1,419.6			1,556.8			15,801.1
Less paid claims ($m)	(3,786.1)		(622.9)		(903.6)	(1,009.4)		(766.9)			(1,014.7)			(741.0)			(525.1)		(464.9)	(149.3)			(6.0)			(9,989.9)
Less unearned portion of ultimate losses ($m)	-		-		-	-		-			-			-			-		(1.5)	(260.9)			(1,357.7)			(1,620.1)
Gross claims liabilities (100% level) ($m)	202.7		82.1		156.1	198.3		281.9			321.1			381.3			539.7		825.4	1,009.4			193.1			4,191.1
Less unaligned share ($m)	(38.7)		(15.0)		(30.3)	(33.4)		(46.5)			(54.1)			(73.0)			(89.9)		(128.5)	(155.3)			(29.3)			(694.0)
Gross claims liabilities, group share ($m)	164.0		67.1		125.8	164.9		235.4			267.0			308.3			449.8		696.9	854.1			163.8			3,497.1

Net ultimate claims	2005 ae %	2006 %	2007 %	2008 %	2009 %	2010 %	2011 %	2012 %	2013 %	2014 %	2015 %
Life, accident & health
12 months					51.7	51.5	55.1	58.0	65.6	62.6
24 months					50.7	52.1	54.2	64.9	68.1
36 months					44.5	52.0	63.2	63.7
48 months					45.5	51.3	60.2
60 months					44.7	50.7
72 months					43.6
84 months
96 months
108 months
Position at 30 June 2015					43.4	50.0	59.8	59.2	68.2	64.1
Marine
12 months		54.1	55.5	61.4	54.0	52.3	56.0	55.4	56.1	56.5
24 months		42.0	56.7	56.7	47.9	49.4	48.0	46.0	53.0
36 months		32.9	49.6	50.6	39.4	44.7	39.3	37.4
48 months		31.4	46.7	47.5	35.7	42.8	35.1
60 months		31.0	47.5	47.0	35.4	41.6
72 months		29.2	47.5	46.4	39.0
84 months		29.0	45.1	45.2
96 months		28.5	43.2
108 months		28.1
Position at 30 June 2015		27.8	43.2	44.9	38.7	41.5	34.4	35.6	50.4	53.6
Political risks & contingency
12 months		56.0	55.4	55.9	59.0	57.3	55.0	59.3	54.7	52.9
24 months		40.5	40.7	75.4	35.2	37.9	38.2	41.4	41.9
36 months		36.6	55.1	77.2	32.4	30.6	32.7	38.2
48 months		47.3	54.8	80.0	27.8	21.8	30.2
60 months		41.6	52.7	69.7	22.3	20.4
72 months		40.0	49.4	59.2	17.5
84 months		39.9	47.3	55.8
96 months		37.2	48.9
108 months		34.0
Position at 30 June 2015		34.0	46.7	57.3	17.8	20.2	29.2	37.7	41.9	52.9
Property
12 months		61.3	61.1	67.3	53.7	59.1	60.6	58.7	56.8	54.6
24 months		48.9	59.4	67.3	48.3	66.1	57.9	53.3	56.3
36 months		47.3	58.5	65.0	44.8	66.6	54.4	46.4
48 months		50.9	58.8	64.0	42.7	60.7	51.1
60 months		50.1	61.9	62.9	42.0	58.5
72 months		50.2	62.1	61.5	40.8
84 months		49.8	62.1	60.8
96 months		48.1	61.7
108 months		47.5
Position at 30 June 2015		46.9	61.8	60.3	40.7	58.2	51.3	42.7	54.1	52.2
Reinsurance
12 months		54.3	55.3	68.0	55.6	76.7	88.4	67.1	55.0	57.9
24 months		37.0	29.6	58.9	51.8	138.4	87.9	43.8	49.8
36 months		34.9	24.7	49.5	46.1	131.6	83.0	37.5
48 months		32.7	22.7	47.5	45.5	127.2	77.4
60 months		31.2	22.1	46.9	40.8	133.5
72 months		31.3	21.9	47.1	37.5
84 months		31.5	20.1	46.1
96 months		30.8	19.0
108 months		29.9
Position at 30 June 2015		30.1	19.0	46.1	37.5	133.1	77.7	37.3	50.0	41.4
Specialty lines
12 months		68.7	69.8	70.2	69.9	71.3	72.8	71.3	69.6	66.0
24 months		68.6	68.7	70.2	69.8	71.4	72.8	70.8	69.1
36 months		68.7	68.6	70.2	69.1	70.7	71.9	68.9
48 months		67.8	67.4	68.8	66.1	69.6	69.8
60 months		63.8	67.4	68.2	65.9	69.2
72 months		57.7	67.4	68.1	64.9
84 months		54.1	67.5	68.2
96 months		50.8	67.2
108 months		49.6
Position at 30 June 2015		48.5	66.4	69.2	64.8	69.3	70.3	65.8	69.4	66.2
Total
12 months		62.2	63.1	66.8	60.8	64.4	67.0	64.1	62.0	60.6
24 months		54.4	59.3	66.8	56.7	70.2	63.7	58.2	60.0
36 months		51.8	58.6	64.5	53.3	67.9	60.7	53.6
48 months		52.5	57.6	63.3	50.7	65.0	57.6
60 months		50.1	58.2	61.9	49.7	64.8
72 months		47.1	58.0	60.7	48.9
84 months		45.5	57.2	59.9
96 months		43.4	56.7
108 months		42.3
Position at 30 June 2015		41.8	56.2	60.5	48.8	64.5	57.8	51.2	59.1	58.2
Total ultimate losses ($m)	2,410.1	571.2	877.5	943.1	808.9	1,092.4	942.7	877.8	1,101.8	1,177.7	1,243.0	12,046.2
Less paid claims ($m)	(2,271.4)	(510.2)	(758.7)	(805.7)	(634.1)	(862.1)	(649.9)	(464.6)	(406.8)	(147.2)	(4.4)	(7,515.1)
Less unearned portion of ultimate losses ($m)	-	-	-	-	-	-	-	-	(4.4)	(234.5)	(1,102.0)	(1,340.9)
Net claims liabilities (100% level) ($m)	138.7	61.0	118.8	137.4	174.8	230.3	292.8	413.2	690.6	796.0	136.6	3,190.2
Less unaligned share ($m)	(26.4)	(11.9)	(20.5)	(24.1)	(32.1)	(39.5)	(53.6)	(68.3)	(106.1)	(126.2)	(21.1)	(529.8)
Net claims liabilities, group share ($m)	112.3	49.1	98.3	113.3	142.7	190.8	239.2	344.9	584.5	669.8	115.5	2,660.4

Analysis of movements in loss development tables

We have updated our loss development tables to show the interim ultimate loss ratios as at 30 June 2015 for each underwriting year. As such, care should be taken when comparing these half year movements to the full year movements shown within the body of the table.

Life, accident & health

2013 and 2014 underwriting years experience to date has been slightly worse than anticipated leading to some strengthening. All other underwriting years have released over the period.

Marine

The relatively benign claims experience has continued within the Marine account leading to either no movement or releases across all underwriting years. The reduction in 2014 is driven by the partial release of available catastrophe margin.

Political risks & contingency

One large claim moved from the 2007 underwriting year into 2008, this lead to a release on 2007 and a strengthening on 2008. Other years have remained broadly stable.

Property

There have been positive developments across most underwriting years, driven by reserve releases on previous natural catastrophes, a favourable attritional experience and a benign natural catastrophe experience.

Reinsurance

2013 and prior underwriting years have remained broadly unchanged, with no major updates to historic catastrophe estimates. The reduction in 2014 is driven by the partial release of available catastrophe margin.

Specialty lines

Releases from the 2003 to 2006 underwriting years have continued, with more recent underwriting years remaining broadly stable. 2008 has strengthened slightly as we obtain greater certainty around claims outcomes. The 2012 underwriting year continues to release in the shorter tail classes.

Claims releases

The table below analyses our net insurance claims between current year claims and adjustments to prior year net claims reserves. These have been broken down by segment and period.

The net of reinsurance claims release on 2014 and prior underwriting years has risen to $74.5m (2013: $72.9m). The releases are the result of both generally favourable development and recoveries on specific claims.

The movements shown on 2012 and earlier are absolute claim movements and are not impacted by any current year movements on premium on those underwriting years.

6 months ended 30 June 2015	Life, accident & health  $m	Marine $m	Political risks & contingency $m	Property $m	Reinsurance $m	Specialty lines $m	Total  $m
Current year	34.5	72.7	25.8	73.8	35.6	249.8	492.2
Prior year
- 2012 and earlier	(1.4)	(7.9)	(1.9)	(10.9)	-	(20.5)	(42.6)
- 2013 underwriting year	(0.3)	(6.2)	(0.3)	(4.4)	-	2.8	(8.4)
- 2014 underwriting year	1.0	(3.9)	(0.2)	(3.5)	(17.7)	0.8	(23.5)
	(0.7)	(18.0)	(2.4)	(18.8)	(17.7)	(16.9)	(74.5)
Net insurance claims	33.8	54.7	23.4	55.0	17.9	232.9	417.7

6 months ended 30 June 2014	Life, accident & health  $m	Marine $m	Political risks & contingency $m	Property $m	Reinsurance $m	Specialty lines $m	Total  $m
Current year	27.2	73.5	24.4	83.6	46.3	229.1	484.1
Prior year
- 2011 and earlier	(0.9)	(11.4)	(10.7)	(11.0)	(5.9)	(15.3)	(55.2)
- 2012 underwriting year	(0.2)	(10.4)	1.4	(5.6)	(3.8)	(1.3)	(19.9)
- 2013 underwriting year	0.4	0.5	(0.1)	1.8	(0.4)	-	2.2
	(0.7)	(21.3)	(9.4)	(14.8)	(10.1)	(16.6)	(72.9)
Net insurance claims	26.5	52.2	15.0	68.8	36.2	212.5	411.2

Year ending 31 December 2014	Life, accident & health  $m	Marine $m	Political risks & contingency  $m	Property $m	Reinsurance $m	Specialty lines $m	Total $m
Current year	66.6	146.8	45.8	157.2	87.8	471.8	976.0
Prior year
- 2011 and earlier	(3.8)	(15.0)	(12.8)	(19.6)	(9.1)	(18.3)	(78.6)
- 2012 underwriting year	(1.0)	(19.6)	(0.8)	(17.3)	(8.6)	(11.4)	(58.7)
- 2013 underwriting year	0.4	(5.6)	(6.5)	1.0	(10.1)	-	(20.8)
	(4.4)	(40.2)	(20.1)	(35.9)	(27.8)	(29.7)	(158.1)
Net insurance claims	62.2	106.6	25.7	121.3	60.0	442.1	817.9

12 Related party transactions

The nature of the related party transactions of the group are consistent in nature and scope with those disclosed in note 30 of the group's consolidated financial statements for the year ended 31 December 2014.

There were no other transactions with related parties during the period which have had a material effect on the results or financial position of the group.

13 Foreign exchange rates

The group used the following exchange rates to translate foreign currency assets, liabilities, income and expenses into US dollars, being the group's presentation currency:

	6 months  ended 30 June 2015 $m	6 months  ended 30 June 2014 $m	Year to 31 December 2014 $m
Average
Pound sterling	0.66	0.60	0.61
Canadian dollar	1.24	1.10	1.10
Euro	0.90	0.73	0.75
Spot
Pound sterling	0.64	0.58	0.64
Canadian dollar	1.25	1.06	1.16
Euro	0.90	0.73	0.83

14 Subsequent events

There are no events that are material to the operations of the group that have occurred since the reporting date.

Glossary

Aggregates/aggregations

Accumulations of insurance loss exposures which result from underwriting multiple risks that are exposed to common causes of loss.

Aggregate excess of loss

The reinsurer indemnifies an insurance company (the reinsured) for an aggregate (or cumulative) amount of losses in excess of a specified aggregate amount.

A.M. Best

A.M. Best is a worldwide insurance-rating and information agency whose ratings are recognised as an ideal benchmark for assessing the financial strength of insurance related organisations, following a rigorous quantitative and qualitative analysis of a company's balance sheet strength, operating performance and business profile.

Binding authority

A contracted agreement between a managing agent and a coverholder under which the coverholder is authorised to enter into contracts of insurance for the account of the members of the syndicate concerned, subject to specified terms and conditions.

Capacity

This is the maximum amount of premiums that can be accepted by a syndicate. Capacity also refers to the amount of insurance coverage allocated to a particular policyholder or in the marketplace in general.

Capital growth assets

These are assets that do not pay a regular income and target an increase in value over the long term. They will typically have a higher risk and volatility than that of the core portfolio. Currently these are the hedge funds, equity linked funds and illiquid credit assets.

Catastrophe reinsurance

A form of excess of loss reinsurance which, subject to a specified limit, indemnifies the reinsured company for the amount of loss in excess of a specified retention with respect to an accumulation of losses resulting from a catastrophic event or series of events.

Claims

Demand by an insured for indemnity under an insurance contract.

Claims ratio

Ratio, in percentage terms, of net insurance claims to net earned premiums. The calculation is performed excluding the impact of foreign exchange.

Combined ratio

Ratio, in percentage terms, of the sum of net insurance claims, expenses for acquisition of insurance contracts and administrative expenses to net earned premiums. This is also the sum of the expense ratio and the claims ratio. The calculation is performed excluding the impact of foreign exchange.

Coverholder/managing general agent

A firm either in the United Kingdom or overseas authorised by a managing agent under the terms of a binding authority to enter into contracts of insurance in the name of the members of the syndicate concerned, subject to certain written terms and conditions. A Lloyd's broker can act as a coverholder.

Deferred acquisition costs (DAC)

Costs incurred for the acquisition or the renewal of insurance policies (e.g. brokerage, premium levy and staff related costs) which are capitalised and amortised over the term of the contracts.

Earnings per share (EPS) - basic/diluted

Ratio, in pence and cents, calculated by dividing the consolidated profit after tax by the weighted average number of ordinary shares issued, excluding shares owned by the group. For calculating diluted earnings per share the number of shares and profit or loss for the year is adjusted for certain dilutive potential ordinary shares such as share options granted to employees.

Economic Capital Requirement (ECR)

The capital required by a syndicate's members to support their underwriting. Calculated as the uSCR 'uplifted' by 35% to ensure capital is in place to support Lloyd's ratings and financial strength.

Excess per risk reinsurance

A form of excess of loss reinsurance which, subject to a specified limit, indemnifies the reinsured company against the amount of loss in excess of a specified retention with respect to each risk involved in each loss.

Expense ratio

Ratio, in percentage terms, of the sum of expenses for acquisition of insurance contracts and administrative expenses to net earned premiums. The calculation is performed excluding the impact of foreign exchange on non-monetary items.

Facultative reinsurance

A reinsurance risk that is placed by means of a separately negotiated contract as opposed to one that is ceded under a reinsurance treaty.

Gross premiums written

Amounts payable by the insured, excluding any taxes or duties levied on the premium, including any brokerage and commission deducted by intermediaries.

Hard market

An insurance market where prevalent prices are high, with restrictive terms and conditions offered by insurers.

Horizontal limits

Reinsurance coverage limits for multiple events.

Incurred but not reported (IBNR)

These are anticipated or likely claims that may result from an insured event although no claims have been reported so far.

International Accounting Standards Board (IASB)

An independent accounting body responsible for developing IFRS (see below).

International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS)

Standards formulated by the IASB with the intention of achieving internationally comparable financial statements. Since 2002, the standards adopted by the IASB have been referred to as International Financial Reporting Standards (IFRS). Until existing standards are renamed, they continue to be referred to as International Accounting Standards (IAS).

Lead underwriter

The underwriter of a syndicate who is responsible for setting the terms of an insurance or reinsurance contract that is subscribed by more than one syndicate and who generally has primary responsibility for handling any claims arising under such a contract.

Line

The proportion of an insurance or reinsurance risk that is accepted by an underwriter or which an underwriter is willing to accept.

Managing agent

A company that is permitted by Lloyd's to manage the underwriting of a syndicate.

Managing general agent (MGA)

An insurance intermediary acting as an agent on behalf of an insurer.

Medium tail

A type of insurance where the claims may be made a few years after the period of insurance has expired.

Net assets per share

Ratio, in pence and cents, calculated by dividing the net assets (total equity) by the number of shares issued.

Net premiums written

Net premiums written is equal to gross premiums written less outward reinsurance premiums written.

Private enterprise

The private enterprise team offers specialised professional and general liability coverage supported by a high service proposition, focusing on meeting the needs of small businesses with assets up to $35 million and up to 500 employees.

Provision for outstanding claims

Provision for claims that have already been incurred at the reporting date but have either not yet been reported or not yet been fully settled.

Rate

The premium expressed as a percentage of the sum insured or limit of indemnity.

Reinsurance special purpose syndicate

A special purpose syndicate (SPS) created to operate as a reinsurance 'sidecar' to Beazley's treaty account, capitalising on Beazley's position in the treaty reinsurance market.

Reinsurance to close (RITC)

A reinsurance which closes a year of account by transferring the responsibility for discharging all the liabilities that attach to that year of account (and any year of account closed into that year), plus the right to buy any income due to the closing year of account, into an open year of account in return for a premium.

Retention limits

Limits imposed upon underwriters for retention of exposures by the group after the application of reinsurance programmes.

Retrocessional reinsurance

The reinsurance of the reinsurance account. It serves to 'lay off' risk.

Return on equity (ROE)

Ratio, in percentage terms, calculated by dividing the consolidated profit after tax by the average daily total equity.

Risk

This term may variously refer to:

a)       the possibility of some event occurring which causes injury
or loss;

b)       the subject matter of an insurance or reinsurance contract; or

c)       an insured peril.

Short tail


A type of insurance where claims are usually made during the term of the policy or shortly after the policy has expired. Property insurance is an example of short tail business.

Sidecar special purpose syndicate

Specialty reinsurance company designed to provide additional capacity to a specific insurance company. It operates by purchasing a portion or all of a group of insurance policies, typically cat exposures. These companies have become quite prominent in the aftermath of Hurricane Katrina as a vehicle to add risk-bearing capacity, and for investors to participate in the potential profits resulting from sharp price increases.

Soft market

An insurance market where prevalent prices are low, and terms and conditions offered by insurers are less restrictive.

Solvency Capital Requirement on an ultimate basis (uSCR)

The capital requirement under Solvency II calculated by Beazley's internal model which captures the risk in respect of the planned underwriting for the prospective year of account in full covering ultimate adverse development and all exposures.

Surplus lines insurer

An insurer that underwrites surplus lines insurance in the USA. Lloyd's underwriters are surplus lines insurers in all jurisdictions of the USA except Kentucky and the US Virgin Islands.

Total shareholder return (TSR)

The increase in the share price plus the value of any first and second dividends paid and proposed during the year.

Treaty reinsurance

A reinsurance contract under which the reinsurer agrees to offer and to accept all risks of certain size within a defined class.

Unearned premiums reserve

The portion of premium income in the business year that is attributable to periods after the reporting date in the underwriting provisions.

 

END

 

 

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