Interim Management Statement

RNS Number : 7607L

Beazley PLC

12 May 2010

 



 

Beazley plc Interim management statement for the 3 months ended 31st March 2010

Dublin, 12 May 2010

Overview

·      Premiums up 19% to $438.2m (2009 $368.9m)

·      Average rates decreased by 1%

·      Claims costs on track in spite of high profile market losses

·      Annualised investment yield of 0.6%

Andrew Horton, Chief Executive Officer, said: 

"The business continued to grow in the early stages of 2010. The expansion of our shorter tail lines provides balance to our portfolio and the market continues to provide profitable opportunities for Beazley. The outlook for investment markets remains unclear and we believe that capital preservation is a priority as we look to create further profitable underwriting growth."

	31 March  2010	31 March 2009	% increase
Gross premiums written ($m)	438.2	368.9	19%
Investments and cash ($m)	3,581	2,870	25%
Investment income / (loss) ($m)	5.0	(3.9)
Investment return / (loss) - annualised (%)	0.6%	(0.6)%	-
Rate (decrease) / increase	(1%)	2%	-

Premiums

The first three months of 2010 has seen premium growth when compared with the equivalent period of 2009. Reporting for the first time in US dollars, premium growth equates to 19% year on year and has been mainly driven by the acquisitions in our property and reinsurance lines of business. Premium rates are down by 1% on average across the portfolio which is within the range we anticipated.

Below is an extract of our performance to the end of March 2010 by business division:

	Gross premiums written 31 March 2010	Gross premiums written (*) 31March 2009	% increase / (decrease)	Q1 2010 Rate change
	$m	$m	%	%
Marine	66.0	59.2	11	(3)
Political risk and contingency	24.8	36.4	(32)	(2)
Property	83.1	52.3	59	(1)
Reinsurance	110.6	78.8	40	-
Specialty lines	153.7	142.2	8	(1)
OVERALL	438.2	368.9	19	(1)

The significant increase in property premium is driven by additional premiums written by the First State underwriting team that joined Beazley in Q2 2009.  This, alongside an increase in catastrophe risk appetite reflected in the increase in premiums for our marine and reinsurance divisions, has continued to provide improved balance between our short and medium tail business.

Beazley's accident and health business (included within reinsurance) has continued to develop well writing $27.6m in the first quarter compared to $12.8m in the equivalent period of 2009.

US operations

Locally underwritten US premium grew to $91.0m in the first quarter of 2010 compared to $63.2m in the equivalent period last year. Of this growth $26.9m is attributable to property business written by the First State team that joined Beazley in April 2009.

Claims update

Our estimate of the claims cost from the Chile earthquake remains in the range of $55m to $75m based on market wide losses in the range of $5bn to $8bn, with no change from the press release on 7 April. We expect that these losses will be covered by the reserves for the 2009 and 2010 underwriting years that are set aside to meet catastrophe claims.

The estimated net cost to Beazley of the Deepwater Horizon oil rig explosion in the Gulf of Mexico is approximately $6m.  The outlook for the development of the 2009 underwriting year of the energy account and for 2010 reserve releases from the overall marine account remains strong.

Claims are developing in line with our expectations in all other areas of our business.

Investment performance

Investment income for the three months to 31 March was $5.0m equivalent to an annualised return of 0.6%, compared with a year to date loss of $3.9m over the same period in 2009.

Investment portfolio

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

			31 March 2010			31 March 2009
			$m	%		$m	%
	Cash and cash equivalents	486		14		648	24
	Government, Agency and Supranational	1,552		44		1,034	36
	AAA	971		27		458	16
	AA+ to AA-	151		4		157	5
	A+ to A-	82		2		326	11
	BBB+ to BBB-	2		-		96	3
Core portfolio			3,244	91		2,719	95
Capital growth assets			337	9		152	5
Total			3,581	100		2,871	100

Investment Return

Comparison of return by major asset class:

	31 March 2010	31 March 2010 annualised return		31 March 2009	31 March 2009 annualised return
	$m	%		$m	%
Core portfolio	3.6	0.5		(6.3)	(0.9)
Capital growth assets	1.4	1.7		2.4	7.5
Overall return	5.0	0.6		(3.9)	(0.6)

Capital

During the year to date Beazley plc has acquired 3.2m of its own shares to be held in treasury at an average price of 108.6p.

In April we exited the interest rate and cross currency swaps giving the group an effective annual finance cost of 5.9% on its £150m bonds which is fixed until 2016.

ENDS

(*) The gross premium written figure quoted for 2009 has been translated at the first quarter 2009 prevailing exchange rates. In our 2010 financial statements, we will be following the guidance under International Accounting Standard 21 (foreign currency translation), where all 2009 comparative information will be converted at the exchange rate as at the transition date when we changed our functional currency to US dollars.

 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 2009, underwrote gross premiums worldwide of £1,115.5 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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