Interim Management Statement

RNS Number : 1840S

Beazley PLC

16 November 2011

 



Press

Release

Beazley plc interim management statement for the 9 months ended 30 September 2011

Dublin, 16 November 2011

Overview

·      Premium rates on renewal business increased by 1%

·      Estimates of the catastrophe losses in the first half of 2011 remain unchanged

·      Full year combined ratio still expected to be below 100%

·      Annualised investment yield of 1.0%

Andrew Horton, Chief Executive Officer, said: 

"While 2011 has been a challenging year for the sector due to first half catastrophe losses, our diverse underwriting portfolio has served us well. We continue to make progress in a number of our markets and expect to deliver an underwriting profit in 2011. Although premium rates are still competitive, trading conditions are improving and we are seeing rating increases across a number of lines. The recent launch of our accident and health initiative in the US in September demonstrates our continued desire to search out new opportunities to grow the company profitably in our existing business lines."

	30 Sept   2011	30 Sept  2010	% increase
Gross premiums written ($m)	1,352	1,350	0%
Investments and cash ($m)	4,031	3,706	4%
Investment return - annualised (%)	1.0%	0.8%	-
Rate increase/(decrease)	1%	(2%)	-

Premiums

The first nine months of 2011 saw flat premiums, when compared with the equivalent period of 2010. This was a good performance given the competitive market conditions in 2011. Premium rates on renewals are up by 1% overall which is in line with our expectations.

Below is an extract of our performance to the end of September 2011 by business division:

	Gross premiums written 30 Sept   2011	Gross premiums written 30 Sept  2010	% increase / (decrease)	Q3 2011 Rate change
	$m	$m	%	%
Life, accident and health	66	64	3	1
Marine	216	202	7	1
Political risk and contingency	78	79	(1)	(2)
Property	288	302	(5)	3
Reinsurance	182	167	9	3
Specialty lines	522	536	(3)	-
OVERALL	1,352	1,350	-	1

Following the catastrophes in the first quarter, we have seen hardening of premium rates in the reinsurance and property classes.  In general, trading conditions are improving with rates up 1% year on year.  We are also anticipating rating increases following changes in risk modelling in property and reinsurance, with the upgrade to RMS version 11.

Business update

We recently submitted our 2012 business plan to Lloyd's and subject to their approval, we expect premium levels to increase between 5 - 10% in 2012. The main areas of increase are catastrophe exposed businesses following 2011 losses and the move to RMS version 11, a full year writing for the new Australian acquisition and growth in specialty lines and political risks and contingency.

Claims update

As previously reported, the group was impacted by the catastrophe losses in the first quarter of 2011 in Japan, New Zealand and Australia. Taken together with the US tornadoes in April and May we reported catastrophe losses of $183m in the first half of 2011.  We are pleased to report that this estimate remains unaltered. 

The second half of the year has seen loss activity continue with hurricane Irene and the ongoing flooding in Thailand as the most noteworthy natural events. Our combined ratio guidance takes into account the output of our third quarter reserving process, together with an evaluation of these emerging events.

Investment performance

Investment income for the nine months to 30 September 2011 was $30.1m (30 September 2010: $22.3m) equivalent to an annualised return of 1.0% (30 September 2010: 0.8%).  In the most recent quarter Beazley's investment income was $7.6m. 

Investment portfolio

Beazley continues with its strategy of holding the majority of its investments in a core portfolio of sovereign fixed income assets, or short duration high quality credit.  This is complemented by a diversified portfolio of capital growth assets. During 2011 we have increased our allocation to credit risk assets to 13%.

The core portfolio continues to be conservatively invested.  As far as the eurozone is concerned, Beazley has sovereign holdings issued by France, Germany, the Netherlands and Belgium only. There is also a 3.7% exposure to major eurozone banks, exclusively in Germany and the Netherlands, of which 3.1% is AAA rated and 0.6% is AA rated.

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

	30 Sept 2011			30 Sept  2010
	$m	%		$m	%
Core portfolio	3,615	89.7		3,307	89.2
Capital growth assets	416	10.3		399	10.8
Total	4,031	100		3,706	100

Investment Return

Comparison of return by major asset class:

	30 Sept 2011	30 Sept 2011 annualised return		30 Sept  2010	30 Sept  2010 annualised return
	$m	%		$m	%
Core portfolio	32.4	1.1		15.6	0.6
Capital growth assets	(2.3)	(0.7)		6.7	2.2
Overall return	30.1	1.0		22.3	0.8

During 2011 we have also increased the weighted average duration of the core portfolio, which at 30 September 2011 was 16 months (30 September 2010: 8 months) and the weighted average yield to maturity of our overall portfolio was 0.8% (30 September 2010: 0.6%).

Capital management

Our capital position will enable us to support the 2012 business plan whilst keeping our $225m letter of credit facility undrawn and available to deploy should any opportunities arise.

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 2010, underwrote gross premiums worldwide of $1,741.6 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

 

END

 

 

IMSEAKFKFFSFFEF