Results for the year ended 31st December 2013

RNS Number : 4159Z
Beazley PLC
06 February 2014
 



Press Release

Beazley delivers an exceptional underwriting performance

Dublin, 6 February 2014

Beazley plc results for the year ended 31st December 2013

·      Profit before income tax of $313.3m (2012: $251.2m)

·      Return on equity of 21% (2012: 19%)

·      Gross written premiums increased by 4% to $1,970.2m (2012: $1,895.9m)

·      Combined ratio of 84% (2012: 91%)

·      Rate increase on renewal portfolio of 1% (2012: 3%)

·      Prior year reserve releases of $218.0m (2012: $126.0m)

·      Net investment income of $43.3m (2012: $82.6m)

·      Second interim dividend of 5.9p, taking total dividends for the year to 8.8p (2012: 8.3p) up 6%, plus a special dividend of 16.1p (2012: 8.4p) 

 

 


Year ended  
31 December 2013

Year ended  
31 December 2012

% movement

Gross written premiums ($m)

1,970.2

1,895.9

4%

Net written premiums ($m)

1,676.5

1,542.7

9%

Profit before income tax ($m)

313.3

251.2

25%


 

 


Earnings per share (pence)

33.6p

26.7p

26%

Net assets per share (pence)

160.6p

147.5p

9%

Net tangible assets per share (pence)

149.6p

133.4p

12%


 

 


Dividend per share (pence)

8.8p

8.3p

6%

Special dividend

16.1p

8.4p

92%

 

Andrew Horton, Chief Executive Officer, said:

 

"Beazley delivered an exceptional underwriting performance in 2013, reflected in the lowest combined ratio we have recorded since becoming a public company in 2002.  It was a quiet year for catastrophe losses, which contributed to the strong reserve releases from short tail classes of business, but the business lines that are not exposed to catastrophes also performed excellently."

 

"Despite intensifying competition in some areas, we continue to identify attractive growth opportunities across the breadth of our well diversified portfolio.  The strength of our underwriting performance gives us the financial flexibility to take advantage of these opportunities while still enhancing returns to shareholders through a special dividend and an increased regular dividend."      

 

 

 

For further information, please contact:

Beazley plc

Martin Bride

Tel: +353 (0) 1854 4700

 

 

RLM Finsbury
Guy Lamming/Sarah Roberts
Tel: +44 (020) 7251 3801

 

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 2013, underwrote gross premiums worldwide of $1,970.2 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

 

 

 

Chairman's statement

 

I am pleased to report that your company delivered an excellent performance in 2013, achieving a return on average shareholders' equity of 21% (2012: 19%).

 

This performance was underpinned by a combined ratio of 84% (2012: 91%). A low incidence of catastrophe losses contributed to this, but strong underwriting results were not confined to catastrophe-exposed lines of business. Earnings per share rose to 52.4c and net tangible assets per share rose 14% to 248.3c. Beazley's share price during the year reflected the strong performance of the business, climbing 52%.

 

The board is pleased to announce a second interim dividend of 5.9p per ordinary share plus a special dividend of 16.1p per ordinary share. Together with the first interim dividend of 2.9p this takes the total dividends declared in 2013 to 24.9p per ordinary share (2012: first interim dividend of 2.7p, second interim dividend of 5.6p plus a special dividend of 8.4p, totalling 16.7p).

 

It has been said that running a successful insurance business is easy to describe but hard to execute. Beazley's vision is to become, and be recognised as, the highest performing specialist insurer. In making progress towards this goal we are frequently evaluating and reappraising our business mix, while ensuring that the overall level of risk grows proportionately with the company's capital base.

 

The strong performance of our marine division in 2013 is illustrative of our approach. Premium rates for war risks, including piracy, have declined sharply as attacks in vulnerable sea lanes, particularly off the Horn of Africa, have diminished. But we have simultaneously been able to increase our marine liabilities book substantially on the back of rate rises triggered in part by the Costa Concordia loss, the largest in marine history. With a well diversified book of business, which now also includes aviation risks as well as marine and energy risks, the team is able to make the adjustments needed to maintain profitability.

 

This approach, replicated across the company, supports efficient capital management. The benefits of our diversified portfolio can be seen in the relative stability of the company's combined ratio through widely varying claims scenarios. Over the past five years, Beazley has achieved a group combined ratio averaging 90%, including an underwriting profit in 2011, one of the worst years in history for insured natural catastrophes.

 

Innovation is also a key element of our strategy. As existing lines of business mature and new competitors crowd in, a specialist insurer such as Beazley must constantly look for new ways to enhance the value it offers to brokers and clients. This sometimes takes the form of new products - Beazley has been a pioneer in offering clients expert services in response to a claim, where such services are more relevant and valuable than a financial indemnity. But innovation also occurs daily in the interactions between underwriters and brokers to cover the more challenging risks.

 

To innovate in this way requires a high level of underwriting expertise and experience, which Beazley unquestionably possesses. In my two years to date as chairman of the company I have been delighted to see the company's continuing success as a magnet for talent in our industry. This applies not only to underwriting but also to the other disciplines, including high quality claims service, in which brokers and clients expect
us to excel.

 

Beazley is fortunate to possess not only a seasoned senior management team, but considerable bench strength across its operations. The rewards of the company's leadership are aligned to the long term performance of the company through a long term incentive plan with demanding performance targets tied to the growth of net asset value per share.

 

Dividend policy and capital management

The board strategy is to grow the dividend by between 5% and 10% per year and this has always been achieved. In addition, our capital management strategy is to carry some surplus capital to enable us to take advantage of growth opportunities that may arise; this is further supported by our fully undrawn banking facility. Given our growth plans and profitability, we are targeting a surplus capital buffer in the range of 10-20%. To the extent that we have surplus capital substantially outside of this range, the board will consider means to return this capital to shareholders, as evidenced by the fact that we have paid special dividends in four of the last seven years.

 

 

 

Outlook

Achieving profitable growth is not easy in the current insurance market and as we signalled at half year we see a number of markets in which we operate becoming more competitive.

 

That said, we do see profitable opportunities for moderate premium growth within our existing risk appetite in the course of 2014. In the board's view, Beazley remains on track towards the achievement of its vision.

 

 

 

 

Dennis Holt

Chairman

6 February 2014

 

 

 

Chief executive's statement

Beazley's businesses delivered an excellent result in 2013, generating a profit before income tax of $313.3m (2012: $251.2m) on gross premiums of $1,970.2m (2012: $1,895.9m). Our combined ratio of 84% (2012: 91%) is the best we have reported since becoming a public company at the end of 2002. While we were aided by a benign claims environment, this was also testament to a focus on underwriting profitability that has sustained Beazley's performance throughout the company's history.

 

With a longstanding commitment to profitability first and growth second, we have nevertheless continued to identify attractive growth opportunities. Specialty lines, our largest division, grew net premiums by 7% to $708.0m, buoyed by rate rises of 3%. Property, our second largest division, saw growth in net premiums of 12% and delivered a contribution to profits of $65.2m, the largest in the division's history. Property rates rose by 3% and, across the company, rates rose on average by 1%.

 

These two divisions account for the vast majority of business we underwrite locally in the United States, our largest market and one that is now home to 340 Beazley employees and the location of ten Beazley offices. We saw the growth of our locally underwritten US premiums accelerate in 2013, increasing by 17% to $451.8m.

 

Prior year reserve releases contributed $218.0m to our underwriting result (2012: $126.0m). A consistent approach to reserving has long been an important feature of our business model, enabling us to make prior year reserve releases as claims crystallise.

 

Profitable growth in the current market is by no means plain sailing. At the half year, we identified increasingly competitive headwinds from a number of sources. In particular, there has been an influx of new capital from pension funds into the reinsurance market, which will continue to depress rates, particularly for peak zone US catastrophe cover. Our reinsurance division, representing 11% of our total gross premiums, saw rates on renewals fall by 3%. With offices in Munich, Singapore and, most recently, Miami (serving cedants in Latin America) our reinsurance team is still able to grow by focusing increasingly on the development of non-US business. Our marine division continued to deliver very impressive underwriting results in 2013 in the face of stiff competition, particularly in the hull market, achieving a combined ratio of 72% (2012: 75%).

 

Much of our success as a company - and particularly the consistency of our performance - has derived from the careful balance of our risk portfolio, comprising lines of business that are not correlated. Not all lines will perform well in all years, as illustrated in 2013 by the contrasting fortunes of our political risks and contingency division and our life, accident & health division. The former had a good year, accounting for 7% of group premiums but almost 17% of group profits. By contrast, life, accident & health's combined ratio of 125% reflected challenging market conditions in Australia (to which we have responded with significant rate rises) and continuing uncertainty over the roll-out of the Affordable Care Act in the US, which depressed demand for the health and disability 'gap protection' cover we offer to the employees of US companies through their employers. We continue to see growth potential in 2014 in this market as the regulatory environment stabilises.

 

Claims activity

The 2013 Atlantic hurricane season was the first since 1994 to end with no major hurricanes and, overall, our claims experience has been relatively light. Our focus on providing high quality claims service remains very strong, however, and we were delighted that this was recognised in 2013 with two awards for our handling of claims in the aftermath of superstorm Sandy in October 2012.

 

A landmark of a different kind occurred in late November, when our technology, media and business services team helped a client manage its first - and our 1,000th - data breach. Data breaches occur with high frequency and require a very specialised and multi-faceted response. Beazley is the only insurer to have established a dedicated business unit to help clients handle data breaches successfully - an important factor in the huge success of our Beazley Breach Response product.

 

Investment performance

Government bond yields rose sharply in the US and Europe in 2013, anticipating a reduction in the amount of quantitative easing by the US Federal Reserve. The rise in yields, the largest for several years, was detrimental to our investment portfolio and contributed to a reduction in our overall return, from 2% in 2012 to 1% in 2013. Our alternative asset allocation contributed positively to the investment portfolio, with equity and credit funds performing especially well.

 

During 2013 we made some changes to the management of our investment portfolio by changing our relationship with Falcon Money Management. This should enable us to achieve lower investment management fees in future periods.

 

Risk management

We continue to monitor closely the risks that could impact the group. Given the nature of our business, the key risks that impact financial performance arise from insurance activities. These include the potential for changes in the tort law environment that could affect multiple teams within our specialty lines division, as well as natural or man-made catastrophe losses impacting our short tail lines of business. Alongside these insurance risks, the success of the group depends on managing the risks to the execution of its strategy. The board continues to receive a suite of risk information to help it mitigate these and the other risks.

 

Growth opportunities

We have a clear preference for developing organic growth opportunities but we would consider acquisition opportunities, on an exceptional basis. In 2013 we continued to plant the seeds of future growth, hiring talented individuals who in our judgement will be able to help us expand into new geographies or lines of business.

 

Latin America has not historically been a major source of business for Beazley underwriters, but the rapid evolution of many of the region's insurance and reinsurance markets led us to reappraise opportunities in the region in 2012 and early 2013. In July we opened an office in Miami to focus on the development of reinsurance business in Latin America, headed by Paul Felfle. And in December we announced the appointment of Ricardo Ortega as head of business development in Latin America, based in Rio de Janeiro. With significant infrastructure investments now under way in Brazil and elsewhere, construction and engineering risks present one area of opportunity among many.

 

We continue to see substantial growth opportunities in Europe. In the course of 2013, the European Union took further steps towards the adoption of a tighter regulatory regime for data breach notification that will result in the EU being far more like the United States in this respect, increasing the appeal of our market leading cover for this risk. And in May we welcomed Matthew Norris, one of the most experienced technology underwriters in the London market, to join our growing European team focused on small scale professional indemnity business.

 

The insurance needs of small technology, media and consulting companies in Europe are evolving rapidly and we see significant growth opportunities in this sector, working closely with brokers.

 

Our marine division also began to reap the benefit of recent senior level hires. In its first full year of trading, our aviation team, under the leadership of David Oates, wrote business worth $28.7m. Premiums for marine liability business, headed by Phil Sandle, rose from $14.7m to $25.9m.

 

Our largest market is and will remain the United States. We write a large volume of predominantly large scale US risks from the Beazley box at Lloyd's, but we also made good headway in 2013 in building our smaller scale business written locally in the US. The head of our specialty lines division, Adrian Cox, relocated to Chicago in August, for a two year secondment, to become chair of the US Management Committee and oversee our US operation.

 

Product innovation remains very important to us and to the brokers we do business with. In September our political violence team in London launched Beazley Flight, one of a new generation of insurance-based solutions that offer clients specialist response services in the event of a claim. We believe Beazley Flight to be the most comprehensive emergency evacuation cover currently on the market, providing expert advisory and evacuation service in a range of crisis scenarios.

 

Of course the Lloyd's market itself is well known as a source of innovation in insurance, so it was gratifying in May to be able to participate in an initiative that stands to increase the attractiveness of Lloyd's to large scale buyers of construction and engineering insurance. Beazley is one of four Lloyd's insurers to form the Construction Consortium at Lloyd's. Through the consortium we will be able to provide capacity for the largest projects, up to a maximum of $166m per risk, offering an alternative to the largest non-Lloyd's insurers.

 

Broker relations

Great products and skilled underwriters are necessary but not sufficient conditions for success in our business. Strong broker relationships are also critical. We work with brokers at multiple levels and are constantly looking for ways to improve our service and enhance the value we provide. Unlike many insurers, we make an effort to include our claims professionals in many of our broker meetings as we believe that the knowledge and skills of our claims staff are important differentiators for Beazley.

 

Responsibility for managing our strategic relationships with key broking firms falls to our broker relations team, headed by Dan Jones. In the course of 2013, we have continued to see efforts by brokers to streamline the placement process and reduce the number of carriers they routinely do business with. We are happy to participate on broker panels and in other arrangements that do not curtail our discretion in writing, or declining, individual risks.

                                                                              

Solvency II

After very extensive deliberations, Solvency II is now scheduled to come into force on 1 January 2016. As described in earlier communications, we have invested heavily in preparing for the new regime and are confident we will be ready.

 

***

 

This has been a year of wide ranging achievements at Beazley and I am very grateful to all of our employees, working in often challenging markets, who have made these achievements possible. But the culture and shared values that bind our people together are in many ways even more important than individual accomplishments, although harder to describe.

 

Every two years, we have a valuable opportunity in the form of the Great Place to Work® survey to test perceptions in this area. In 2013, 87% of our people completed the survey. According to the definition adopted by the survey organisers we were already a great place to work, with a score in 2011 of 76%. But this increased sharply last year, with 83% of respondents agreeing that Beazley was a great place to work.

 

I believe that this measure, which we have included as one of our key performance indicators, is intimately related to our financial success as measured by the other key performance indicators. A specialist insurer such as Beazley relies heavily on the skills and versatility of its people to succeed; and a business that is seen so positively by its people enjoys a major competitive advantage.

 

 

 

Andrew Horton

Chief executive

6 February 2014

 

 

 

Financial review

 

Statement of profit or loss


2013

$m

2012

$m

Movement

%

Gross premiums written

1,970.2

1,895.9

4%

Net premiums written

1,676.5

1,542.7

9%





Net earned premiums

1,590.5

1,478.5

8%

Net investment income

43.3

82.6

(48%)

Other income

36.4

24.7

47%

Revenue

1,670.2

1,585.8

5%





Net insurance claims

719.1

778.4

(8%)

Acquisition and administrative expenses

619.3

563.5

10%

Foreign exchange (gain)/loss

3.0

(11.0)

-

Expenses

1,341.4

1,330.9

1%





Share of loss of associates

(0.3)

(0.5)


Finance costs

(15.2)

(3.2)


Profit before tax

313.3

251.2

25%

Income tax (expense)/credit

(49.3)

(36.6)

35%

Profit after tax

264.0

214.6

23%





Claims ratio

45%

53%


Expense ratio

39%

38%


Combined ratio

84%

91%






Rate increase

1%

3%


Investment return

1.0%

2.0%


 

Premiums

Gross premiums written have increased by 4% in 2013 to $1,970.2m. Rates on renewal business on average increased by 1% across the portfolio, with more significant increases in property of 3% and specialty lines of 3%. We have continued to adjust our underwriting appetite in areas where competition is most intense.

 

Our portfolio by business division has remained broadly unchanged from 2012. We continue to operate a diversified portfolio by type of business and geographical location, and have grown our business across five of the six divisions during 2013.

 

Premium retention rates

Retention of business from existing brokers and clients is a key feature of Beazley's strategy. It enables us to maintain a deep understanding of our clients' businesses and requirements, affording greater insight into the risks involved in each policy we write and enabling us to price risk most accurately to achieve profit. The table below shows our retention rates by division compared to 2012.

 

Retention rates*

2013

2012

Life, accident & health

92%

91%

Marine

86%

87%

Political risks & contingency

67%

71%

Property

74%

79%

Reinsurance

88%

86%

Specialty lines

80%

86%

Overall

81%

84%

 

* Based on premiums due for renewal in each calendar year.

 

Rating environment

Premium rates charged for renewal business increased by 1% during 2013 across the portfolio (2012: an increase of 3%). The most notable rate increases were seen in our specialty lines division where they have been at 3% for the last two years; prior to this rate increases had not been seen for six years. Increases were the most significant in professional indemnity for architects and engineers (6%), management liability (6%) and treaty (3%). Other significant rate increases were seen within our property division (3%), with the most significant being in homeowners (6%) and US commercial property (6%). Rate change on renewals in all other divisions were down by 1% in political risks & contingency and life, accident & health, 3% in reinsurance and 5% in marine.

 

Cumulative renewal rate changes since 2001 below:

 


2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Life, accident & health









100%

100%

101%

101%

100%

Marine

100%

117%

128%

127%

130%

140%

131%

123%

131%

127%

127%

127%

121%

Political risks &

contingency

100%

120%

122%

114%

108%

101%

94%

89%

89%

86%

85%

84%

83%

Property

100%

128%

133%

126%

124%

140%

137%

128%

135%

131%

134%

142%

146%

Reinsurance

100%

143%

150%

149%

150%

192%

201%

188%

205%

199%

206%

217%

211%

Specialty lines

100%

138%

167%

175%

177%

177%

169%

158%

157%

155%

154%

159%

163%

All divisions

100%

132%

146%

146%

147%

156%

149%

140%

144%

141%

142%

146%

147%

 

Reinsurance purchased

Reinsurance is purchased for a number of reasons:

·      to mitigate the impact of catastrophes such as hurricanes;

·      to enable the group to write large or lead lines on risks we underwrite; and

·      to manage capital to lower levels.

 

The amount the group spent on reinsurance in 2013 was $293.7m (2012: $353.2m). The group as a whole is a net buyer of reinsurance and has benefited from falling premium rates on renewals. In addition, specific reductions in reinsurance spend were seen in the property division where we were able to achieve more efficiency in our reinsurance buying through the consolidation of parts of the property and catastrophe programme.

 

Combined ratio

The combined ratio of an insurance company is a measure of its operating performance and represents the ratio of its total costs (including claims and expenses) to total net earned premium. A combined ratio under 100% indicates an underwriting profit. Consistent delivery of operating performance across the market cycle is clearly a key objective for an insurer. Beazley's combined ratio has decreased in 2013 to 84% (2012: 91%). Our combined ratio in 2013 is lower than the historic average due to relatively low levels of claims activity with no significant catastrophes or adverse development on prior years claims. It is worth pointing out that the calculation of the combined ratio for Beazley includes all claims and other costs to the group but excludes foreign exchange gains or losses. We believe this represents the most transparent and useful measure of operating performance as it ensures that all of the costs of being in business are captured, whether directly linked to underwriting activity or not.

 

Claims

Overall, claims have developed favourably during 2013, with claims notifications at normalised levels. We have only moderate exposure to the floods in Europe during May and the hailstorms in Germany, as well as the floods in Calgary in July.

 

Reserve releases

Beazley has a consistent reserving philosophy, with initial reserves being set to include risk margins that may be released over time as and when any uncertainty reduces. Historically these margins have given rise to held reserves within the range 5-10% above the actuarial estimates which themselves include some margin for uncertainty. The margin held above the actuarial estimate was 8.2% at the end of 2013 (2012: 6.9%).

 

Reserve monitoring is performed at a quarterly 'peer review', which involves a challenge process contrasting the claims reserves of underwriters and claim managers, who make detailed claim-by-claim assessments, and the actuarial team, who provide statistical analysis. This process allows early identification of areas where claims reserves may need adjustment.

 

During 2013 we were able to make the following prior year reserve adjustments across divisions, with the overall net impact being a release to the group.

 

 

 

2013

$m

2012

$m

Life, accident & health

(4.6)

0.5

Marine

47.3

27.7

Political risks & contingency

39.4

33.1

Property

33.7

6.2

Reinsurance

55.6

7.0

Specialty lines

46.6

51.5

Total

218.0

126.0

Releases as a percentage of net earned premium

13.7%

8.5%

 

The increase in reserve releases was driven by our property and reinsurance divisions which benefitted from the benign natural catastrophe environment in 2012, and favourable development on our reserves set up following the 2010 and 2011 natural catastrophes.

 

Reserve releases decreased in specialty lines in 2013, which was in line with our expectations. The 2013 releases came mainly from the 2003 through 2006 underwriting years as these years continued their exceptional development.

 

The political risks and contingency reserve releases were driven by continued favourable development on our financial crisis-exposed 2006 - 2008 underwriting years, while our Marine division benefitted from continued strong performance on all years.

 

Acquisition costs and administrative expenses

Business acquisition costs and administrative expenses increased during 2013 to $619.3 from $563.5 in 2012. The breakdown of these costs is shown below:


2013

$m

2012

$m

Brokerage costs

337.2

313.0

Other acquisition costs

94.3

95.5

Total acquisition costs

431.5

408.5

Administrative expenses

187.8

155.0

Total acquisition costs and administrative expenses

619.3

563.5

 

Brokerage costs are the premium commissions paid to insurance intermediaries for providing business. As a percentage of net earned premium they remain between 21% and 22%. Brokerage costs are deferred and expensed over the life of the associated premiums in accordance with accounting standards.

 

Other acquisition costs comprise costs that have been identified as being directly related to underwriting activity (e.g. underwriters' salaries and Lloyd's box rental). These costs are also deferred in line with premium earning patterns.

 

Administrative expenses comprise primarily personnel costs, IT costs, facilities costs, Lloyd's central costs and other support costs. These increased in 2013 due to performance linked remuneration and the write off of renewal rights assets relating to the life, accident & health and specialty lines divisions.

 

Investment performance

Investment income for the year ended 31 December 2013 was $43.3m, or an annualised return of 1.0%, compared with $82.6m or 2.0% over the same period in 2012. Lower returns, compared with the previous year, were driven by a rise in bond yields in the US, as the federal reserve indicated early in the year that it would taper its quantitative easing programme, finally confirming in December that the tapering would start in 2014. In the UK yields rose, as the economy recovered, and in Europe yields followed the lead set by the US.

 

Our core portfolio returned 0.5% in 2013. Government bonds, especially in the US, performed poorly (the comparable BoAML 1-5 year government index produced a negative return in 2013), but the credit component of our portfolio performed well, as credit spreads narrowed significantly in 2013. At year end AAA/AA government and agency bonds remained approximately 47% of the overall portfolio, while cash and cash equivalents and credit assets comprised 41%.

 

The main challenge to our investment performance in 2013 was US federal reserve policy, and we expect that, if the US economy maintains its upward trend, federal policy and a rising yield environment will continue to make investment conditions challenging for managers of fixed income portfolios in 2014.

 

The remaining 12% of our portfolio continues to be held in a diversified portfolio of capital growth assets, which returned 4.7% in 2013. This portfolio continues to be managed by our associated company, Falcon Money Management Limited.

 

Duration of the fixed income portfolio at year end was 1.8 years (2012: 1.9 years) with a yield to maturity of 1.4% (2012: 1.0%).

 

We are changing our relationship with Falcon Money Management. In 2014, they will cease managing our core portfolio but will be actively involved in the management of our capital growth assets. This should enable us to lower investment management fees in future periods.

 

The table below details the breakdown of our portfolio by asset class:


31 Dec 2013

31 Dec 2012


$m

%

$m

%

Cash and cash equivalents

382.7

8.7

316.5

7.3

Fixed income: sovereign and supranational

2,082.2

47.0

2,430.9

56.2

Investment grade credit

1,351.0

30.5

1,082.7

25.1

Other credit

94.1

2.1

74.1

1.7

Core portfolio

3,910.0

88.3

3,904.2

90.3

Capital growth assets

516.3

11.7

417.7

9.7

Total

4,426.3

100.0

4,321.9

100.0

 

Comparison of return by major asset class:


31 Dec 2013

31 Dec 2012


$m

%

$m

%

Core portfolio

21.3

0.5

69.6

1.9

Capital growth assets

22.0

4.7

13.0

3.1

Overall return

43.3

1.0

82.6

2.0

 

The funds managed by the Beazley group have grown by 2% in 2013, with financial assets at fair value and cash and cash equivalents of $4,426.3m at the end of the year (2012: $4,321.9m). The chart above shows the increase in our group funds since 2009.

 

Tax

Beazley is liable to corporation tax in a number of jurisdictions, notably the UK and Ireland. Our effective tax rate is thus a composite tax rate between the Irish and UK tax rates.

 

In 2013, it was announced that the UK corporation tax rate will be reduced to 20% by 2015. This rate reduction in the UK tax rate has been applied to our UK deferred tax liability brought forward. This reduction in our deferred tax liability has offset our current year tax charge to create an effective tax rate of 15.7% for the year.

 

 

 

Summary statement of financial position


2013

$m

2012

$m

Movement

%

Intangible assets

91.6

115.1

(20%)

Reinsurance assets

1,178.2

1,187.3

(1%)

Insurance receivables

617.7

578.0

7%

Other assets

270.8

246.6

10%

Financial assets at fair value and cash and cash equivalents

4,426.3

4,321.9

2%

Total assets

6,584.6

6,448.9

2%





Insurance liabilities

4,577.3

4,483.8

2%

Financial liabilities

274.9

315.0

(13%)

Other liabilities

393.7

445.6

(12%)

Total liabilities

5,245.9

5,244.4

-

Net assets

1,338.7

1,204.5

11%

Net assets per share (cents)

266.5c

240.5c

11%

Net tangible assets per share (cents)

248.3c

217.5c

14%





Net assets per share (pence)

160.6p

147.5p

9%

Net tangible assets per share (pence)

149.6p

133.4p

12%

Number of shares*

502.2m

500.9m

-

 

* Excludes shares held in the employee share trust and treasury shares.

** The restatement is in respect of the change to IAS 19.

 

Intangible assets

Intangible assets consist of goodwill on acquisitions of $62.0m, purchased syndicate capacity of $10.7m, US admitted licences of $9.3m and capitalised expenditure on IT projects of $9.6m. During the year renewal rights in relation to specific business within the specialty lines and life, accident and health divisions have been fully impaired by $11.5m; therefore at 31 December 2013 there is no carrying value remaining in respect of renewal rights within intangible assets. In addition, amortisation on IT development costs and renewal rights has contributed to the reduction in the group's intangible assets.

 

Reinsurance assets

Reinsurance assets represent recoveries from reinsurers in respect of incurred claims of $978.4m, and the unearned reinsurance premiums reserve of $199.8m. The reinsurance receivables from reinsurers are split between recoveries on claims paid or notified of $253.7m and an actuarial estimate of recoveries on claims that have not yet been reported of $724.7m. The group's exposure to reinsurers is managed through:

 

·      minimising risk through selection of reinsurers who meet strict financial criteria (eg minimum net assets, minimum 'A' rating by S&P). These criteria vary by type of business (short vs medium-tail);

·      timely calculation and issuance of reinsurance collection notes from our ceded reinsurance team; and

·      regular monitoring of the outstanding debtor position by our reinsurance security committee and credit control committees.

 

We continue to provide against impairment of reinsurance recoveries, and at the end of 2013 our provision had reduced to $14.5m (2012: $18.0m) in respect of reinsurance recoveries, following a partial recovery during the year in relation to Lehman Re.

 

Insurance receivables

Insurance receivables are amounts receivable from brokers in respect of premiums written. The balance at 31 December 2013 was $617.7m, an increase of 7% over 2012 ($578.0m). We continue to outsource the collection of our Lloyd's broker premium balances to Randall and Quilter Investment Holdings plc, which operates within the Lloyd's market as a specialist credit controller.

 

Other assets 

Other assets are analysed separately in the notes to the accounts. The largest items included comprise:

·      financial assets at fair value of $4,043.6m;

·      cash and cash equivalents of $382.7m;

·      deferred acquisition costs of $206.0m;

·      profit commissions of $11.5m and other balances of $17.0m receivable from syndicate 623; and

·      deferred tax assets available for use against future taxes payable of $8.7m.

 

Insurance liabilities

Insurance liabilities of $4,577.3m consist of two main elements, being the unearned premium reserve (UPR) and gross insurance claims liabilities.

 

Our UPR has increased by 7% to $956.8m. The majority of the UPR balance relates to current year premiums that have been deferred and will be earned in future periods. Current indicators are that this business is profitable.

 

Gross insurance claims reserves are made up of claims which have been notified to us but not yet paid and an estimate of claims incurred but not yet reported (IBNR). These are estimated as part of the quarterly reserving process involving the underwriters and group actuary. Gross insurance claims reserves have increased by 1% to $3,620.5m.

 

Financial liabilities

Financial liabilities comprise borrowings and derivative financial liabilities. The group utilises three long-term debt facilities:

·      In 2006 we raised £150m of lower tier 2 unsecured fixed rate debt that is payable in 2026 and callable in 2016. In 2013 we bought back an additional £26.2m (2012: £47.3m). The initial interest rate payable is 7.25% and the nominal value of this debt as at 31 December 2013 is £76.5m (2012: £103m);

·      A US$18m subordinated debt facility raised in 2004. This loan is also unsecured and interest is payable at the US interbank offered rate (LIBOR) plus 3.65%. These subordinated notes are due in 2034 and have been callable at the group's option since 2009; and

·      During September 2012 we issued a sterling denominated 5.375% retail bond under a £250,000,000 euro medium term note programme which raised £75m for the group and are due in 2019. This diversified the source and maturity profile of the group's debt financing.

 

A syndicated short-term banking facility led by Lloyds Banking Group Plc provides potential borrowings up to $225m. Under the facility $225m may be drawn as letters of credit to support underwriting at Lloyd's. Of this, $175m may be advanced as cash under a revolving facility. The cost of the facility is based on a commitment fee of 0.6% per annum and any amounts drawn are charged at a margin of 1.75% per annum. The cash element of the facility will last for three years, expiring on 31 December 2016, whilst letters of credit issued under the facility can be used to provide support for the 2013, 2014 and 2015 underwriting years. The facility is currently unutilised.

 

Capital Structure

Beazley has a number of requirements for capital at a group and subsidiary level. Capital is primarily required to support underwriting at Lloyd's and in the US and is subject to prudential regulation by local regulators (PRA, FCA, Lloyd's, Central Bank of Ireland, and the US state level supervisors).

 

Beazley is subject to the capital adequacy requirements of the European Union (EU) Insurance Groups Directive (IGD). We comply with all IGD requirements.

 

Further capital requirements come from rating agencies who provide ratings for Beazley Insurance Company Inc. We aim to manage our capital levels to obtain the ratings necessary to trade with our preferred client base.

 

Beazley holds a level of capital over and above its regulatory requirements. The amount of surplus capital held is considered on an ongoing basis in light of the current regulatory framework, opportunities for organic or acquisitive growth and a desire to maximise returns for investors.

 

The group actively seeks to manage its capital structure and continued to reduce its cost of debt in 2013. Our preferred use of capital is to deploy it on opportunities to underwrite profitably. However there may be times in the cycle when the group will generate excess capital and not have the opportunity to deploy it. At such points in time the board will consider returning capital to shareholders.

 

In 2013 Beazley acquired 5.0m of its own shares. These were acquired at an average price of 230p and the cost to the group was $17.7m.

 

Our funding comes from a mixture of our own equity of $1,338.7m alongside £76.5m of tier 2 subordinated debt, $18.0m subordinated long-term debt, a £75m retail bond and an undrawn banking facility of $225.0m.

 

 

 

The following table sets out the group's sources and uses of capital:


2013

$m

2012

$m

 

Sources of funds



 

Shareholders' funds

1,338.7

1,204.5

 

Tier 2 subordinated debt

127.0

166.3

Retail bond

124.5

122.3

Long-term subordinated debt

18.0

18.0

 


1,608.2

1,511.1

 

Uses of funds



 

Lloyd's underwriting

935.4

876.0

Capital for US insurance company

107.7

107.7

 


1,043.1

983.7

 




 

Surplus

565.1

527.4

Unavailable surplus*

(150.8)

(145.0)

Fixed and intangible assets

(97.6)

(122.1)

 

Available surplus

316.7

260.3

 

Unutilised banking facility

225.0

225.0

 

* Unavailable surplus primarily represents profits earned that have not yet been transferred from the Lloyd's syndicates. The cash transfers occur half-yearly in arrears and are reflected as unavailable until the cash is received into Beazley corporate accounts. In addition certain items other than fixed and intangible assets such as deferred tax assets are not immediately realisable as cash and have also accordingly been reflected as unavailable surplus.

 

Individual capital assessment

The group is required to produce an individual capital assessment (ICA) which sets out the amount of capital that is required to reflect the risks contained within the business. Lloyd's reviews this assessment to ensure that ICAs are consistent across the market.

 

The current capital assessment has been established using our Solvency II internal model which has been run within the ICA regime as prescribed by Lloyd's. In order to determine the capital assessment, we have made significant investments in both models and process:

·      we use sophisticated mathematical models that reflect the key risks in the business allowing for probability of occurrence, impact if they do occur, and interaction between risk types. A key focus of these models is to understand the risk posed to individual teams, and to the business as a whole, of a possible deterioration in the underwriting cycle; and

·      the internal model process is embedded so that the teams can see the direct and objective link between underwriting decisions and the capital allocated to that team. This gives a consistent and comprehensive picture of the risk reward profile of the business and allows teams to focus on strategies that improve return on capital.

 

The increase in our funds at Lloyd's from £558.0m to £563.0m is in proportion to the increase in business planned and the changes in the economic conditions. These numbers in US dollars are $935.4m and $876.0m for 2014 and 2013 respectively, which have been translated at the spot exchange rate at reporting dates.

 

Solvency II

Beazley has set two guiding principles for Solvency II, namely:

·      to develop a framework that can be used to inform management and assist with business decision making; and

·      to hold an appropriate and efficient level of capital for the agreed risk appetite through risk identification and mitigation.

 

During 2013, Beazley has continued to embed the principles of Solvency II and the use of our internal model in our business. As well as providing the basis for Lloyd's capital setting, our internal model is used extensively to inform risk management, capital allocation and decision making both on a routine and an ad hoc basis. In December, Lloyd's confirmed that it assesses us as continuing to meet the principles of Solvency II as currently drafted.

 

The Solvency II programme continues to oversee the development of our capability and engagement with regulators as they complete their assessment of our model and our overall readiness for Solvency II. The Central Bank of Ireland has continued to progress its pre-application review of our model which will be used for both individual and group capital setting purposes.

 

Following the provisional agreement which has been reached between the European Parliament, the European Commission and European Council on the Omnibus II Directive, we now look forward with a greater degree of certainty to the recently revised implementation date for Solvency II of 1 January 2016. The European Insurance and Occupational Pensions Authority's guidelines for the preparation of Solvency II provide for a lead in to implementation over the next two years. The work which we have already done in our programme to date leaves us well placed to respond to this final phase of Solvency II preparation.

 

Group structure

The group operates across both Lloyd's and the US through a variety of legal entities and structures. The main entities within the legal entity structure are as follows:

·      Beazley plc - group holding company and investment vehicle, quoted on the London Stock Exchange;

·      Beazley Underwriting Limited - corporate member at Lloyd's writing business through syndicates 2623, 3622 and 3623;

·      Beazley Furlonge Limited - managing agency for the group's five syndicates (623, 2623, 3622, 3623 and 6107);

·      Beazley Re Limited - reinsurance company that accepts reinsurance premium ceded by the corporate member, Beazley Underwriting Limited;

·      Syndicate 2623 - corporate body regulated by Lloyd's through which the group underwrites its general insurance business excluding accident and life. Business is written in parallel with syndicate 623;

·      Syndicate 623 - corporate body regulated by Lloyd's which has its capital supplied by third-party names;

·      Syndicate 6107 - special purpose syndicate writing reinsurance business on behalf of third-party names;

·      Syndicate 3622 - corporate body regulated by Lloyd's through which the group underwrites its life insurance and reinsurance business;

·      Syndicate 3623 - corporate body regulated by Lloyd's through which the group underwrites its personal accident and BICI reinsurance business;

·      Beazley Insurance Company, Inc. (BICI) - insurance company regulated in the US. Licensed to write insurance business in all 50 states; and

·      Beazley USA Services Inc. (BUSA) - managing general agent based in Farmington, Connecticut. Underwrites business on behalf of Beazley syndicates and BICI.

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 DECEMBER 2013

 




2013

$m


2012

$m







Gross premiums written



1,970.2


1,895.9

Written premiums ceded to reinsurers



(293.7)


(353.2)

Net premiums written



1,676.5


1,542.7







Change in gross provision for unearned premiums



(64.2)


(82.5)

Reinsurer's share of change in the provision for unearned premiums



(21.8)


18.3

Change in net provision for unearned premiums



(86.0)


(64.2)

Net earned premiums



1,590.5


1,478.5







Net investment income



43.3


82.6

Other income



36.4


24.7




79.7


107.3

Revenue



1,670.2


1,585.8







Insurance claims



877.1


902.8

Insurance claims recoverable from reinsurers



(158.0)


(124.4)

Net insurance claims



719.1


778.4







Expenses for the acquisition of insurance contracts



431.5


408.5

Administrative expenses



187.8


155.0

Foreign exchange loss/(gain)



3.0


(11.0)

Operating expenses



622.3


552.5

Expenses



1,341.4


1,330.9

Share of loss in associates



(0.3)


(0.5)

Results of operating activities



328.5


254.4







Finance costs



(15.2)


(3.2)







Profit before income tax



313.3


251.2







Income tax expense



(49.3)


(36.6)

Profit for the year attributable to equity shareholders



264.0


214.6







Earnings per share (cents per share):






Basic



52.4


42.4

Diluted



51.2


41.3

Earnings per share (pence per share):






Basic



33.6


26.7

Diluted



32.8


26.0







 

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

 

Group

2013

$m


2012

(restated)*

$m

Profit for the year attributable to equity shareholders

264.0


214.6

Other comprehensive income




Items that will never be reclassified to profit or loss:




Loss on remeasurement of retirement benefit obligations

(3.1)


(1.8)





Items that may be reclassified subsequently to profit or loss:




Foreign exchange translation differences

3.1


2.3

Total other comprehensive income

-


0.5

Total comprehensive income recognised

264.0


215.1

 

* The restatement is in respect of the changes to IAS 19. For further information see note 1.

 

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

 

Company

2013

$m


2012

$m





Profit for the year attributable to equity shareholders

112.7


43.0

Total comprehensive income recognised

112.7


43.0

 

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

Group


 

 

Share

capital

$m

 

 

Share

premium

$m

Foreign

currency

translation

reserve

$m

 

 

Other

reserves

$m

 

 

Retained

earnings

(restated)*

$m

 

 

 

Total

$m









Balance at 1 January 2012


42.8

1.1

(88.5)

(50.1)

1,160.3

1,065.6









Total comprehensive income recognised


-

-

2.3

-

212.8

215.1

Dividends paid


-

-

-

-

(65.1)

(65.1)

Issue of shares


0.2

1.6

-

(0.2)

-

1.6

Equity settled share based payments


-

-

-

12.4

-

12.4

Acquisition of own shares in trust


-

-

-

(25.1)

-

(25.1)

Reclassification of reserves


-

9.3

-

(9.7)

0.4

-

Cancellation of treasury shares


(1.4)

-

-

30.1

(28.7)

-

Balance at 31 December 2012


41.6

12.0

(86.2)

(42.6)

1,279.7

1,204.5









Total comprehensive income recognised


-

-

3.1

-

260.9

264.0

Dividends paid


-

-

-

-

(129.9)

(129.9)

Equity settled share based payments


-

-

-

19.1

(2.1)

17.0

Acquisition of own shares in trust


-

-

-

(17.7)

-

(17.7)

Transfer of shares to employees


-

-

-

3.4

(2.6)

0.8

Balance at 31 December 2013


41.6

12.0

(83.1)

(37.8)

1,406.0

1,338.7

 

* The restatement is in respect of the changes to IAS 19. For further information see note 1.

 

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

 

Company

 

 

 

 

 

 

 

Share

capital

$m

 

 

Share

premium

$m

Foreign

currency

translation

reserve

$m

 

 

Other

reserves

$m

 

 

Retained

earnings

$m

 

 

 

Total

$m









Balance at 1 January 2012


42.8

1.1

(35.9)

(59.3)

775.3

724.0









Total comprehensive income recognised


-

-

-

-

43.0

43.0

Dividends paid


-

-

-

-

(65.1)

(65.1)

Issue of shares


0.2

1.6

-

(0.2)

-

1.6

Equity settled share based payments


-

-

-

12.4

-

12.4

Acquisition of own shares in trust


-

-

-

(25.1)

-

(25.1)

Reclassification of reserves


-

9.3

-

(9.7)

0.4

-

Cancellation of treasury shares


(1.4)

-

-

30.1

(28.7)

-

Balance at 31 December 2012


41.6

12.0

(35.9)

(51.8)

724.9

690.8









Total comprehensive income recognised


-

-

-

-

112.7

Dividends paid


-

-

-

-

(129.9)

(129.9)

Equity settled share based payments


-

-

-

19.1

(2.1)

17.0

Acquisition of own shares in trust


-

-

-

(17.7)

-

(17.7)

Transfer of shares to employees


-

-

-

3.4

(2.6)

0.8

Balance at 31 December 2013


41.6

12.0

(35.9)

(47.0)

703.0

673.7

 

 

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013



2013

2012


 

 

Group

$m

Company

$m

Group

 (restated)*

$m

Company

$m

Assets






Intangible assets


91.6

-

115.1

-

Plant and equipment


6.0

1.1

7.0

1.4

Investment in subsidiaries


-

747.2

-

747.2

Investment in associates


8.4

-

10.0

1.4

Deferred acquisition costs


206.0

-

185.0

-

Deferred tax asset


8.7

-

11.0

-

Reinsurance assets


1,178.2

-

1,187.3

-

Financial assets at fair value**


4,043.6

-

4,005.4

-

Insurance receivables


617.7

-

578.0

-

Current income tax asset


-

-

1.2

-

Other receivables


41.7

49.2

32.4

61.9

Cash and cash equivalents**


382.7

1.2

316.5

1.3

Total assets


6,584.6

798.7

6,448.9

813.2







Equity






Share capital


41.6

41.6

41.6

41.6

Share premium


12.0

12.0

12.0

12.0

Foreign currency translation reserve


(83.1)

(35.9)

(86.2)

(35.9)

Other reserves


(37.8)

(47.0)

(42.6)

(51.8)

Retained earnings*


1,406.0

703.0

1,279.7

724.9

Total equity


1,338.7

673.7

1204.5

690.8







Liabilities






Insurance liabilities


4,577.3

-

4483.8

-

Financial liabilities


274.9

123.0

315.0

120.5

Retirement benefit liability*


2.4

-

0.7

-

Deferred tax liabilities


65.0

-

84.0

-

Current income tax liability


18.5

0.2

-

-

Other payables


307.8

1.8

360.9

1.9

Total liabilities


5,245.9

125.0

5,244.4

122.4

Total equity and liabilities


6,584.6

798.7

6,448.9

813.2

 

* The restatement is in respect of the changes to IAS 19. For further information see note 1.

** Deposits to the value of $307.3m (2012: $320.0m) managed centrally by Lloyd's are now included in financial assets and no longer classified as cash and cash equivalents.

 

 

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2013




2013


2012



Group

$m

Company

$m

Group

$m

Company

$m







Cash flow from operating activities






Profit before income tax


313.3

112.7

251.2

43.0

Adjustments for:






Amortisation of intangibles


14.2

-

15.0

-

Equity settled share based compensation


19.1

19.1

12.4

12.4

Net fair value losses/(gains) on financial assets


15.0

-

(17.3)

-

Loss in associate


0.3

-

0.5

-

Depreciation of plant and equipment


2.4

0.2

2.9

0.4

Impairment of reinsurance assets (written back)/recognised


(3.5)

-

2.3

-

Impairment loss recognised on intangible assets


11.5

-

-

-

Impairment loss recognised on investment in associates


1.4

1.4

-

-

Increase/(decrease) in insurance and other liabilities


37.1

1.3

157.4

(29.0)

(Increase)/decrease in insurance, reinsurance and
other receivables


(36.4)

12.7

(21.5)

(61.9)

Increase in deferred acquisition costs


(21.0)

-

(25.3)

-

Financial income


(68.7)

-

(77.0)

-

Financial expense


17.3

6.7

16.1

1.8

Profit on debt buyback


(2.1)

-

(12.9)

-

Income tax paid


(46.4)

-

(22.7)

-

Net cash from/(used in) operating activities


253.5

154.1

281.1

(33.3)







Cash flow from investing activities






Purchase of plant and equipment


(1.5)

-

(2.6)

(0.3)

Expenditure on software development


(5.1)

-

(5.8)

-

Purchase of investments*


(3,079.5)

-

(4,668.1)

-

Proceeds from sale of investments


3,026.3

-

4,267.7

-

Investment in associate


(0.1)

-

(1.6)

-

Interest and dividends received


68.7

-

77.0

-

Net cash from/(used in) investing activities


8.8

-

(333.4)

(0.3)







Cash flow from financing activities






Proceeds from issue of shares


-

-

1.6

1.6

Acquisition of own shares in trust


(17.7)

(17.7)

(25.1)

(25.1)

Proceeds from issue of debt


-

-

121.0

121.0

Repayment of borrowings


(39.5)

-

(66.7)

-

Interest paid


(13.5)

(6.7)

(14.3)

-

Dividends paid


(129.9)

(129.9)

(65.1)

(65.1)

Net cash (used in)/from financing activities


(200.6)

(154.3)

(48.6)

32.4







Net increase/(decrease) in cash and cash equivalents


61.7

(0.2)

(100.9)

(1.2)

Cash and cash equivalents at beginning of year*


316.5

1.3

419.2

2.5

Effect of exchange rate changes on cash and cash equivalents


4.5

0.1

(1.8)

-

Cash and cash equivalents at end of year*


382.7

1.2

316.5

1.3


* Deposits to the value of $307.3m (2012: $320.0m) managed centrally by Lloyd's are now included in financial assets and no longer classified as cash and cash equivalents.

 

 

Notes to the financial statements

 

1 Statement of accounting policies

Beazley plc is a company incorporated in Jersey and domiciled in Ireland. The group financial statements for the year ended 31 December 2013 comprise the parent company and its subsidiaries and the group's interest in associates.

 

Both the financial statements of the parent company, Beazley plc, and the group financial statements have been prepared and approved by the directors in accordance with IFRSs as adopted by the EU ('Adopted IFRSs'). On publishing the parent company financial statements together with the group financial statements, the company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements.

 

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these group financial statements.

 

All new standards and interpretations released by the International Accounting Standards Board (IASB) have been considered and of these the following new and amended standards have been adopted by the group during the period:

IFRS 7: Amendment: Offsetting financial assets and financial liabilities;

IFRS 13: Fair value measurement;

IAS 1: Amendment: Presentation of other items of comprehensive income; and

IAS 19: Amendment: Defined benefit plans.

 

IFRS 7 was amended to provide expanded disclosures relating to offsetting financial assets and financial liabilities. In particular, the disclosures focus on quantitative information about recognised financial instruments that are offset in the statement of financial position, as well as those recognised financial instruments that are subject to master netting or similar arrangements.

 

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs. In accordance with the transitional provisions of IFRS 13, the group has applied the new fair value measurement guidance prospectively. Notwithstanding the above, the change had no significant impact on the measurements of the group's assets and liabilities. However, additional disclosures have been made in these financial statements.

 

As a result of the amendments to IAS 1, the group has modified the presentation of items of other comprehensive income in its consolidated statement of comprehensive income, to present separately items that would be reclassified to profit and loss in the future from those that would never be and have renamed the income statement to the statement of profit or loss. Comparative information has also been re-presented accordingly. The adoption of the amendment to IAS 1 has no impact on the recognised assets, liabilities and comprehensive income of the group.

 

IAS 19 was amended effective 1 January 2013, the applicable impact being that actuarial gains and losses that have previously not been recognised in accordance with the 'corridor method' permitted in the old standard must be reflected in financial statements for both the current and prior reporting periods. The impact of this change is a restatement of the pension asset, in respect of the defined benefit pension scheme, in the statement of financial position with a corresponding restatement in the statement of comprehensive income and statement of changes in equity to the value of $7.2m as at 31 December 2012 ($5.4m as at 1 January 2012). The restatement results in the pension asset being disclosed as a pension liability in the statement of financial position from 1 January 2012. The impact of the amendment to IAS 19 is the only change to the statement of financial position as at 31 December 2011 and the impact is highlighted above. Accordingly, no statement of financial position as at 31 December 2011 have been prepared and presented.

 

Under the amended IAS 19, the group also determines the net interest expense/(income) for the period on the net defined benefit liability/(asset) by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset) at the beginning of the annual period, taking into account any changes in the net defined benefit liability/(asset) during the period as a result of contributions and benefit payments. Consequently, the net interest on the defined liability/(asset) now comprises:

·      interest cost on the defined benefit obligation;

·      interest income on plan assets; and

·      interest on the effect of the asset ceiling.

 

Previously, the group determined interest income on plan assets based on their long-term rate of expected return. The impact of this change is not large enough to change the numbers reported in the statement of profit or loss for the year ended 31 December 2012 and therefore no restatement have been disclosed.

 

The following is a list of standards that are in issue but are not effective in 2013, but have been endorsed for use in the EU, together with the effective date of application to the group:

IFRS 10: Consolidated financial statements (effective 1 January 2014);

IFRS 11: Joint arrangements (effective 1 January 2014);

IFRS 12: Disclosure of interests in other entities (effective 1 January 2014);

IAS 19: Amendment: Defined benefit plans: Employee Contributions (effective 1 July 2014)

IAS 27: Amendment: Separate financial statements (effective 1 January 2014);

IAS 28: Amendment: Investments in associates and joint ventures (effective 1 January 2014);

IAS 32: Amendment: Offsetting financial assets and financial liabilities (effective 1 January 2014);

IAS 36: Amendment: Recoverable amount disclosures for non-financial assets (effective 1 January 2014);

IAS 39: Amendment: Novation of derivatives and continuation of hedge accounting. (effective 1 January 2014); and

IFRIC 21: Levies.

 

In addition, improvements to IFRSs (effective 1 January 2014) are in issue but are not effective in 2013, and have not yet been endorsed for use in the EU.

 

The implications of these standards and interpretations are under review.

 

Basis of presentation

The group financial statements are prepared using the historical cost convention except that financial investments and derivative financial instruments are stated at their fair value. All amounts presented are stated in US dollars and millions, unless stated otherwise.

 

The 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.

 

Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

 

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in this statement of accounting policies and specifically in the following notes:

note 12: Intangible assets (assumptions underlying recoverable amounts);

note 16: Financial assets and liabilities (valuations based on models and unobservable inputs);

note 23: Equity compensation plans (assumptions used to calculate fair value of share options granted);

note 24: Insurance liabilities and reinsurance assets (estimates for losses incurred but not reported); and

note 27: Retirement benefit obligations (actuarial assumptions).

 

The most critical estimate included within the group's financial position is the estimate for insurance losses incurred but not reported. The total estimate, net of reinsurers' share, as at 31 December 2013 is $1,872.8m (2012: $1,833.9m) and is included within total insurance liabilities in the statement of financial position.

 

2 Segmental analysis

a) Reporting segments

 

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

 

The operating segments are based upon the different types of insurance risk underwritten by the group, as described below:

 

Life, accident & health

This segment underwrites life, health, personal accident, sports and income protection risks.

 

Marine

This segment underwrites a broad spectrum of marine classes including hull, energy, cargo and specie, piracy, aviation, kidnap and ransom and war risks.

 

Political risks & contingency

This segment underwrites terrorism, political violence, expropriation and credit risks as well as contingency and risks associated with contract frustration.

 

Property

The property segment underwrites commercial, high-value homeowners' and construction and engineering property insurance on a worldwide basis.

 

Reinsurance

This division specialises in writing property catastrophe, property per risk, casualty clash, aggregate excess of loss and pro-rata business.

 

Specialty lines

This segment underwrites professional liability, management liability and environmental liability, including architects and engineers, healthcare, lawyers, technology, media and business services, directors and officers and employment practices risks.

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The reporting segments do not cross-sell business to each other. There are no individual policyholders who comprise greater than 10% of the group's total gross premiums written.

 

b) Segment information

2013

Life,

accident

& health

$m

Marine

$m

Political

risks &

contingency

$m

Property

$m

Reinsurance

$m

Specialty

lines

$m

Total

$m

Segment results








Gross premiums written

100.3

315.9

131.2

371.4

221.6

829.8

1,970.2

Net premiums written

96.1

282.1

110.1

308.7

171.5

708.0

1,676.5









Net earned premiums

95.4

264.4

98.6

302.6

165.3

664.2

1,590.5

Net investment income

0.5

4.6

2.2

5.9

4.7

25.4

43.3

Other income

5.8

4.1

2.6

10.5

2.2

11.2

36.4

Revenue

101.7

273.1

103.4

319.0

172.2

700.8

1,670.2









Net insurance claims

70.8

88.7

4.7

122.2

29.5

403.2

719.1

Expenses for the acquisition of insurance contracts

27.7

71.3

26.8

99.5

34.1

172.1

431.5

Administrative expenses

21.0

29.6

17.4

31.5

17.5

70.8

187.8

Foreign exchange gain

0.1

0.5

0.2

0.6

0.4

1.2

3.0

Expenses

119.6

190.1

49.1

253.8

81.5

647.3

1,341.4









Share of profit/(loss) of associate

-

-

0.1

-

-

(0.4)

(0.3)









Segment result

(17.9)

83.0

54.4

65.2

90.7

53.1

328.5

Finance costs







(15.2)

Profit before income tax







313.3









Income tax expense







(49.3)

Profit for the year attributable
to equity shareholders







264.0









Claims ratio

74%

34%

5%

40%

18%

61%

45%

Expense ratio

51%

38%

45%

44%

31%

36%

39%

Combined ratio

125%

72%

50%

84%

49%

97%

84%

 

Segment assets and liabilities

 

Segment assets

221.4

1,089.8

785.7

1,016.9

384.2

3,086.6

6,584.6

Segment liabilities

(187.1)

(701.2)

(614.9)

(852.6)

(269.8)

(2,620.3)

(5,245.9)

Net assets

34.3

388.6

170.8

164.3

114.4

466.3

1,338.7









Additional information








Investment in associates

-

-

1.5

-

-

6.9

8.4

Impairment of non-financial assets

7.5

0.1

0.1

0.2

0.2

4.8

12.9

Capital expenditure

0.3

1.0

0.5

2.1

0.8

1.9

6.6

Amortisation and depreciation

0.6

1.3

0.6

1.6

1.1

11.4

16.6

Net cash flow

2.7

19.9

8.7

6.5

3.0

25.4

66.2

 

2012

Life,

accident

& health

$m

Marine

$m

Political

risks &

contingency

$m

Property

$m

Reinsurance

$m

Specialty

lines

$m

Total

$m

Segment results








Gross premiums written

94.4

311.2

116.6

376.7

188.6

808.4

1,895.9

Net premiums written

75.3

283.1

102.3

275.7

146.7

659.6

1,542.7









Net earned premiums

80.3

279.6

98.1

266.4

139.0

615.1

1,478.5

Net investment income

1.1

8.0

4.4

11.1

8.9

49.1

82.6

Other income

1.1

3.1

1.9

10.2

0.4

8.0

24.7

Revenue

82.5

290.7

104.4

287.7

148.3

672.2

1,585.8









Net insurance claims

46.4

116.9

11.7

140.4

87.3

375.7

778.4

Expenses for the acquisition of insurance contracts

20.8

71.6

25.6

103.0

27.5

160.0

408.5

Administrative expenses

18.6

20.7

14.1

24.4

12.7

64.5

155.0

Foreign exchange loss

(0.6)

(1.9)

(0.7)

(2.1)

(1.1)

(4.6)

(11.0)

Expenses

85.2

207.3

50.7

265.7

126.4

595.6

1,330.9









Share of loss of associate

-

-

(0.2)

-

-

(0.3)

(0.5)









Segment result

(2.7)

83.4

53.5

22.0

21.9

76.3

254.4

Finance costs







(3.2)

Profit before income tax







251.2









Income tax expense







(36.6)

Profit for the year attributable
to equity shareholders







 

214.6









Claims ratio

58%

42%

12%

53%

63%

61%

53%

Expense ratio

49%

33%

40%

48%

29%

37%

38%

Combined ratio

107%

75%

52%

101%

92%

98%

91%

 

Segment assets and liabilities

 

Segment assets

214.7

1,047.5

767.3

1,002.0

377.8

3,039.6

6,448.9

Segment liabilities

(166.0)

(685.9)

(609.7)

(882.3)

(323.8)

(2,576.7)

(5,244.4)

Net assets

48.7

361.6

157.6

119.7

54.0

462.9

1,204.5









Additional information








Investment in associates

-

0.1

1.5

0.2

0.2

8.0

10.0

Capital expenditure

0.4

0.9

0.5

1.3

0.5

4.8

8.4

Amortisation and depreciation

1.5

1.2

0.5

2.3

0.7

11.7

17.9

Net cash flow

(5.7)

(30.0)

(11.6)

(10.2)

(3.7)

(41.5)

(102.7)

 

c) Information about geographical areas

The group's operating segments are also managed geographically by placement of risk. UK earned premium in the analysis below represents all risks placed at Lloyd's and US earned premium represents all risks placed at the group's US insurance company, Beazley Insurance Company, Inc.


2013

$m

2012

$m

Net earned premiums



UK (Lloyd's)

1,556.2

1,451.1

US (Non-Lloyd's)

34.3

27.4


1,590.5

1,478.5

 

 


2013

$m

2012

$m

Segment assets



UK (Lloyd's)

6,263.5

6,123.9

US (Non-Lloyd's)

321.1

325.0


6,584.6

6,448.9

 

Segment assets are allocated based on where the assets are located.


2013

$m

2012

$m

Capital expenditure



UK (Lloyd's)

5.4

8.0

US (Non-Lloyd's)

1.2

0.4


6.6

8.4

 

3 Net investment income


2013

$m

2012

$m

Interest and dividends on financial investments at fair value through profit or loss

68.0

72.9

Interest on cash and cash equivalents

0.7

0.6

Realised losses on financial investments at fair value through profit or loss

(7.1)

(10.8)

Net unrealised fair value (losses)/gains on financial investments at fair value through profit or loss

(7.9)

31.6

Investment income from financial investments

53.7

94.3

Fair value gain on derivative financial instruments

-

0.1

Investment income

53.7

94.4




Investment management expenses

(10.4)

(11.8)


43.3

82.6

 

Deposits managed centrally by Lloyd's are now included in financial assets and no longer classified as cash and cash equivalents. In accordance with this reclassification, we have reclassified investment income from interest to realised and unrealised fair value gains/(losses).

 

4 Other income


2013

$m

2012

$m

Commissions received

23.2

17.0

Profit commissions

11.0

5.8

Agency fees

2.0

1.9

Other income

0.2

-


36.4

24.7

 

5 Operating expenses


2013

$m

2012

$m

Operating expenses include:

 



Amounts receivable by the auditor and associates in respect of:



- the auditing of accounts of the company's subsidiaries

1.2

1.1

- taxation compliance services

0.2

0.2

- all other assurance services not included above

0.3

0.4

- all other non-audit services not included above

-

0.1


1.7

1.8




Impairment loss (written back)/recognised on reinsurance assets

(3.5)

2.3

Impairment loss recognised on intangible assets

11.5

-

Impairment loss recognised on investment in associates

1.4

-




Operating leases

8.8

8.5

Other than the fees disclosed above, no other fees were paid to the company's auditor.

 

6 Employee benefit expenses


2013

$m

2012

$m

Wages and salaries

111.7

101.8

Short-term incentive payments

57.0

45.2

Social security

11.8

10.5

Share-based remuneration

16.3

12.1

Pension costs*

8.7

8.4


205.5

178.0

Recharged to syndicate 623

(20.7)

(16.9)


184.8

161.1

 

* Pension costs refer to the contributions made under the defined contribution scheme.

 

7 Finance costs


2013

$m

2012

$m

Interest expense

16.2

16.1

Profit on debt buyback

(2.1)

(12.9)

Other finance costs

1.1

-


15.2

3.2

 

During the period, Beazley bought back a total nominal amount of $39.5m (2012: $77.1m) of debt at market value of $37.4m (2012: $64.2m) in the form of fixed/floating rate subordinated notes falling due in 2026. A profit of $2.1m (2012: $12.9m) was realised in the difference between the carrying value and the nominal amount of the debt bought back.

 

8 Income tax expense


2013

$m

2012

$m

Current tax expense



Current year

60.6

30.7

Prior year adjustments

4.3

0.5


64.9

31.2

Deferred tax expense



Origination and reversal of temporary differences

(12.1)

7.2

Prior year adjustments

(3.5)

(1.8)


(15.6)

5.4

Income tax expense

49.3

36.6




Profit before tax

313.3

251.2

Tax calculated at Irish rate

39.2

31.4

Rates applied

12.5%

12.5%




Effects of:



- Tax rates in foreign jurisdictions

10.5

10.2

- Non-deductible expenses

1.7

0.9

- Tax relief on share based payments - current and future years

(0.3)

0.6

- Under/(over) provided in prior years

0.8

(1.3)

- Change in UK tax rates*

(3.8)

(6.1)

- Foreign exchange on tax

2.9

0.7

- Foreign tax recoverable

(1.7)

1.7

- Utilisation of tax losses brought forward

-

(1.5)

Tax charge for the period

49.3

36.6

 

The weighted average applicable tax rate was 15.9% (2012: 16.5%).

 

* The Budget 2013 announced that the UK corporation rate will reduce to 21% at 1 April 2014, with a further reduction to 20% in 2015. The reductions in the UK tax rate to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. These reductions will reduce the company's future current tax charge and the deferred tax liability at 31 December 2013 has thus been calculated based on the tax rates substantively enacted at the statement of financial position.

 

9 Earnings per share


2013

2012

Basic (cents)

52.4c

42.4c

Diluted (cents)

51.2c

41.3c




Basic (pence)

33.6p

26.7p

Diluted (pence)

32.8p

26.0p

 

Basic

Basic earnings per share are calculated by dividing profit after tax of $264.0m (2012: $214.6m) by the weighted average number of shares in issue during the year of 503.7m (2012: 506.4m). The shares held in the Employee Share Options Plan (ESOP) of 17.3m (2012: 13.3m) 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 tax of $264.0m (2012: $214.6m) by the adjusted weighted average number of shares of 515.4m (2012: 519.5m). The adjusted weighted average number of shares assumes conversion of dilutive potential ordinary shares, being shares from the SAYE, retention and deferred share schemes. The shares held in the ESOP of 17.3m (2012: 13.3m) have been excluded from the calculation, until such time as they vest unconditionally with the employees.

 

10 Dividends per share

A second interim dividend of 5.9p per ordinary share (2012: 5.6p) and a special dividend of 16.1p (2012: 8.4p) will be payable on 28 March 2014 to shareholders registered at 5.00pm on 28 February 2014 in respect of the six months ended 31 December 2013. These financial statements do not provide for the second interim dividend and the special dividend as a liability.

 

Together with the interim dividend of 2.9p (2012: 2.7p) this gives a total dividend for the year of 24.9p (2012: 16.7p).

 

The aforementioned interim and special dividends will be payable on 28 March 2014 to shareholders registered at 5.00pm on 28 February 2014 (save to the extent that shareholders on the register of members on 28 February 2014 are to be paid a dividend by a subsidiary of the company (being Beazley DAS Limited) resident for tax purposes in the United Kingdom pursuant to elections made or deemed to have been made and such shareholders shall have no right to this second interim dividend).

 

11 Insurance liabilities and reinsurance assets

 


2013

$m

2012

$m

 

Gross



 

Claims reported and loss adjustment expenses

1,023.0

1,058.9

 

Claims incurred but not reported

2,597.5

2,533.3

 

Gross claims liabilities

3,620.5

3,592.2

 

Unearned premiums

956.8

891.6

 

Total insurance liabilities, gross

4,577.3

4,483.8

 




 

Recoverable from reinsurers



 

Claims reported and loss adjustment expenses

253.7

266.7

Claims incurred but not reported

724.7

699.4

 

Reinsurers share of claims liabilities

978.4

966.1

 

Unearned premiums

199.8

221.2

 

Total reinsurers' share of insurance liabilities

1,178.2

1,187.3

 




 

Net



 

Claims reported and loss adjustment expenses

769.3

792.2

Claims incurred but not reported

1,872.8

1,833.9

 

Net claims liabilities

2,642.1

2,626.1

 

Unearned premiums

757.0

670.4

 

Total insurance liabilities, net

3,399.1

3,296.5

 

 

The gross claims reported, the loss adjustment liabilities and the liabilities for claims incurred but not reported are net of recoveries from salvage and subrogation.

 

 

 

Movements in insurance liabilities and reinsurance assets

a) Claims and loss adjustment expenses


2013

2012


Gross

$m

Reinsurance

$m

Net

$m

Gross

$m

Reinsurance

$m

Net

$m

Claims reported and loss adjustment expenses

1,058.9

(266.7)

792.2

1,085.6

(252.4)

833.2

Claims incurred but not reported

2,533.3

(699.4)

1,833.9

2,440.6

(743.3)

1,697.3

Balance at 1 January

3,592.2

(966.1)

2,626.1

3,526.2

(995.7)

2,530.5








Claims paid

(860.3)

146.3

(714.0)

(852.0)

200.8

(651.2)








Increase in claims







- Arising from current year claims

1,160.9

(223.8)

937.1

1,101.9

(197.4)

904.5

- Arising from prior year claims

(283.8)

65.8

(218.0)

(199.1)

73.1

(126.0)

Net exchange differences

11.5

(0.6)

10.9

15.2

(46.9)

(31.7)

Balance at 31 December

3,620.5

(978.4)

2,642.1

3,592.2

(966.1)

2,626.1








Claims reported and loss adjustment expenses

1,023.0

(253.7)

769.3

1,058.9

(266.7)

792.2

Claims incurred but not reported

2,597.5

(724.7)

1,872.8

2,533.3

(699.4)

1,833.9

Balance at 31 December

3,620.5

(978.4)

2,642.1

3,592.2

(966.1)

2,626.1

 

b) Unearned premiums reserve


2013

2012


Gross

$m

Reinsurance

$m

Net

$m

Gross

$m

Reinsurance

$m

Net

$m

Balance at 1 January

891.6

(221.2)

670.4

808.4

(202.2)

606.2








Increase in the year

1,970.2

(313.5)

1,656.7

1,895.9

(366.8)

1,529.1

Release in the year

(1,905.0)

334.9

(1,570.1)

(1,812.7)

347.8

(1,464.9)

Balance at 31 December

956.8

(199.8)

757.0

891.6

(221.2)

670.4

 

Assumptions, changes in assumptions and sensitivity analysis

a) Process used to decide on assumptions

 

The peer review reserving process

Beazley uses a quarterly dual track process to set its reserves:

·      the actuarial team uses several actuarial and statistical methods to estimate the ultimate premium and claims costs. The most appropriate methods are selected depending on the nature of each class of business; and

·      the underwriting teams concurrently review the development of the incurred loss ratio over time, work with our claims managers to set reserve estimates for identified claims and utilise their detailed understanding of both risks underwritten and the nature of the claims to establish an alternative estimate of ultimate claims cost which is compared to the actuarially established figures.

 

A formal internal peer review process is then undertaken to determine the reserves held for accounting purposes which, in totality, are not lower than the actuarially established figure. The group also commissions an annual independent review to ensure that the reserves established are reasonable or within a reasonable range.

 

The group has a consistent reserving philosophy with initial reserves being set to include risk margins which may be released over time as uncertainty reduces.

 

Actuarial assumptions

Chain-ladder techniques are applied to premiums, paid claims and incurred claims (ie paid claims plus case estimates). The basic technique involves the analysis of historical claims development factors and the selection of estimated development factors based on historical patterns. The selected development factors are then applied to cumulative claims data for each underwriting year that is not yet fully developed to produce an estimated ultimate claims cost for each underwriting year.

 

Chain-ladder techniques are most appropriate for classes of business that have a relatively stable development pattern. Chain-ladder techniques are less suitable in cases in which the insurer does not have a developed claims history for a particular class of business or for underwriting years that are still at immature stages of development where there is a higher level of assumption volatility.

 

The Bornhuetter-Ferguson method uses a combination of a benchmark/market-based estimate and an estimate based on claims experience. The former is based on a measure of exposure such as premiums; the latter is based on the paid or incurred claims observed to date. The two estimates are combined using a formula that gives more weight to the experience-based estimate as time passes. This technique has been used in situations where developed claims experience was not available for the projection (eg recent underwriting years or new classes of business).

 

The expected loss ratio method uses a benchmark/market-based estimate applied to the expected premium and is used for classes with little or no relevant historical data.

 

The choice of selected results for each underwriting year of each class of business depends on an assessment of the technique that has been most appropriate to observed historical developments. In certain instances, this has meant that different techniques or combinations of techniques have been selected for individual underwriting years or groups of underwriting years within the same class of business. As such, there are many assumptions used to estimate general insurance liabilities.

 

We also review triangulations of the paid/outstanding claim ratios as a way of monitoring any changes in the strength of the outstanding claim estimates between underwriting years so that adjustments can be made to mitigate any subsequent over/(under) reserving. To date, this analysis indicates no systematic change to the outstanding claim strength across underwriting years.

 

Where significant large losses impact an underwriting year (e.g. the events of 11 September 2001, the hurricanes in 2004, 2005, 2008 and 2012, or the earthquakes in 2010 and 2011), the development is usually very different from the attritional losses. In these situations, the large loss total is extracted from the remainder of the data and analysed separately by the respective claims managers using exposure analysis of the policies in force in the areas affected.

 

Further assumptions are required to convert gross of reinsurance estimates of ultimate claims cost to a net of reinsurance level and to establish reserves for unallocated claims handling expenses and reinsurance bad debt.

 

b) Major assumptions

The main assumption underlying these techniques is that the group's past claims development experience (with appropriate adjustments for known changes) can be used to project future claims development and hence ultimate claims costs. As such these methods extrapolate the development of premiums, paid and incurred losses, average costs per claim and claim numbers for each underwriting year based on the observed development of earlier years.

 

Throughout, judgement is used to assess the extent to which past trends may not apply in the future; for example, to reflect changes in external or market factors such as economic conditions, public attitudes to claiming, levels of claims inflation, premium rate changes, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy conditions and claims handling procedures.

 

c) Changes in assumptions

As already discussed, general insurance business requires many different assumptions.

 

Given the range of assumptions used, the group's profit or loss is relatively insensitive to changes to a particular assumption used for an underwriting year/class combination. However, the group's profit or loss is potentially more sensitive to a systematic change in assumptions that affect many classes, such as judicial changes or when catastrophes produce more claims than expected. The group uses a range of risk mitigation strategies to reduce the volatility including the purchase of reinsurance. In addition, the group holds capital to absorb volatility.

 

d) Sensitivity analysis

The estimation of IBNR reserves for future claim notifications is subject to a greater degree of uncertainty than the estimation of the outstanding claims already notified. This is particularly true for the specialty lines business, which will typically display greater variations between initial estimates and final outcomes as a result of the greater degree of difficulty in estimating these reserves. The estimation of IBNR reserves for other business written is generally subject to less variability as claims are generally reported and settled relatively quickly.

 

As such, our reserving assumptions contain a reasonable margin for prudence given the uncertainties inherent in the insurance business underwritten, particularly on the longer tailed specialty lines classes.

 

Since year end 2004, we have identified a range of possible outcomes for each class and underwriting year combination directly from our individual capital assessment (ICA) process. Comparing these with our pricing assumptions and reserving estimates gives our management team increased clarity into our perceived reserving strength and the relative uncertainties of the business written.

 

 

 

To illustrate the robustness of our reserves, the loss development tables below provide information about historical claims development by the six segments - life, accident & health, marine, political risks & 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 and ultimate net claims.

 

The top part of the table illustrates how the group's estimate of the 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 appearing in the statement of financial position.

 

While the information in the table provides 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 estimate of total claims liabilities as at 31 December 2013 is 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

2003 ae

%

2004

%

2005

%

2006

%

2007
%

2008

%

2009

%

2010

%

2011

%

2012

%

2013

%


Life, accident & health













12 months







53.1

52.9

56.0

56.6

63.3


24 months







52.2

52.5

52.1

68.0



36 months







45.0

49.0

59.5




48 months







43.2

48.1





60 months







42.4






72 months













84 months













96 months













108 months













120 months












Marine













12 months


62.3

82.5

57.1

57.8

69.0

55.8

50.6

55.1

55.9

57.1


24 months


65.2

80.1

42.9

60.1

65.1

52.0

49.6

47.9

46.0



36 months


62.3

70.6

33.0

50.6

59.1

45.3

43.8

40.0




48 months


61.8

68.6

29.2

48.1

62.7

41.7

42.3





60 months


60.7

66.4

29.0

49.6

62.5

41.4






72 months


56.2

64.5

26.6

50.3

58.9







84 months


55.9

63.7

26.5

46.9








96 months


55.7

63.3

25.9









108 months


55.6

63.3










120 months


54.8











Political risks & contingency













12 months


67.7

61.0

57.7

57.2

57.5

61.1

61.4

58.8

62.5

57.3


24 months


55.6

38.1

36.2

39.0

67.1

38.7

40.3

38.4

42.6



36 months


52.3

28.6

33.0

56.4

72.6

35.8

32.9

33.7




48 months


37.9

25.1

43.1

52.8

86.5

31.1

23.8





60 months


37.0

18.2

39.1

53.7

71.6

25.2






72 months


35.1

17.8

38.8

49.9

60.8







84 months


26.5

17.7

36.0

47.4








96 months


26.3

12.2

30.5









108 months


26.1

12.2










120 months


26.1











Property













12 months


65.4

87.0

58.7

58.5

71.2

54.1

58.9

59.6

55.9

55.4


24 months


65.2

83.9

44.8

56.7

66.2

43.0

62.3

51.9

48.3



36 months


65.8

82.4

43.9

54.5

65.1

38.0

60.3

49.8




48 months


63.9

87.4

51.4

55.3

63.1

36.9

57.5





60 months


64.4

86.8

51.5

58.6

61.6

35.8






72 months


63.1

85.1

51.2

66.9

60.5







84 months


62.9

84.4

50.5

66.9








96 months


63.5

83.6

48.3









108 months


63.5

82.4










120 months


63.3





































 

Gross ultimate claims

2003 ae

%

2004

%

2005

%

2006

%

2007

%

2008

%

2009

%

2010

%

2011

%

2012

%

2013

%


Reinsurance













12 months


87.5

196.0

52.4

59.6

60.1

60.8

68.2

76.6

62.9

61.5


24 months


81.6

187.5

25.1

26.5

51.1

48.7

152.6

77.5

36.0



36 months


76.5

185.8

24.9

22.0

42.5

40.7

141.0

72.0




48 months


74.0

179.0

23.3

20.0

39.3

40.2

135.3





60 months


72.1

175.2

21.4

19.2

38.9

36.0






72 months


71.1

172.7

21.1

19.0

39.0







84 months


70.0

171.6

21.3

17.5








96 months


69.0

171.2

20.8









108 months


68.6

167.7










120 months


68.1











Specialty lines













12 months


72.8

72.1

72.7

72.9

72.2

72.8

74.0

75.7

74.2

73.6


24 months


71.4

72.1

72.8

72.5

72.2

72.8

74.0

75.8

74.2



36 months


67.7

69.9

72.7

72.6

72.1

72.0

73.0

76.6




48 months


64.6

66.5

72.7

72.4

72.1

71.4

73.1





60 months


59.5

62.9

71.0

72.4

71.8

71.5






72 months


58.4

56.2

66.0

72.4

71.9







84 months


56.5

52.5

62.1

72.5








96 months


54.6

49.3

58.6









108 months


52.7

47.6










120 months


49.7











Total













12 months


69.5

90.5

63.0

63.6

68.8

62.6

64.8

67.3

64.7

63.3


24 months


69.1

87.7

53.3

59.3

67.6

57.5

73.3

63.0

58.1



36 months


66.5

84.1

50.9

58.2

66.2

53.8

69.3

61.2




48 months


63.5

82.5

52.6

58.5

67.4

52.2

67.3





60 months


61.0

79.6

52.2

59.6

65.6

51.2






72 months


59.3

75.9

49.5

61.4

64.0







84 months


57.9

74.0

47.5

60.6








96 months


57.0

72.0

44.9









108 months


56.2

70.7










120 months


54.6











Total ultimate losses ($m)

2,250.8

742.2

1,081.9

751.3

1,099.9

1,212.8

1,079.1

1,369.1

1,199.7

1,228.5

1,418.5

13,433.8

Less paid claims ($m)

(2,162.7)

(673.2)

(999.0)

(593.9)

(859.2)

(870.1)

(623.1)

(845.0)

(522.3)

(220.6)

(46.2)

(8,415.3)

Less unearned portion
of ultimate losses ($m)

-

-

-

-

-

-

-

-

-

(21.2)

(635.3)

(656.5)

Gross claims liabilities (100% level) ($m)

88.1

69.0

82.9

157.4

240.7

342.7

456.0

524.1

677.4

986.7

737.0

4,362.0

Less unaligned share ($m)

(16.7)

(13.1)

(15.8)

(29.9)

(45.7)

(61.7)

(82.1)

(93.8)

(117.6)

(153.4)

(111.7)

(741.5)

Gross claims liabilities, group share ($m)

71.4

55.9

67.1

127.5

195.0

281.0

373.9

430.3

559.8

833.3

625.3

3,620.5

 

 

 

 

Net ultimate claims

2003 ae

%

2004

%

2005

%

2006

%

2007

%

2008

%

2009

%

2010

%

2011

%

2012

%

2013

%


Life, accident & health













12 months







51.8

51.6

55.1

57.9

65.4


24 months







50.3

52.0

54.0

64.7



36 months







44.5

51.8

62.5




48 months







44.8

50.8





60 months







44.0






72 months













84 months













96 months













108 months













120 months













Marine













12 months


58.0

55.5

54.1

55.0

61.3

54.5

52.3

56.1

55.4

56.8


24 months


53.0

49.0

42.3

56.5

57.1

48.5

49.3

48.1

45.9



36 months


48.7

42.8

33.0

49.5

50.9

39.8

44.6

39.6




48 months


47.9

39.6

31.6

46.7

47.8

36.1

42.8





60 months


46.7

39.1

31.1

47.6

47.4

35.9






72 months


44.3

38.0

29.3

47.8

46.9







84 months


44.0

36.6

29.1

45.2








96 months


43.3

36.2

28.6









108 months


43.2

36.2










120 months


43.0











Political risks & contingency













12 months


64.3

63.6

56.2

55.4

55.9

58.8

57.3

55.0

59.4

54.8


24 months


58.1

46.6

40.4

39.4

74.8

35.1

37.7

37.2

40.8



36 months


54.1

36.0

37.4

55.1

74.8

33.0

30.4

31.9




48 months


40.9

30.3

46.9

53.6

79.4

28.4

21.5





60 months


40.6

24.2

41.2

52.0

68.2

22.8






72 months


36.1

23.1

39.6

48.8

57.9







84 months


26.1

23.1

39.7

46.7








96 months


25.3

15.2

36.8









108 months


24.3

15.2










120 months


24.2











Property













12 months


59.7

65.0

61.5

61.2

67.4

53.8

59.1

60.6

58.8

56.9


24 months


61.0

62.2

49.6

59.8

67.4

48.8

66.4

58.1

53.4



36 months


60.4

58.6

48.1

59.0

65.1

45.5

66.8

54.7




48 months


58.7

61.3

52.0

59.5

64.1

43.2

60.9





60 months


58.5

61.9

51.1

62.5

63.1

42.6






72 months


57.7

60.2

51.1

62.6

61.7







84 months


57.5

59.3

50.7

62.6








96 months


57.5

59.2

49.1









108 months


57.8

57.8










120 months


57.3
























 

Net ultimate claims

2003 ae

%

2004

%

2005

%

2006

%

2007

%

2008

%

2009

%

2010

%

2011

%

2012

%

2013

%


Reinsurance













12 months


88.4

152.9

54.3

55.3

67.1

55.6

77.0

85.8

67.1

59.2


24 months


85.5

131.6

36.6

30.5

56.6

52.6

137.9

87.7

43.0



36 months


82.4

127.1

34.7

25.3

47.6

46.7

132.3

82.0




48 months


76.3

117.5

32.5

22.9

45.6

46.2

127.4





60 months


73.0

111.3

31.0

22.3

45.0

41.3






72 months


71.5

110.1

31.0

22.1

45.1







84 months


70.8

104.9

31.3

20.4








96 months


69.5

104.4

30.7









108 months


69.7

99.5










120 months


68.2











Specialty lines













12 months


69.7

69.3

68.7

69.7

70.2

70.0

71.4

72.8

71.4

69.7


24 months


68.6

69.3

68.6

68.7

70.2

69.9

71.4

72.8

71.0



36 months


65.8

67.6

68.6

68.8

70.2

69.2

70.7

72.0




48 months


62.3

64.0

68.7

67.5

68.8

66.2

69.7





60 months


57.0

59.0

63.9

67.4

68.3

65.9






72 months


53.7

53.9

57.8

67.4

68.2







84 months


51.2

50.4

54.3

67.6








96 months


48.9

48.0

51.1









108 months


47.6

46.1










120 months


45.3











Total













12 months


65.8

73.1

62.2

63.1

66.3

60.4

64.5

66.9

64.2

65.4


24 months


65.3

68.8

54.5

59.3

66.8

57.0

70.3

63.7

58.0



36 months


62.7

65.1

51.9

58.8

64.3

53.5

68.0

60.8




48 months


59.4

62.3

52.6

57.6

63.3

50.9

65.0





60 months


56.5

59.2

50.4

58.2

61.8

49.8






72 months


54.0

56.4

47.3

58.0

60.5







84 months


52.2

53.9

45.8

57.3








96 months


50.9

52.2

43.7









108 months


50.3

50.5










120 months


49.0











Total ultimate losses ($m)

1,348.8

557.1

602.5

595.5

897.9

949.0

819.2

1,127.7

971.2

997.0

1,140.0

10,005.9

Less paid claims ($m)

(1,287.4)

(496.4)

(542.7)

(485.0)

(728.5)

(732.0)

(538.1)

(737.2)

(448.9)

(207.6)

(42.6)

(6,246.4)

Less unearned portion
of ultimate losses ($m)

-

-

-

-

-

-

-

-

-

(20.0)

(553.0)

(573.0)

Net claims liabilities (100% level) ($m)

61.4

60.7

59.8

110.5

169.4

217.0

281.1

390.5

522.3

769.4

544.4

3,186.5

Less unaligned share ($m)

(11.7)

(11.5)

(11.4)

(21.0)

(32.2)

(39.1)

(50.6)

(70.1)

(89.9)

(121.4)

(85.5)

(544.4)

Net claims liabilities, group share ($m)

49.7

49.2

48.4

89.5

137.2

177.9

230.5

320.4

432.4

648.0

458.9

2,642.1

 

 

 

Analysis of movements in loss development tables

We have updated our loss development tables to show the ultimate loss ratios as at 31 December 2013 for each
underwriting year.

 

Generally, the claims experience has been in line with or better than expected. There was notably benign natural catastrophe experience on the 2012 underwriting year, which resulted in the release of unutilised catastrophe reserve margin. The initial reserves established in respect of the 2010 and 2011 natural catastrophe events have remained appropriate in light of development to date.

 

Life, accident & health

The 2011 and 2012 reserves were strengthened on the income protection segment of the portfolio, emerging claims experience exceeded expectation. The 2013 underwriting year opening loss ratio reflects this. The remainder of the portfolio developed as expected.

 

Marine

The sustained period of exceptional performance continued as all years exhibited stable to strongly favourable development.

 

Political risks & contingency

The financial crisis-exposed 2006, 2007 and 2008 underwriting years for our political risks business have continued to develop favourably in 2013. The subsequent underwriting years showed lower claim frequency, which is now being borne out in reserve releases.

 

Property

2013 saw stable to strongly positive development across all underwriting years. Reserve releases on the 2010 and 2011 natural catastrophes, generally favourable attrition and benign natural catastrophe experience on the 2012 underwriting year each played their part.

 

Reinsurance

The benign natural catastrophe experience in 2012 can readily be seen in the development of that underwriting year. In addition, there was improvement on the 2010 and 2011 underwriting years as the reserves initially established on the natural catastrophes have being proving more than sufficient.

 

Specialty lines

During 2013, the hard market 2003, 2004, 2005 and 2006 underwriting years continued their exceptional development. The team maintained its vigilance on the 2007 and post underwriting years. The nature of claims development and the residual uncertainty in these years coupled with our consistent reserving philosophy has resulted in stable to marginally decreasing loss ratios.

 

Our 2010 and 2011 underwriting year loss ratios opened slightly higher than in the previous years to reflect the rating and claims environment and to allow consistency to be maintained in our reserving philosophy. Our 2012 and 2013 underwriting years opening loss ratios were lower than 2011 reflecting the growing benefit of our breach response product to the business mix.

Claim releases

The table below analyses our net claims between current year claims and adjustments to prior year net claims reserves. These have been broken down by department and period. Beazley's reserving policy is to maintain catastrophe reserve margins either until the end of the exposure period or until catastrophe events occur. Therefore margins have been released on those classes affected by superstorm Sandy.

 

The net of reinsurance estimates of ultimate claims costs on the 2012 and prior underwriting years has improved by $218.0m during 2013 (2012: $126.0m). This movement has arisen from a combination of better than expected claims experience coupled with small changes to the many assumptions reacting to the observed experience and anticipating any changes as a result of the new business written.

 

The movements shown on 2010 and earlier are absolute claim movements and are not impacted by any current year movements in premium on those underwriting years.

 

2013

Life,

accident

& health

$m

Marine

$m

Political

risks &

contingency

$m

Property

$m

Reinsurance

$m

Specialty

lines

$m

Total

$m

Current year

66.2

136.0

44.1

155.9

85.1

449.8

937.1

Prior year








- 2010 underwriting year and earlier

(1.4)

(14.8)

(27.8)

(18.9)

(18.4)

(43.4)

(124.7)

- 2011 underwriting year

7.0

(21.4)

(3.8)

(8.0)

(9.6)

(3.2)

(39.0)

- 2012 underwriting year

(1.0)

(11.1)

(7.8)

(6.8)

(27.6)

-

(54.3)


4.6

(47.3)

(39.4)

(33.7)

(55.6)

(46.6)

(218.0)

Net insurance claims

70.8

88.7

4.7

122.2

29.5

403.2

719.1

 

2012

Life,

accident

& health

$m

Marine

$m

Political

risks &

contingency

$m

Property

$m

Reinsurance

$m

Specialty

lines

$m

Total

$m

Current year

46.9

144.6

44.8

146.6

94.3

427.2

904.4

Prior year








- 2009 underwriting year and earlier

-

(9.4)

(22.4)

(6.7)

(4.8)

(47.8)

(91.1)

- 2010 underwriting year

-

(10.3)

(4.3)

5.4

(3.8)

(3.7)

(16.7)

- 2011 underwriting year

(0.5)

(8.0)

(6.4)

(4.9)

1.6

-

(18.2)


(0.5)

(27.7)

(33.1)

(6.2)

(7.0)

(51.5)

(126.0)

Net insurance claims

46.4

116.9

11.7

140.4

87.3

375.7

778.4

 

12 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 fund 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 (eg 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.

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

 

 

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.

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.

Return on equity (ROE)

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

Retrocessional reinsurance

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

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.

Sidecar special purpose syndicate

Specialty reinsurance company designed to provide additional capacity to a specific insurance company. They operate by purchasing a portion or all of a group of insurance policies, typically cat exposures. They 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.

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.

Soft market

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

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 balance date is accounted foras unearned premiums in the underwriting provisions.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR DXGDDGBGBGSU

Companies

Beazley (BEZ)
UK 100

Latest directors dealings