Slide 1: Results for the six months ended 30 June 2021
Results for the six months ended 30 June 2021 Friday, 23 July 2021 (updated 26 July 2021)
Slide 2: Disclaimer notice
Disclaimer notice Certain statements made in this presentation, both oral and written, are or may constitute “forward looking statements” with respect to the operation, performance and financial condition of the Company and/or the Group. These forward looking statements are not based on historical f
Slide 3: Contents
Contents • Results overview 4-5 • Financials 6-14 o Performance 8 o Investments 9-10 o Claims releases 11 o Reserves 12 o Cumulative rate change 13 o Capital position 14 • In Focus - Cyber 15-24 • The Outlook 25-26 • Strategy 27 • Questions 28 • Appendices 29-31 3
Slide 4: Overview
Overview TeaZley.
Slide 5: Results Summary
Results Summary • Profit before tax $167.3m (2020: Loss of $13.8m) • Return on equity of 15% (2020: -1%) • Gross premiums written increased by 22% to $2,035.3m (2020: $1,663.9m) • Combined ratio of 94% (2020: 107%) • Rate increase of 20% on renewal portfolio (2020: increase of 11%) • Our first party
Slide 6: Financials
Financials 6
Slide 7: Financials
Financials • Prior year reserve releases of $95.7m (2020: $58.6m) • Net investment income of $83.6m (2020: $83.2m) • Capital remains within preferred range at 23% (2020: 23%) 7
Slide 8: Financial performance
Financial performance 6 months ended 6 months ended 30 June 2021 30 June 2020 % movement Gross premiums written ($m) 2,035.3 1,663.9 22% Net premiums written ($m) 1,442.1 1,317.8 9% Net earned premiums ($m) 1,390.2 1,233.8 14% (Loss)/Profit before income tax ($m) 167.3 (13.8) Claims ratio 57% 71% Ex
Slide 9: Investment portfolio: continued prudent investment approach
Continued prudent investment approach 60% 50% 48% 41% 40% 37% Investment portfolio 30% 28% 20% 10% 7% 6% 6% 5% 4% 4% 3% 3% 3% 3% 1% 1% 0% Sovereign Debt Investment Grade Hedge Funds Cash and Cash High Yield Debt Equities Illiquid Credit Other Debt Equivalents Assets 2020 HY 2021 9
Slide 10: Capital growth assets drive strong investment return
Capital growth assets drive strong investment return 300.0 7.0% 6.0% 250.0 93.4 5.0% 200.0 4.0% 150.0 104.1 3.0% 58.9 100.0 170.3 2.0% 30.4 50.0 14.1 79.4 84.0 82.6 1.0% 62.7 33.1 43.5 0.0 8.0 0.0% 2015 2016 2017 2018 2019 2020 2021 1st half 2nd half Annualised Return 10
Slide 11: Underwriting action continues to benefit reserve releases
Underwriting action continues to benefit reserve releases 220 12.0% 200 11.0% 180 10.0% 160 9.0% 8.0% 140 7.0% 120 6.0% % of NEP 100 5.0% $m 80 4.0% 60 3.0% 40 2.0% 20 1.0% 0 0.0% -20 -1.0% -40 -2.0% -60 -3.0% 2014 2015 2016 2017 2018 2019 2020 2020HY 2021HY CyEx Marine PAC Property Reinsurance Spec
Slide 12: Consistent prudent reserving approach continues
Consistent prudent reserving approach continues Surplus in net held reserves 10.0% % above actuarial estimate 8.2% 8.2% 8.2% 7.9% 7.5% 7.4% 7.4% 6.9% 7.1% 6.7% 6.7% 6.6% 6.8% 6.6% 6.4% 6.3% 6.1% 5.6% 5.0% 5.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 13: Cumulative rate change since 2016
Cumulative rate change since 2016 180% 175% 170% 165% 160% 155% 150% Rate Change 145% 140% 135% 130% 125% 120% 115% 110% 105% 100% 95% 90% 2016 2017 2018 2019 2020 2021HY Underwriting Year Marine Property Speciality lines CyEx Reinsurance PAC Market facilities All divisions 13
Slide 14: Capital position remains strong and within preferred range
Capital position remains strong and within preferred range • Group capital requirement: Projected Year ended 31 Dec 2021 31 Dec 2020 $m $m Lloyd’s economic capital requirement (ECR)* 2,221.0 2,116.5 Capital for US insurance company 259.7 246.3 2,480.7 2,362.8 • We expect to be at 23% above Lloyd’s E
Slide 15: In focus Cyber
In focus Cyber 15
Slide 16: Timeline
Timeline 2009 2013 2011 2007 Yahoo data breach impacting 2003 Heartland, the fifth-biggest In rapid succession, data all 3 billion users. TJX Co. announce in SEC payments processor in the on 77 million Sony Yahoo later fined $35m California data security filing that more than 45 U.S., suffers major
Slide 17: Timeline
Timeline 2018 2017 Marriott data breach. 2020 Marriott fined $23.8m by 2015 the UK Information 2021 Equifax data breach - one California Consumer Commissioner’s Office Privacy Act goes into effect OPM data breach – largest of the largest cybercrimes Colonial pipeline US government data related to id
Slide 18: Changing threat landscape - how are we responding?
Changing threat landscape - how are we responding? • Ransomware underwriting global approach: o 5 key pillars Data and analytics Ransomware application: Follows cyber kill chain Vulnerability scanning Limits Management: Targeted approach Rates: Building the runway • Supporting underwriters
Slide 19: Beazley Cyber Ecosystem
Beazley Cyber Ecosystem 19
Slide 20: Risk Management Services, Data & Threat Intelligence
New offering Existing Data & Threat Intelligence Risk Management Services Education Targeted Education: Automated Beazley Prevention rather than cure Vulnerability Claims Notification Data Insurance, reimagined Process Expansion e.g.Phishing Targeted Email Lodestone Inhouse Education Templates Threa
Slide 21: Changing threat landscape - impact of our response so far
Changing threat landscape - Impact of our response so far Early trend analysis since October 2020 shows: • 20% ransomware frequency reduction per policy • 50% ransomware frequency reduction per premium • Increasing rates, less exposure 21
Slide 22: Increased Premium, Reduced Exposure
Increased Premium, Reduced Exposure 800.0 700.0 600.0 GWP (USD$m) 500.0 400.0 300.0 200.0 100.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Forecast Tech E&O BBR InfoSec Vector Policy count 22
Slide 23: Cyber exposure management
Cyber exposure management Attritional vs Systemic cyber risk Attritional Systemic Management of systemic Reinsurance • Data breach • Cloud outage • Risk appetite and • Systemic catastrophe • Ransomware • Supply chain attacks realistic disaster cover (Ransomware) scenarios • Aggregate cover • Malicio
Slide 24: Cyber positioning
Cyber positioning • We understand how to manage our exposure and we understand the market • We have developed an appropriate culture and process to enable smart underwriting which allows us to make the right risk selection/ design the make up of our book • We have developed and refined an evolving r
Slide 25: The outlook
The outlook AUN AF
Slide 26: Outlook
Outlook • Market conditions and rate continue in our favour • We expect growth to be in the mid 20’s for the full year with net growth in the mid teens • Our combined ratio guidance is unchanged at low 90s • Investment yield on core portfolio 0.5% as at 30th June • We remain focussed on achieving di
Slide 27: Strategy
Strategy 27
Slide 28: Questions
Questions 28
Slide 29: Appendices
Appendices 29
Slide 30: Performance by division
Performance by division Six months ended 30 June 2021 Cyber & Market Specialty Marine PAC Property Reinsurance Executive Risk Facilities Lines Gross premiums written ($m) 548.8 194.1 88.8 154.8 276.6 161.5 610.7 Net premiums written ($m) 405.3 162.9 23.1 126.8 151.2 94.9 477.9 Result from operating
Slide 31: Beazley approach to capital
Beazley approach to capital • We primarily present the Lloyd’s Economic capital requirement (ECR) chosen as it is the most stringent regulatory capital measure, alongside our US capital requirement for BICI • The ECR is the only measure we have a target surplus range for – this is an internally pref