Slide 1: Results for the year ended 31 December 2013
Generic title white Results for the year ended 31 December 2013 Thursday, 6 February 2014
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 Pages Overview of 2013 4-8 Financials Performance 10 Investments 11-12 Reserves 13-14 Capital 15-16 Underwriting review 17-21 Our vision 22 Outlook 23 Appendix 25-35 3
Slide 4: Overview of 2013
Generic title white Overview of 2013
Slide 5: Exceptional underwriting result
Exceptional underwriting result • 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: $1,895.9m) • Combined ratio of 84% (2012: 91%) • Rate increase on renewal portfolio of 1% (2012: 3%) • Prior year r
Slide 6: Sustained high performance
Sustained Cover high performance 2500 Gross premiums written ($m) 125% Combined ratio (%) 99% 2000 100% 90% 88% 91% 84% 37% 1500 75% 35% 38% 36% 39% 1000 1,895.9 1,970.2 50% 1,751.3 1,741.6 1,712.5 62% 500 25% 55% 52% 53% 45% 0 0% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Expense ratio Claim
Slide 7: A year of significant achievement
A year of significant achievement • Record low combined ratio of 84%, with 90% average over the last 5 years • Rate increases were achieved in specialty lines (3%) and property (3%) • Continuing investments in: • People • Products – 2013: Aviation and growth of Beazley Breach Response 2014: Satellit
Slide 8: Excellent total shareholder return (TSR) and NAV growth
Excellent total shareholder return (TSR) and NAV growth 250% 225% 200% 175% 150% 125% 100% 75% 50% 25% 0% 31 December 2009 31 December 2010 31 December 2011 31 December 2012 31 December 2013 NAV target range NAV growth TSR growth (RFR +10% p.a. to (Including dividends) (1 month average) RFR +15% p.a
Slide 9: Financials
Generic title white Financials
Slide 10: Strong performance across all metrics
Strong performance across all metrics Year ended 31 Dec 2013 Year ended 31 Dec 2012 % increase Gross premiums written ($m) 1,970.2 1,895.9 4% Net premiums written ($m) 1,676.5 1,542.7 9% Net earned premiums ($m) 1,590.5 1,478.5 8% Profit before income tax ($m) 313.3 251.2 25% Earnings per share 33.6
Slide 11: Portfolio delivered 1.0% in the second half as expected
Portfolio delivered 1.0% in the second half as expected 100.0 7.0% 90.0 80.0 6.0% 70.0 Annualised Investment Return 46.9 5.0% Investment Return 60.0 46.5 ($m) 4.0% 50.0 40.0 3.0% 30.0 16.8 2.0% 29.0 43.5 43.3 20.0 36.1 1.0% 10.0 22.5 8.5 0.0 0.0% 2009 2010 2011 2012 2013 2nd half 1st half Return 11
Slide 12: Portfolio mix remains stable
Portfolio mix remains stable Dec-13 Dec-12 Other Credit, Other Credit, Capital Growth 1.7% Cash and Cash Capital Growth Cash and 2.1% Assets, 11.7% Equivalents, Assets, 9.7% Cash 8.7% Equivalents, 7.3% Investment Grade Credit, 30.5% Fixed Income: Sovereign and Supranational, Fixed Income: 47.0% Sove
Slide 13: Strong prior year reserve releases
Strong prior year reserve releases 15.0% 225 14.0% 210 13.0% 195 12.0% 180 11.0% 165 10.0% 150 9.0% 135 ($m) 120 8.0% 105 7.0% 90 6.0% 75 5.0% 60 4.0% 45 3.0% 30 2.0% 15 1.0% 0 0.0% 2009 2010 2011 2012 2013 -15 -1.0% Specialty lines Political risks and contingency Life accident and health Marine Pro
Slide 14: Whole account reserve strength within our target range
Whole account reserve strength within our target range Preferred upper end 8.2% 8.2% % above actuarial estimate 7.9% 7.5% 7.4% 7.4% 6.9% 6.7% 6.7% 6.4% 6.1% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Financial year 14
Slide 15: Capital management discipline is maintained
Capital management discipline is maintained • We have returned capital of $579.7m in the past 5 years • This represents 87% of our post 2009 rights-issue market capitalisation 600 100% 5 year capital return track record 550 90% Percentage of market capitalisation at 2009 rights issue 500 80% 450 70%
Slide 16: Strong capital position
Strong capital position Sources of funds Year ended 31 Dec 2013 Year ended 31 Dec 2012 Shareholders funds ($m) 1,338.7 1,204.5 Subordinated debt ($m) 145.0 184.3 Retail bond ($m) 124.5 122.3 Total Sources of Funds 1,608.2 1,511.1 Uses of funds Lloyd’s underwriting ($m) 935.4 876.0 US Insurance Compa
Slide 17: Underwriting review
Generic title white Underwriting review
Slide 18: Underwriting review – 2013 achievements
Underwriting review – 2013 achievements • Combined ratio of 84% in line with earlier guidance • Gross premiums written achieved 4% growth in 2013 • 2013 rate increase on renewals of 1% • Favourable claims experience including lower than average catastrophe activity • We continue to reserve consisten
Slide 19: Underwriting review
Underwriting review Year Ended 31 Dec 2013 Year Ended 31 Dec 2012 Gross premiums written ($m) 1,970.2 1,895.9 Net premiums written ($m) 1,676.5 1,542.7 Net earned premiums ($m) 1,590.5 1,478.5 Expenses ratio 39% 38% Claims ratio 45% 53% Combined ratio 84% 91% Rate change on renewals 1% 3% 19
Slide 20: Cumulative rate changes since 2001
Cumulative rate changes since 2001 250% 200% 150% Rate Change 100% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Underwriting Year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 20
Slide 21: Underwriting review – 2014 plans
Underwriting review – 2014 plans • Increasing competitive headwinds in catastrophe-driven, short tail lines • Specialty lines continues to enjoy a more favourable rating environment • Continued opportunities for moderate growth: • Marine division – marine liability, aviation, satellite • Property di
Slide 22: Our vision and strategic priorities
US Managing for Performance Asia Pacific Our vision and strategic priorities Broker Relations specialist insurer Innovation and the highest performing Product Development To become, and be recognised as, Europe Growing through Lloyd’s 22
Slide 23: The outlook for 2014
The outlook for 2014 • Well positioned in a changing and increasingly competitive market place • We expect an annualised 2% investment yield going forward • Premium growth of 5-10% is planned in 2014 • We continue to identify opportunities for profitable growth 23
Slide 24: Any questions?
Questions? Any questions?
Slide 25: Appendix
Generic title white Appendix
Slide 26: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations Net incurred loss ratio at each development year Development Year 140% 6 5 4 120% 114% 3 2 ULR 100% 85% Net incurred loss ratio 80% 74% 65% 62% 57% 60% 53% 52% 45% 41% 42% 41% 38% 40% 20% 12% 0% 1993- 1997- 2001 2002 2003 2004 2005 200
Slide 27: Locally underwritten US business grows 17% to $451.8m
Locally underwritten US business grows 17% to $451.8m 170 GWP by major product category 160 150 140 130 120 110 100 90 ($m) 80 70 60 50 40 30 20 10 0 2009 2010 2011 2012 2013 Architects and Engineers professional indemnity Technology, Media & Business Services Other specialty lines Property 27
Slide 28: Zoom on rate changes since 2008
Zoom on rate changes since 2008 120% 115% 110% Rate Change 105% 100% 95% 90% 2008 2009 2010 2011 2012 2013 Underwriting Year Life, accident & health Marine Political risks & contingency Property Specialty lines Reinsurance All divisions 28
Slide 29: Portfolio management achieves consistent combined ratio through market cycles
Portfolio management achieves consistent combined ratio through market cycles 160 140 120 100 80 60 40 2009 2010 2011 2012 2013 Year 29
Slide 30: Life accident & health
Life accident & health Year ended 31 December 2013 2012 Gross premiums written ($m) 100.3 94.4 Net premiums written ($m) 96.1 75.3 • 6% increase in gross premiums • Losses in Australian business, although Net earned premiums ($m) 95.4 80.3 renewal secured at significant rate increase Claims ratio 74
Slide 31: Marine
Marine Year ended 31 December 2013 2012 Gross premiums written ($m) 315.9 311.2 Net premiums written ($m) 282.1 283.1 • Gross premiums increased by 2% • Combined ratio of 72% continues Net earned premiums ($m) 264.4 279.6 recent outstanding performance • Prior year reserve releases of $47.3m (2012:
Slide 32: Political risks and contingency
Political risks and contingency Year ended 31 December 2013 2012 Gross premiums written ($m) 131.2 116.6 Net premiums written ($m) 110.1 102.3 • Growth in gross premiums of 13% due to development in our political books Net earned premiums ($m) 98.6 98.1 • Combined ratio 50% (2012: 52%) • Strong prio
Slide 33: Property
Property Year ended 31 December 2013 2012 Gross premiums written ($m) 371.4 376.7 Net premiums written ($m) 308.7 275.7 • Increase in net premiums of 12% with improved contribution to group result Net earned premiums ($m) 302.6 266.4 of $65m • Rate change on renewals of 3% • Combined ratio of 84% (2
Slide 34: Reinsurance
Reinsurance Year ended 31 December 2013 2012 Gross premiums written ($m) 221.6 188.6 Net premiums written ($m) 171.5 146.7 • Increase in gross premiums of 17% in spite of rate decreases on renewals of Net earned premiums ($m) 165.3 139.0 (3%) • Combined ratio of 49% (2012: 92%) Claims ratio 18% 63%
Slide 35: Specialty lines
Specialty lines Year ended 31 December 2013 2012 Gross premiums written ($m) 829.8 808.4 Net premiums written ($m) 708.0 659.6 • Positive rate change on renewals • 3% increase in gross premiums written Net earned premiums ($m) 664.2 615.1 • Prior year reserve releases of $46.6m (2012: $51.5m) Claims