Slide 1: Results for the year ended 31 December 2015
Generic title white Results for the year ended 31 December 2015 Thursday, 4 February 2016
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 2015 4-8 Financials Performance 10 Investments 11-12 Reserves 13-14 Capital 15-16 Proposed new holding company 17 Underwriting review 18-22 Our vision and strategy 23 Outlook for 2016 24 Appendix 25-36 3
Slide 4: Overview of 2015
Generic title white Overview of 2015
Slide 5: Increased premiums, profits and dividends
Increased premiums, profits and dividends • Profit before income tax of $284.0m (2014: $261.9m) • Return on equity of 19% (2014: 17%) • Gross premiums written increased by 3% to $2,080.9m (2014: $2,021.8m) • Combined ratio of 87% (2014: 89%) • Rate reduction of 2% on renewal portfolio (2014: reducti
Slide 6: Continued progress with our strategic initiatives
Continued progress with our strategic initiatives • Investment in our teams: People – ranked in top quartile for employee engagement We passed the 1,000 employee landmark We continue to attract talent • We grew 21% in the US and opened our Los Angeles office • Started our Korean Re partnership
Slide 7: Sustained high performance
Sustained Cover high performance 2,500 Gross premiums written ($m) 125% Combined ratio* (%) 2,000 99% 100% 91% 89% 87% 84% 37% 1,500 75% 38% 40% 39% 39% 1,000 1,970.2 2,021.8 2,080.9 50% 1,895.9 1,712.5 62% 500 25% 53% 49% 48% 45% 0 0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Expense ratio
Slide 8: Excellent total shareholder return
Excellent total shareholder return - TSR 33.5% per annum since 31.12.09 400% 375% 350% 325% 300% 275% 250% Shareholder return (%) 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 31 December 2014 31 December 2015 NAV ta
Slide 9: Financials
Generic title white Financials
Slide 10: Strong performance across all metrics
Strong performance across all metrics Year ended Year ended % Increase / 31 December 2015 31 December 2014 (Decrease) Gross premiums written ($m) 2,080.9 2,021.8 3% Net premiums written ($m) 1,713.1 1,732.7 (1%) Net earned premiums ($m) 1,698.7 1,658.9 2% Profit before income tax ($m) 284.0 261.9 8%
Slide 11: Portfolio delivered 1.3% annualised return
Portfolio delivered 1.3% annualised return 100 7.0% 90 6.0% 80 5.0% 70 Annualised Investment Return Investment return ($m) 36.2 60 46.5 4.0% 50 14.1 3.0% 40 30 16.8 2.0% 46.8 43.3 43.5 20 36.1 1.0% 10 22.5 0 0.0% 2011 2012 2013 2014 2015 1st half 2nd half Return 11
Slide 12: Minor changes to portfolio mix
Minor changes to portfolio mix 31 December 2015 31 December 2014 Illiquid Credit Assets, Illiquid Credit Assets 2.0% 1.0% Cash and Cash Hedge Funds Hedge Funds Equivalents, 8.2% (Uncorrelated Strategies) (Uncorrelated Strategies) 7.3% 8.3% Equity Linked funds 3.3% Equity Linked funds, 3.3% Senior Se
Slide 13: Continued prior year reserve releases
Continued prior year reserve releases 15.0% 225 14.0% 210 13.0% 195 12.0% 180 11.0% 165 10.0% 150 Reserve releases ($m) 9.0% 135 8.0% 120 105 7.0% 90 6.0% 75 5.0% 60 4.0% 45 3.0% 30 2.0% 15 1.0% 0 0.0% 2011 2012 2013 2014 2015 -15 -1.0% Specialty lines Political risks and contingency Life accident a
Slide 14: Whole account reserve strength within our target range
Whole account reserve strength within our target range Surplus in net held reserves 10.0% 8.2% 8.2% 8.2% 7.9% Above actuarial estimate (%) 7.5% 7.4% 7.4% 7.1% 6.9% 6.7% 6.7% 6.4% 6.1% 5.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Financial year 14
Slide 15: Capital management discipline continues
Capital management discipline continues • We have returned capital of $952m in the past 7 years • This represents 144% of our 2009 post rights-issue market capitalisation 1000 160% 950 Percentage of market capitalisation at 2009 rights issue 150% 900 140% 850 800 130% Funds returned to shareholders
Slide 16: Updated capital position remains strong
Updated capital position remains strong • Group capital requirement: Year ended Year ended 31 December 2015 31 December 2014 $m $m Lloyd’s economic capital requirement (ECR) 1,326.9 1,359.0 Capital for US insurance company 107.7 107.7 1,434.6 1,466.7 • Our funding is made up of our own equity (on a
Slide 17: Proposed new holding company
Proposed new holding company • Change will allow group management to be from the UK from the end of April • Timetable is for a shareholder vote in March • No change to the operating structure, expected profits or tax rates of the group • Beazley plc will be retained as the name for our top company 1
Slide 18: Underwriting review
Generic title white Underwriting review
Slide 19: Underwriting review – 2015 achievements
Underwriting review – 2015 achievements • Combined ratio of 87%, with improved combined ratio achieved by all divisions • Growth in gross premiums written of 3% to $2,080.9m Specialty lines, our largest division, achieved growth of 13% 21% growth in locally underwritten US premium • Rate reducti
Slide 20: Underwriting review
Underwriting review Year Ended Year Ended % Increase/ 31 December 2015 31 December 2014 (Decrease) Gross premiums written ($m) 2,080.9 2,021.8 3% Net premiums written ($m) 1,713.1 1,732.7 (1%) Net earned premiums ($m) 1,698.7 1,658.9 2% Expense ratio 39% 40% Claims ratio 48% 49% Combined ratio 87% 8
Slide 21: Cumulative rate changes since 2008
Cumulative rate changes since 2008 120% 115% 110% 105% Rate change (%) 100% 95% 90% 85% 80% 2008 2009 2010 2011 2012 2013 2014 2015 Underwriting year Life, accident & health Marine Political risks & contingency Property Specialty lines Reinsurance All divisions 21
Slide 22: 2016 underwriting outlook
2016 underwriting outlook • Competitive market conditions expected to continue • Well diversified portfolio will allow efficient cycle management • Disciplined underwriting in areas where competition is greatest • We see opportunities for moderate growth in 2016 US underwritten premium US ‘gap p
Slide 23: Our vision and strategic priorities
Our vision and strategic priorities To become, and be recognised as, the highest performing specialist insurer Product Development Sales and Service Growth in Europe Growth in SME Growth in Asia Innovation and Growth in US Pacific New in 2015 23
Slide 24: Outlook for 2016 – our 30th year
Outlook for 2016 – our 30th year • Continue our organic growth strategy • Premium rates expected to decline across portfolio as a whole • Continued growth opportunities in US • Market consolidation offers opportunities to attract talent • Pursue our refreshed strategic initiatives • New corporate st
Slide 25: Any questions?
Questions? Any questions?
Slide 26: Appendix
Generic title white Appendix
Slide 27: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations 140% Specialty lines net incurred loss ratio at each development year 6 to latest 6 5 120% 114% 4 3 2 100% ULR 88% Net incurred loss ratio (%) 80% 73% 73% 75% 68% 66% 61% 60% 60% 48% 51% 49% 44% 44% 40% 29% 20% 14% 0% 1993- 1997- 2001
Slide 28: US gross premium over years
US gross premium over 11 years 700 600 500 US gross premiums ($m) 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Architects and engineers professional indemnity Technology, media and business services Other specialty lines Property PCG & Marine Accident and health 28
Slide 29: Cumulative rate changes since 2001
Cumulative rate changes since 2001 250% 200% Cumulative rate change (%) 150% 100% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Underwriting year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 29
Slide 30: Portfolio management achieves consistent combined ratio through market cycles
Portfolio management achieves consistent combined ratio through market cycles 160 140 120 Combined ratio (%) 100 80 60 40 2011 2012 2013 2014 2015 Year 30
Slide 31: Life accident & health
Life accident & health Year ended 31 December 2015 2014 Gross premiums written ($m) 119.8 132.2 Net premiums written ($m) 106.6 113.7 • Profit of $0.4m Net earned premiums ($m) 110.8 103.0 • Combined ratio improved to 103% (2014: 107%) Claims ratio 58% 60% Rate change on renewals (1%) 9% Percentage
Slide 32: Marine
Marine Year ended 31 December 2015 2014 Gross premiums written ($m) 269.3 325.2 Net premiums written ($m) 239.5 289.9 • Improved combined ratio of 77% (2014: 78%) Net earned premiums ($m) 258.2 282.6 • Second largest divisional contribution to group’s profitability in 2015 Claims ratio 38% 38% Rate
Slide 33: Political risks and contingency
Political risks and contingency Year ended 31 December 2015 2014 Gross premiums written ($m) 123.6 123.2 Net premiums written ($m) 105.0 101.2 • Combined ratio of 76% (2014: 78%) Net earned premiums ($m) 106.4 96.9 • Net earned premiums increased by 10% Claims ratio 29% 27% Rate change on renewals (
Slide 34: Property
Property Year ended 31 December 2015 2014 Gross premiums written ($m) 353.1 344.7 Net premiums written ($m) 304.8 297.6 • Improved combined ratio of 84% (2014: 86%) Net earned premiums ($m) 297.8 287.9 • Strong performance across all teams Claims ratio 39% 42% • Net earned premiums increased by 3% R
Slide 35: Reinsurance
Reinsurance Year ended 31 December 2015 2014 Gross premiums written ($m) 199.9 200.8 Net premiums written ($m) 132.0 153.8 • Combined ratio of 57% (2014: 69%) Net earned premiums ($m) 133.8 160.1 • Market over supplied with capacity Claims ratio 22% 37% Rate change on renewals (7%) (10%) Percentage
Slide 36: Specialty lines
Specialty lines Year ended 31 December 2015 2014 Gross premiums written ($m) 1,015.2 895.7 Net premiums written ($m) 825.2 776.5 • Highest divisional contribution to group’s profitability with $77.0m Net earned premiums ($m) 791.7 728.5 • Combined ratio of 96% (2014: 98%) Claims ratio 60% 61% • Grow