Slide 1: Results for the six months ended 30 June 2020
Results for the six months ended 30 June 2020 Thursday, 23 July 2020
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 • Overview 4-6 • Business update 6 • Financials 7-15 o Performance 8 o Investments 9-10 o Reserves 11-14 o Capital position 15 • In focus: Property 16-20 • The outlook 21-22 • Questions 23 • Appendix 24-35 3
Slide 4: Overview
Overview beautifully designed insurance
Slide 5: Overview – strong premium growth
Overview – strong premium growth • Gross premiums written increased • Prior year reserve releases of $58.6m by 12% to $1,663.9m (30 June 2019: $3.4m) (30 June 2019: $1,483.6m) • Investment return of $83.2m • Rate change on renewal business 11% (30 June 2019: $170.3m) (30 June 2019: 5%) • Annualised
Slide 6: Business update
Business update • Growth achieved across six of our seven divisions COVID-19: • Market facilities split out from specialty lines • Company has been successfully operating • Equity raise of $292.6m to fund planned remotely for past four months growth opportunities • Continued to deliver product launc
Slide 7: Financials
Financials beautifully designed insurance
Slide 8: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase 30 June 2020 30 June 2019 Gross premiums written ($m) 1,663.9 1,483.6 12% Net premiums written ($m) 1,317.8 1,225.5 8% Net earned premiums ($m) 1,233.8 1,118.0 10% (Loss) / Profit before income tax ($m) (13.8) 166.4 (Loss) / E
Slide 9: Strong investment return in volatile market
Strong investment return in volatile market 300.0 7.0% 6.0% 250.0 Q1 2020 ($55.0m) Annualised investment return 93.4 5.0% $m Investment Return 200.0 Q2 2020 $138.2m 4.0% 150.0 3.0% 58.9 100.0 170.3 2.0% 30.4 50.0 14.1 1.0% 79.4 83.2 62.7 43.5 33.1 0.0 8.0 0.0% 2015 2016 2017 2018 2019 2020HY 1st hal
Slide 10: Active portfolio management in uncertain markets
Active portfolio management in uncertain markets 30 June 2020 31 December 2019 Hedge Funds, 5.4% Illiquid Credit Assets, 3.4% Hedge Funds 6.0% Illiquid Credit Assets, 3.7% Cash and Cash Equity Linked funds, 1.4% Cash and Cash Equity Linked funds, 2.8% Equivalents, 4.8% Equivalents, 5.8% Derivative A
Slide 11: Claims releases more in line with historic levels
Claims releases more in line with historic levels 220 $203.9m 200 14% $176.3m $180.7m 180 12% $158.1m $115.0m 160 140 10% 120 8% 100 6% $m $58.6m 80 $9.5m 60 4% 40 $3.4m 2% 20 0 0% -20 -2% -40 -60 -4% 2014 2015 2016 2017 2018 2019 2019HY 2020HY CyEx Marine Market facilities PAC Property Reinsurance
Slide 12: Consistent reserving strategy leads to improving surplus position
Consistent reserving strategy leads to improving surplus position Surplus in net held reserves 10.0% 8.2% 8.2% 8.2% 7.9% 7.5% 7.4% 7.4% 7.1% % above actuarial estimate 6.9% 7.0% 6.7% 6.7% 6.8% 6.4% 6.6% 6.1% 5.6% 5.0% 5.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 13: Our initial claims ratios were robust in last recession
Our initial claims ratios were robust in last recession Claims ratio progress in last recession 102% 100% 98% 96% Initial claims ratio Lower claims ratio 94% position at a mature position 92% 90% 88% 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 2008 u/w year 2009 u/w year 2010 u/w year 13
Slide 14: Reinsurance protection of significant underwriting action in SL and CyEx
Reinsurance protection of significant underwriting action in SL and CyEx • Our claims made liability business has always been exposed to systemic issues and we have also been preparing for a recession for a number of years • During 2020 we have focused on amending our underwriting to reduce the pote
Slide 15: Underwriting capital – in a strong position for market conditions
Underwriting capital – in a strong position for market conditions • Group capital requirement: Projected Year ended 31 Dec 2020 31 Dec 2019 $m $m Lloyd’s economic capital requirement (ECR) 1,996.5 1,828.4 Capital for US insurance company 301.4 203.9 2,297.9 2,032.3 • Expect to be at 22% of Lloyd’s E
Slide 16: In focus: Property
In focus: Property
Slide 17: Vision & Strategy
Vision & Strategy To become, and be recognised as, the highest performing specialist property insurer Key performance indicators • 15%+ return on capital • Continued double-digit growth • Above “Beazley average” broker survey result • Top quartile engagement survey result 17
Slide 18: Our structure & products
Our structure & products Beazley Property Group ($429m*) London Singapore US Canada Lloyd’s Latin America Underwriting Underwriting Underwriting Underwriting China Miami Platform Platforms Platforms Platforms Platform Platform Jewellers, Fine Arts Delegated & Package Small, Mid Market & Large Proper
Slide 19: Key areas of focus
Key areas of focus • Tailored and optimised portfolio • Active distribution management • Empowered underwriting • Investment in technology and processes • Efficient use of capital 19
Slide 20: 2020 Property outlook and beyond
2020 Property outlook and beyond • Expected premium growth +15% YOY • Continued rate increases across portfolio o Large Commercial +22% YTD o Small & Mid Market +18% YTD o US Homeowners +14% YTD • High retention on core business • Favorable terms & conditions • Ongoing improvement on attritional los
Slide 21: The outlook
The outlook beautifully designed insurance
Slide 22: Outlook
Outlook • Maintain double digit top line growth • Continue to mitigate impact of COVID-19 o Taking underwriting action on liability classes • Expect combined ratio around 100% for 2020 • Expect lower investment return in second half of 2020 as fixed income assets yield just 0.8%. • Expect rate momen
Slide 23: Questions?
Questions? beautifully designed Insurance
Slide 24: Appendix
Appendix beautifully designed Insurance
Slide 25: Cumulative rate change since 2015
Cumulative rate change since 2015 140% 130% 120% Rate change (%) 110% 100% 90% 80% 2015 2016 2017 2018 2019 2020HY CyEx Marine PAC Property Reinsurance Speciality lines Market facilities All divisions 25
Slide 26: US interest rates
US interest rates 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% US 10 Year Index US 5 Year Index US 2 Year Index 26
Slide 27: Cyber gross premiums written growth
Cyber gross premiums written growth 600.0 500.0 400.0 GWP ($m) 300.0 200.0 100.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 projected Tech E&O BBR InfoSec Vector 27
Slide 28: Portfolio management achieves consistent combined ratio through market cycles
Portfolio management achieves consistent combined ratio through market cycles 180 160 140 Combined ratio (%) 120 100 80 60 40 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020HY Lines of business Diversified portfolio 28
Slide 29: Cyber & executive risk
Cyber & executive risk 6 months ended 30 June • 21% growth in gross premiums written 2020 2019 • Expense ratio at 30% (June 2019: 32%) Gross premiums written ($m) 419.6 348.1 Net premiums written ($m) 360.7 303.9 Net earned premiums ($m) 367.9 296.1 Claims ratio 59% 63% Rate change on renewals 13% 4
Slide 30: Marine
Marine 6 months ended 30 June • Gross premiums written growth of 7% 2020 2019 • Improved combined ratio to 98% (June 2019: 108%) Gross premiums written ($m) 176.3 165.1 Net premiums written ($m) 153.8 138.4 141.3 134.2 Net earned premiums ($m) 62% 68% Claims ratio 15% 7% Rate change on renewals 54%
Slide 31: Market facilities
Market facilities 6 months ended 30 June • Gross premiums written growth of 173% 2020 2019 Gross premiums written ($m) 60.7 22.2 Net premiums written ($m) 17.5 9.5 Net earned premiums ($m) 12.1 5.6 Claims ratio 29% 43% Rate change on renewals 13% 1% Percentage of business led 6% 6% 31
Slide 32: Political, accident & contingency
Political, accident & contingency 6 months ended 30 June • Gross premiums written growth of 3% 2020 2019 • Combined ratio 170% (June 2019: 94%) Gross premiums written ($m) 150.8 145.9 • Large impact from COVID-19 Net premiums written ($m) 110.8 126.0 Net earned premiums ($m) 97.0 109.4 Claims ratio
Slide 33: Property
Property 6 months ended 30 June • 1% increase in gross premiums written. Strong growth in second quarter 2020 2019 • Combined ratio increased to Gross premiums written ($m) 233.5 230.9 147% (June 2019:92%), largely due to impact of COVID-19 Net premiums written ($m) 183.8 180.7 • Expense ratio impro
Slide 34: Reinsurance
Reinsurance 6 months ended 30 June • Combined ratio decreased to 95% (June 2019: 140%) 2020 2019 • Improved expense ratio of 40% (June 2019: 43%) Gross premiums written ($m) 151.0 161.4 Net premiums written ($m) 92.1 97.8 Net earned premiums ($m) 50.8 57.2 Claims ratio 55% 97% Rate change on renewal
Slide 35: Specialty lines
Specialty lines 6 months ended 30 June • 15% growth in gross premiums written 2020 2019 • Improved expense ratio at 37% (June 2019: 39%) Gross premiums written ($m) 472.0 410.0 Net premiums written ($m) 399.1 369.2 Net earned premiums ($m) 387.2 338.7 Claims ratio 57% 62% Rate change on renewals 9%