Beazley Plc · LSE:BEZ
Beazley — Investor Day (November 2023)
34 slides from Beazley's investor day presentation, November 2023
Slide 1: Capital Markets Day
Capital Markets Day November 2023
Slide 2: Presenters
Adrian Cox CEO Bob Quane CUO Richard Montminy Group Head of Property Risks Paul Bantick Group Head of Cyber Risks Aidan Flynn Head of London and International Cyber Underwriting Management
Slide 3: Contents
Contents 01 04 Introduction Property Q&A 02 05 Property Risks Cyber Risks 03 06 Underwriting for Cyber Q&A climate change 3
Slide 4: Disclaimer notice
Disclaimer notice Certain statements made in this presentation, both oral and written, are or may constitute The information and opinions contained in this presentation, including any forward-looking “forward looking statements” with respect to the operation, performance and financial condition stat
Slide 5: Introduction
01 Introduction Capital Markets Day Adrian Cox, CEO 5
Slide 6: Property Risks
02 Property Risks Richard Montminy Group Head of Property Risks 6
Slide 7: Underwriting property risks to reflect loss trends
Underwriting property risks to reflect loss trends • Insured losses have grown by 5-7% annually over the past three decades • Natural catastrophe events in 2023 have already surpassed $100 billion • Hurricane Ian in 2022 estimated insured losses of $50-65 billion second only to 2005’s Hurricane Katr
Slide 8: Navigating a changing property market
Navigating a changing property market • Having retooled during the soft market - We retained our focus and market knowledge - Strengthened property pricing and catastrophe modelling • Last 12 months we have been taking advantage of the market conditions in property - Terms and conditions tightened
Slide 9: Property risks - platform premium split
Property risks - platform premium split Europe North America Global Wholesale Via Lloyd’s 37% % premium share 3% 0% 100% 60% Admitted business Non admitted business Growth HY23 v HY22 -11% 127% 48% 9
Slide 10: Property: What we do
Property: What we do 1. Geographical split 2. Geographical split 3. Underwriters for property insurance for property reinsurance globally 90% 10% 60% 40% 106 North America Europe & North America Europe & International International 4. Property insurance max 5. Commercial 6. We are a primary market c
Slide 11: Property risk claims ratio
Property risk claims ratio IFRS 4 Claims ratio for Property Risks 80% 75% 70% Claims ratio 65% 60% 55% 50% Calendar year 2020 2021 2022 11
Slide 12: Stable property risk appetite as shareholder equity increases
Stable property risk appetite as shareholder equity increases 1 in 250 risk appetite as percentage of shareholder equity 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 12
Slide 13: The reducing impact of a 1 in 10 year event
The reducing impact of a 1 in 10 year event 1 in 10 year event as a percentage of expected earnings 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2020 2021 2022 2023 13
Slide 14: Underwriting for climate change
03 Underwriting for climate change November 2023 14
Slide 15: Materiality of peril to Beazley today
Materiality Assessment High North Atlantic Hurricane US Flood US Severe Convective Storm (SCS) US Wildfire US Winter Storm Materiality of peril to Beazley today EU Winter Storm EU Flood Japan Typhoon Canada Flood & Wildfire Australia Windstorm EU SCS Japan, Australia & Caribbean Flood Canada, Japan
Slide 16: Climate Risk Framework
Climate Risk Framework Materiality Assessment Catastrophe Portfolio Scenario Pricing Underwriting modelling Management Analysis
Slide 17: Pricing for Climate Risk
Pricing for Climate Risk Then Blanket load Models based on climate science and historical data for perils Now Granular modelling Models enhanced for forward looking view of risk Climate conditioned Climate Adjusted Perils Individual catastrophe model Enhanced by analysis US Hurricane peril, asset an
Slide 18: Catastrophe Modelling – a forward looking view
Catastrophe Modelling – a forward looking view Improving Strengthening Monitoring our our tools our skillset exposure Catastrophe models adjusted for Creation of a natural hazard Restructure of catastrophe non-modelled perils and reflect research function modelling to create dedicated recent events
Slide 19: Portfolio management
Portfolio management Property Risks Portfolio Management Framework Aim: Maximise profitability while managing risk across exposed natural catastrophe Property Risks classes Segmentation Monitoring Adaptability Property Risks Monitoring of Dynamic re-allocation manage and optimise metrics using forwa
Slide 20: Scenario Analysis – assessing the financial risk of climate change
Scenario Analysis – assessing the financial risk of climate change Physical risk scenario analysis for three Future business temperature scenarios planning 1.4⁰C, 2⁰C, and 3⁰C Monitoring how Analysis outputs indicate exposure to future climate financial impacts at portfolio Supports risk is developi
Slide 21: Underwriting – individual risk focused
Underwriting – individual risk focused Climate change metric designed to assess long-term impact of US hurricane risk and factoring in client's own risk management Dialogue improves client and broker interaction – Improves understanding of client resiliency – Drives client retention Underwriting for
Slide 22: Our climate risk management journey
Our climate risk management journey 01 02 03 04 05 Transitioning to Pricing each peril, Active individual Positive feedback E&S market forward-looking asset and location risk selection loop consistently has agility to modelling updating our effectively approach underwrite property risks in the US 22
Slide 23: Property outlook
Property outlook • Market conditions continue to be favourable • Expect continued growth in 2024 • Continue the long term build out of the North American commercial property book 23
Slide 24: Property Q&A
04 Property Q&A November 2023 24
Slide 25: Cyber Risks
05 Cyber Risks Paul Bantick, Group Head of Cyber Risks Aidan Flynn, Head of London and International Cyber Underwriting Management 25
Slide 26: Cyber Market Update
Cyber Market Update Rating Environment Market Competition Loss Environment • Rate at end of Q3 is - 4% • European and international • Frequency at Beazley globally, confident on rate demand continues to remains at the low levels adequacy increase vs US previously reported • Achieving planned • Exist
Slide 27: Cyber Market Update: War Exclusion, Threat Intelligence
Cyber Market Update War Exclusion Threat Intelligence • Market finding parity on approach • Beazley Cyber Council • Full market deployment expected by 1st • Monitoring Geopolitical changes January 2024 • Work on AI • War represents one of the largest potential systemic risks • Continual monitoring o
Slide 28: Cyber Risks – platform premium split
Cyber Risks – platform premium split Europe North America Global Wholesale Via Lloyd’s 50% % premium share 18% 22% 78% 32% Admitted business Non admitted business Growth HY23 v HY22 34% 4% 22% 28
Slide 29: Catastrophic probabilistic modelling
Catastrophic probabilistic modelling November 2023 29
Slide 30: Addition of Cyber Probabilistic Model
Addition of Cyber Probabilistic Model Historic Approach Changes from 2024 • Realistic disaster scenarios (RDS) • From 2024 we are going to manage our internal risk appetite based on our internal • Probabilistic approaches have and will continue to evolve probabilistic model • Prudent capitalisation
Slide 31: Overview of model outputs
Overview of model outputs • The probabilistic model includes scenarios that are much more remote and extreme than the RDSs • The assumptions that are used within the probabilistic model have been developed internally $m Group Probabilistic • The probabilistic outputs are similar in size to the RDS n
Slide 32: Overview of model outputs
Overview of model outputs • The gross cyber losses in the probabilistic model is compared to the Cybercube model below at a range of return periods • We are already capitalised to risk that is consistent with external models • We carefully manage dependent business interruption (DBI) exposure, which
Slide 33: Cyber outlook
Cyber outlook Continued demand for Cyber insurance, especially outside North America 2024 expected to be a year of growth Agile approach - The business will continue to manage according to the threats and market conditions
Slide 34: Cyber Q&A
06 Cyber Q&A November 2023 34