Slide 1: Results for the six months ended 30 June 2019
Cover Results for the six months ended 30 June 2019 Tuesday, 23 July 2019 1
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 4-6 Business update 6 Financials 7-13 Performance 8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus: Broker relations at Beazley 14-18 The Outlook 19-22 Appendix 23-32 3
Slide 4: Overview
Generic title white Overview
Slide 5: Overview – strong premium growth
Overview – strong premium growth • Gross premiums written increased by 12% to $1,483.6m (30 June 2018: $1,323.8m) • Profit before income tax of $166.4m (30 June 2018: $57.5m) • Combined ratio 100% (30 June 2018: 95%) • Rate change on renewal business 5% (30 June 2018: 3%) • Prior year reserve releas
Slide 6: Business update
Business update • Growth across all platforms • Specialty lines split into specialty lines and cyber and executive risk • Management changes: • Martin Bride succeeded by Sally Lake • Mark Bernacki succeeded by Richard Montminy • Claims experience has been elevated in discrete areas • Pockets of US L
Slide 7: Financials
Generic title white Financials
Slide 8: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase 30 June 2019 30 June 2018 Gross premiums written ($m) 1,483.6 1,323.8 12% Net premiums written ($m) 1,225.5 1,105.3 11% Net earned premiums ($m) 1,118.0 990.2 13% Profit before income tax ($m) 166.4 57.5 189% Earnings per shar
Slide 9: Strong investment return in first half
Strong investment return in first half 180.0 7.0% 160.0 6.0% 140.0 5.0% Annualised investment return 120.0 $m Investment Return 58.9 4.0% 100.0 170.3 80.0 30.4 3.0% 36.2 60.0 14.1 2.0% 40.0 79.4 62.7 33.1 1.0% 46.8 43.5 20.0 8.0 0.0 0.0% 2014 2015 2016 2017 2018 2019HY 1st half 2nd half Return 9
Slide 10: Minor changes to optimise portfolio
Minor changes to optimise portfolio 30 June 2019 31 December 2018 Cash and Cash Cash and Cash Illiquid Credit Assets, 4.2% Equivalents Illiquid Credit Assets, 3.7% Equivalents 5.7% 6.7% Hedge Funds, 5.5% Hedge Funds, 6.7% Equity Funds, 2.2% Equity Funds, 1.7% Other Credit, 2.9% Senior Secured Loans,
Slide 11: Lower than average releases
Lower than average releases 220 12.0% 200 11.0% 180 10.0% 9.0% 160 8.0% 140 7.0% 120 6.0% 100 % of NEP 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 2018HY 2019HY Specialty lines CyEx PAC Marine Property Reinsurance % of NEP 11
Slide 12: Whole account reserve strength within our target range
Whole account reserve strength within our target range Preferred upper end 12
Slide 13: Underwriting capital – remains in a strong position
Underwriting capital – remains in a strong position • Group capital requirement: Projected Year ended 31 Dec 2019 31 Dec 2018 $m $m Lloyd’s economic capital requirement (ECR) 1,745.7 1,594.5 Capital for US insurance company 173.4 173.4 1,919.1 1,767.9 • Expect to be at 19% of Lloyd’s ECR, which is w
Slide 14: In focus: Broker relations at Beazley
In focus Broker relations at Beazley
Slide 15: Broker Relations at Beazley: Our role
Broker Relations at Beazley: Our role • Lead Beazley’s distribution strategy • Assist in building long-term broker relationships • Provide consistent support to underwriters as we expand footprint • Help create and facilitate opportunities to cross-sell Beazley products • Build distribution around n
Slide 16: Responding to change: Technology & Insurance
Responding to change: Technology & Insurance Technology………… • supports ambition to grow in smaller commercial lines market • drives efficient distribution across global markets • supports bifurcation of lead vs follow capacity • enables digitalisation of risk placement • encourages collaboration wit
Slide 17: Broker consolidation - A threat and an opportunity
Broker consolidation - A threat and an opportunity • Ongoing across retail & wholesale insurance markets • BR instrumental in managing, through transitions • Potential for increased pressure around commissions • Avoiding over-reliance on one intermediary • Emergence of new brokers means opportunitie
Slide 18: Tracking progress: Broker survey
Tracking progress: Broker survey • Conduct annual formal feedback surveys • Finding our blind spots • Different things matter to brokers in each region • Our claims reputation matters most • Expertise is a most important driver of satisfaction • Service/responsiveness 18
Slide 19: The Outlook
Generic title white The Outlook
Slide 20: Cumulative rate change since 2015
Cumulative rate change since 2015 120% 115% 110% 105% Rate change (%) 100% 95% 90% 85% 80% 2015 2016 2017 2018 2019HY Marine Property Specialty Lines CyEx Reinsurance PAC All divisions 20
Slide 21: Outlook
Outlook • Continued double digit growth • Expect combined ratio in the high nineties for 2019 • Expect investment return to follow running yield of 2.4% • Beazley supportive of Lloyd’s prospectus and initiatives • Pricing discipline and rate rises continue 21
Slide 22: Any questions?
Questions? Any questions?
Slide 23: Appendix
Generic title white Appendix
Slide 24: 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 24
Slide 25: TMB gross premium growth
TMB gross premium growth 500.0 450.0 400.0 350.0 300.0 GWP (USD$m) 250.0 200.0 150.0 100.0 50.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 projected Tech E&O BBR InfoSec Vector 25
Slide 26: Portfolio management achieves consistent combined ratio through market cycles
Portfolio management achieves consistent combined ratio through market cycles 160 140 120 100 Combined ratio (%) 80 60 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019HY 26
Slide 27: Cyber & executive risk
Cyber & executive risk 6 months ended 30 June 2019 2018 Gross premiums written ($m) 348.1 294.3 Net premiums written ($m) 303.9 258.3 • 18% growth in gross premiums written Net earned premiums ($m) 296.1 261.6 • Expense ratio at 32% (2018: 34%) Claims ratio 63% 52% Rate change on renewals 4% (2%) Pe
Slide 28: Marine
Marine 6 months ended 30 June 2019 2018 Gross premiums written ($m) 165.1 158.0 • Combined ratio at 108% Net premiums written ($m) 138.4 133.6 (2018: 99%) Net earned premiums ($m) 134.2 125.0 • Consistent expense ratio of 40% (2018: 40%) Claims ratio 68% 59% Rate change on renewals 7% 2% Percentage
Slide 29: Political, accident & contingency
Political, accident & contingency 6 months ended 30 June 2019 2018 Gross premiums written ($m) 145.9 120.0 Net premiums written ($m) 126.0 101.8 • Gross premiums written 109.4 86.2 growth of 22% Net earned premiums ($m) • Combined ratio 94% (2018: Claims ratio 51% 55% 101%) Rate change on renewals (
Slide 30: Property
Property 6 months ended 30 June 2019 2018 Gross premiums written ($m) 230.9 243.4 • 5% decline in gross Net premiums written ($m) 180.7 198.0 premiums written due to withdrawal from construction Net earned premiums ($m) 176.8 163.9 and engineering business • Improved combined ratio of Claims ratio 5
Slide 31: Reinsurance
Reinsurance 6 months ended 30 June 2019 2018 Gross premiums written ($m) 161.4 152.5 • Gross premiums written Net premiums written ($m) 97.8 95.5 growth of 6% Net earned premiums ($m) 57.2 59.1 • Combined ratio increased to 140% (2018: 68%) Claims ratio 97% 30% Rate change on renewals 4% 7% Percenta
Slide 32: Specialty lines
Specialty lines 6 months ended 30 June 2019 2018 Gross premiums written ($m) 432.2 355.6 Net premiums written ($m) 378.7 318.1 • 22% growth in gross premiums written Net earned premiums ($m) 344.3 294.4 • Improved expense ratio at 40% (2018: 42%) Claims ratio 62% 50% Rate change on renewals 4% 1% Pe