Slide 1: Results for the six months ended 30 June 2018
Cover Results for the six months ended 30 June 2018 Friday, 20 July 2018 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 4-5 Business update 6 Financials 7 Performance 8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus: Operations and digital at Beazley 14-20 The Outlook 21-23 Appendix 25-34 3
Slide 4: Overview
Generic title white Overview
Slide 5: Overview – strong premium growth
Overview – strong premium growth • Profit before income tax of $57.5m (2017: $158.7m) • Gross premiums written increased by 15% to $1,323.8m (2017: $1,149.3m) • Combined ratio 95% (2017: 90%) • Rate change on renewal business 3% (2017: -2%) • Prior year reserve releases of $48.1m (2017: $83.4m) • In
Slide 6: Business update
Business update • Top line growth across all of our divisions • Syndicate 5623 started - facilities business premiums written of $13m • Management liability & TMB to form a new division from 2019 separate from specialty lines • Neil Maidment will be succeeded as chief underwriting officer by Adrian
Slide 7: Financials
Generic title white Financials
Slide 8: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase/ 30 June 2018 30 June 2017 (decrease) Gross premiums written ($m) 1,323.8 1,149.3 15% Net premiums written ($m) 1,105.3 936.4 18% Net earned premiums ($m) 990.2 886.7 12% Profit before income tax ($m) 57.5 158.7 (64%) Earnings
Slide 9: Rising US rates reduced return for the first half of 2018
Rising US rates reduced return for the first half of 2018 140.0 5.0% 120.0 4.0% 58.9 100.0 Annualised investment return $m Investment Return 3.0% 80.0 30.4 36.2 60.0 2.0% 14.1 40.0 79.4 62.7 1.0% 46.8 43.5 20.0 8.0 0.0 0.0% 2014 2015 2016 2017 2018HY 1st half 2nd half Return 9
Slide 10: Minor changes to optimise portfolio
Minor changes to optimise portfolio 30 June 2018 31 December 2017 Illiquid Credit Assets, 3.7% Illiquid Credit Assets, 3.7% Hedge Funds, 8.6% Hedge Funds , 7.7% Equity Linked funds, 2.1% Cash and Cash Cash and Cash Equivalents Equity Linked funds, 3.4% Equivalents 8.9% 9.0% Senior Secured Loans, 2.8
Slide 11: Lower than average releases – strengthening in property
Lower than average releases – strengthening in property 250 25.0% 200 20.0% 150 15.0% % of NEP $m 100 10.0% 50 5.0% 0 0.0% 2013 2014 2015 2016 2017 2017HY 2018HY -50 -5.0% Specialty lines PAC Marine Property Reinsurance % of NEP 11
Slide 12: Whole account reserve strength maintained in our target range
Whole account reserve strength maintained in 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 2018 31 Dec 2017 $m $m Lloyd’s economic capital requirement (ECR) 1,563.0 1,517.2 Capital for US insurance company 175.0 96.5 1,738.0 1,613.7 • Expect to be above of our target range of 15%-2
Slide 14: In focus: Operations and digital at Beazley
In focus Operations and digital at Beazley
Slide 15: Role of the Group COO and management team
Role of the Group COO and management team Ben Spencer • Technology and data Chief Information Officer 13 years at Beazley • Projects and change Douglas Colosky Head of Operations • Underwriting and claims operations 12 years at Beazley • Commercial management & real estate Munira Hirji Head of Comme
Slide 16: Our digital strategy - what we’re seeing, what we’re doing
Our digital strategy - what we’re seeing, what we’re doing Significant opportunity from 1) Focusing investment via two new strategic initiatives technology and data Changing customer buying 2) Digitising transactions around the customer patterns Not necessary for people to 3) Creating a digital work
Slide 17: Focusing digital investments via two new strategic initiatives
1) Focusing digital investments via two new strategic initiatives Smarter Faster Underwriting Complex risk Bionic processes Low volume Beazley Digital Simple risk Automated processes High volume 17
Slide 18: Digitising our transactions around the customer: what are we doing?
2a) Digitising our transactions around the customer What are we doing? Smarter Faster Underwriting Beazley Digital Using external data sources E-trading (myBeazley.com) Beazley single Predictive analytics customer Auto pricing email submissions view Integrating to broker systems Automating cross sel
Slide 19: Digitising our transactions around the customer: why are we doing it?
2b) Digitising our transactions around the customer Why are we doing it? • Changing the way we underwrite • More informed decision making, pricing and cross sell • Changing the way we communicate with brokers • Responding via more digital channels • Quicker response times • Increasing staff producti
Slide 20: Creating a digital work environment
3) Creating a digital work environment Implementing activity based working environments • Attracting next generation of talent • Aligning to broker placement behaviour • Re-thinking our office space 20
Slide 21: The Outlook
Generic title white The Outlook
Slide 22: Cumulative rate change since 2008
Cumulative rate change since 2008 120% 115% 110% 105% Rate change (%) 100% 95% 90% 85% 80% 75% 70% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018HY Marine Property Specialty Lines Reinsurance PAC All divisions 22
Slide 23: Outlook
Outlook • Continued double digit growth • Expect combined ratio in the low to mid nineties barring any major claim events • Should capture higher investment return (circa 3%) going forward • Continue to invest in technology via our strategic initiatives • Closing in on $1bn of locally underwritten U
Slide 24: Any questions?
Questions? Any questions?
Slide 25: Appendix
Generic title white Appendix
Slide 26: US interest rates
US interest rates 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% US 10 Year Index US 5 Year Index US 2 Year Index 26
Slide 27: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations 27
Slide 28: TMB gross premium growth
TMB gross premium growth 400.0 350.0 300.0 250.0 GWP ($m) 200.0 150.0 100.0 50.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 projected Tech E&O BBR Info Sec Vector 28
Slide 29: 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 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018HY 29
Slide 30: Marine
Marine 6 months ended 30 June 2018 2017 Gross premiums written ($m) 158.0 145.6 • Combined ratio at 99% Net premiums written ($m) 133.6 118.9 (2017: 96%) Net earned premiums ($m) 125.0 114.0 • Improved expense ratio of 40% (2017: 43%) Claims ratio 59% 53% Rate change on renewals 2% (4%) Percentage o
Slide 31: Political, accident & contingency
Political, accident & contingency 6 months ended 30 June 2018 2017 Gross premiums written ($m) 120.0 108.4 Net premiums written ($m) 101.8 94.9 • Gross premiums written 86.2 91.5 growth of 11% Net earned premiums ($m) • Break even result for the Claims ratio 55% 53% 2018HY (2017: loss of $0.6m) Rate
Slide 32: Property
Property 6 months ended 30 June 2018 2017 Gross premiums written ($m) 243.4 194.1 • 25% growth in gross Net premiums written ($m) 198.0 149.6 premiums written Net earned premiums ($m) 163.9 147.6 • Increase in claims ratio to 76% (2017: 51%) due to high level of attritional Claims ratio 76% 51% clai
Slide 33: Reinsurance
Reinsurance 6 months ended 30 June 2018 2017 Gross premiums written ($m) 152.5 140.8 • Contribution to group Net premiums written ($m) 95.5 82.9 operating profit of $19.8m (2017: $19.6m) Net earned premiums ($m) 59.1 55.6 • Combined ratio improved to 68% (2017: 75%) Claims ratio 30% 38% Rate change
Slide 34: Specialty lines
Specialty lines 6 months ended 30 June 2018 2017 Gross premiums written ($m) 649.9 560.4 Net premiums written ($m) 576.4 490.1 • 16% growth in gross premiums written Net earned premiums ($m) 556.0 478.0 • Consistent expense ratio at 38% (2017: 38%) Claims ratio 51% 49% Rate change on renewals (1%) (