Slide 1: Results for the year ended 31 December 2017
Results for the year ended 31 December 2017 Generic title white Thursday, 8th February 2018 Moments of truth
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 2017 4-8 Financials Performance 10 Investments 11-12 Reserves 13-14 Capital 15-16 Underwriting review 17-21 Data and analytics strategic initiative (DASI) 22 Outlook for 2018 23 Appendix 25-31 3
Slide 4: Overview of 2017
Generic title white Overview of 2017
Slide 5: Growth and underwriting profits despite the natural catastrophes
Growth and underwriting profits despite the natural catastrophes • Profit before income tax of $168.0m (2016: $293.2m) • Return on equity of 9% (2016: 18%) • Gross premiums written increased by 7% to $2,343.8m (2016: $2,195.6m) • Combined ratio of 99% (2016: 89%) • Rate reduction of 1% on renewal po
Slide 6: Business update
Business update • Continued strong growth in our US business • SL International started underwriting: • Licencing of Beazley Insurance dac • Acquisition of Creechurch Underwriters • 28 underwriters hired in Europe, Canada, Latin America and Asia • Launched syndicate 5623 • Our Environmental, Social
Slide 7: Consistent high performance
Consistent Cover high performance Gross premiums written ($m) Combined ratio (%) 2,500 125% 99% 2,000 100% 89% 84% 87% 89% 75% 41% 1,500 40% 39% 41% 39% 2,195.6 2,343.8 1,000 1,970.2 2,021.8 2,080.9 50% 25% 58% 500 45% 49% 48% 48% 0 0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Expense ratio
Slide 8: Excellent total shareholder return - TSR 24.1% per annum since 31.12.09
Excellent total shareholder return - TSR 24.1% per annum since 31.12.09 500% 475% 450% 425% 400% 375% 350% 325% Shareholder return (%) 300% 275% 250% 225% 200% 175% 150% 125% 100% 75% 50% 25% 0% 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 Decemb
Slide 9: Financials
Generic title white Financials
Slide 10: Growth and profit in challenging conditions
Growth and profit in challenging conditions Year ended Year ended % Increase 31 December 2017* 31 December 2016 Gross premiums written ($m) 2,343.8 2,195.6 7% Net premiums written ($m) 1,978.8 1,854.0 7% Net earned premiums ($m) 1,869.4 1,768.2 6% Profit before income tax ($m) 168.0 293.2 Earnings p
Slide 11: Minor changes to portfolio mix
Minor changes to portfolio mix 31 December 2017 31 December 2016 Illiquid Credit Assets, 3.7% Illiquid Credit Assets , 2.8% Hedge Funds, 7.7% Hedge Funds, 6.7% Cash and Cash Equity Linked funds, 2.5% Equity Linked funds, 3.4% Equivalents Cash and Cash Senior Secured Loans , 2.0% Senior Secured Loans
Slide 12: Portfolio delivered an excellent 2.9% return
Portfolio delivered an excellent 2.9% return 5.0% 140.0 120.0 4.0% 58.9 Annualised Investment Return Investment Return ($m) 100.0 3.0% 80.0 30.4 36.2 60.0 2.0% 14.1 40.0 79.4 62.7 1.0% 46.8 43.5 20.0 43.3 0.0 0.0% 2013 2014 2015 2016 2017 1st half 2nd half Return 12
Slide 13: Overall prior year reserve releases remain stable
Overall prior year reserve releases remain stable 15% 225 14% 210 13% 195 12% 180 11% 165 10% 150 Reserve releases ($m) 9% 135 8% 120 105 7% 90 6% 75 5% 60 4% 45 3% 30 2% 15 1% 0 0% 2012 2013 2014 2015 2016 2017 -15 -1% Specialty lines Politial, accident and contingency Marine Property Reinsurance %
Slide 14: Whole account reserve strength in range but at the bottom
Whole account reserve strength in range but at the bottom Above actuarial estimate (%) 14
Slide 15: Capital management discipline continues
Capital management discipline continues • We have returned capital of £775.6m in the past 9 years • This represents 188% of our 2009 post rights-issue market capitalisation 800 200% 750 190% Percentage of market capitalisation at 2009 rights issue 180% 700 170% Funds returned to shareholders (£m) 65
Slide 16: Updated capital position remains strong
Updated capital position remains strong • Group capital requirement Year ended Year ended 31 December 2017 31 December 2016 $m $m Lloyd’s economic capital requirement (ECR) 1,517.2 1,489.2 Capital for US insurance company* 96.5 107.7 1,613.7 1,596.9 *The A.M. Best rating of our US insurance company
Slide 17: Underwriting review
Generic title white Underwriting review
Slide 18: Underwriting review – 2017 achievements
Underwriting review – 2017 achievements • Combined ratio of 99% due to balanced portfolio • Growth in gross premiums written of 7% to $2,343.8m Specialty lines, our largest division, achieved growth of 11% 12% growth in locally underwritten US premium • Rating environment remained challenging wi
Slide 19: Underwriting review
Underwriting review Year ended Year ended % Increase 31 December 2017 31 December 2016 Gross premiums written ($m) 2,343.8 2,195.6 7% Net premiums written ($m) 1,978.8 1,854.0 7% Net earned premiums ($m) 1,869.4 1,768.2 6% Expense ratio 41% 41% Claims ratio 58% 48% Combined ratio 99% 89% Rate change
Slide 20: Cumulative rate changes since 2008
Cumulative rate changes since 2008 120% 115% 110% 105% 100% Rate change (%) 95% 90% 85% 80% 75% 70% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Underwriting Year Marine Property Specialty Lines Reinsurance PAC All divisions 20
Slide 21: 2018 underwriting outlook
2018 underwriting outlook • More positive market conditions expected • We see good opportunities for continued growth in 2018 Locally underwritten US premium across SL, property and marine Cyber demand continues to increase and GDPR comes to Europe SL international business • Rate increases in
Slide 22: Data and analytics strategic initiative (DASI)
Data and analytics strategic initiative (DASI) • Focused on operational efficiency and smarter, faster underwriting • ‘Beazley Insight’ system live – building our systems around our customer data, augmenting this data with external sources, and bringing more automation to risk submission process • R
Slide 23: Outlook for 2018
Outlook for 2018 • Interest rate and economic outlook better than recent years • Premium rates expected to increase across short tail catastrophe exposed lines • Opportunities for double digit growth led by our specialty lines and catastrophe related businesses • SL International expected to grow si
Slide 24: Any questions?
Questions? Any questions?
Slide 25: Appendix
Generic title white Appendix
Slide 26: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations Net incurred loss ratio (%) Please note that this graph is gross of internal commissions 26
Slide 27: US gross premium growth
US gross premium growth 1,000 900 800 700 US gross premiums ($m) 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Architects and Engineers professional indemnity Technology, Media and Business Services Other specialty lines Property Marine and PAC 27
Slide 28: TMB gross premium growth
TMB gross premium growth 400.0 350.0 300.0 250.0 GWP ($m) 200.0 150.0 100.0 50.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Tech E&O BBR Info Sec Vector 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 2016 2017 Underwriting Year Marine Property Reinsurance Specialty lines PAC 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 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Lines of Business Diversified Portfolio 30
Slide 31: Performance by division
Performance by division Year ended 31 December 2017 Specialty Marine PAC Property Reinsurance lines Gross premiums written ($m) 267.6 214.3 362.9 206.8 1,292.2 Net premiums written ($m) 233.2 190.8 300.0 134.6 1,120.2 Net earned premiums ($m) 227.9 188.7 293.8 136.9 1,022.1 Result from operating act