Slide 1: Results for the year ended 31 December 2021
Results for the year ended 31 December 2021 Thursday, 10 February 2022
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 • Dividend Policy 7 • Financials 8-14 o Performance 9 o Investments 10-11 o Claims releases 12 o Reserves 13 o Capital position 14 • Underwriting 15-21 • The Outlook 22-23 • Questions 24 • Appendix 25-27 3
Slide 4: Overview
Overview 4
Slide 5: Return to profitable growth
Return to profitable growth • Profit before tax of $369.2m (2020: Loss $50.4m). • Prior year reserve releases of $209.8m (2020: $93.1m). • Return on equity of 16% (2020: Loss on equity 3%). • Net investment income of $116.4m (2020: $188.1m). • Gross premiums written increased by 30% to $4,618.9m • C
Slide 6: Strong premium growth and return to profitability
Strong premium growth and return to profitability Gross premiums written ($m) Combined ratio (%) +30% +19% 125% 109% 5,000 +15% 4,618.9 99% 98% 100% +12% 100% 93% +7% 3,563.8 4,000 3,003.9 2,615.3 75% 3,000 2,343.8 58% 59% 62% 73% 58% 2,000 50% 1,000 25% 41% 39% 38% 36% 35% 0 0% 2017 2018 2019 2020
Slide 7: Our updated dividend strategy
Our updated dividend strategy With brief suspension of dividend payments in 2020 we utilised the time to revisit our dividend strategy • Beazley will operate a progressive dividend policy going forward, intending to grow dividend each year but recognising that some earnings fluctuations are to be ex
Slide 8: Financials
Financials 8
Slide 9: Financial performance
Financial performance Year ended Year ended % Increase 31 December 2021 31 December 2020 Gross premiums written ($m) 4,618.9 3,563.8 30% Net premiums written ($m) 3,512.4 2,917.0 20% Net earned premiums ($m) 3,147.3 2,693.4 17% Profit/(loss) before income tax ($m) 369.2 (50.4) Claims ratio 58% 73% E
Slide 10: Investment portfolio
2020 Financial Assets: $6.7bn Investment portfolio 2021 Financial Assets: $7.9bn 60% 51% 50% 41% 40% 37% 30% 24% 20% 10% 7% 6% 6% 5% 5% 4% 3% 3% 3% 3% 1% 1% 0% Sovereign Debt Investment Grade Hedge Funds Cash and Cash High Yield Debt Equities Illiquid Credit Other Debt Equivalents Assets 2020 2021 1
Slide 11: Investment return
Investment return 300.0 7.0% 6.0% 250.0 93.4 5.0% 200.0 4.0% $m 150.0 104.1 3.0% 58.9 100.0 32.8 170.3 2.0% 30.4 50.0 79.4 84.0 83.6 1.0% 62.7 33.1 0.0 8.0 0.0% 2016 2017 2018 2019 2020 2021 1st half 2nd half Annualised Return 11
Slide 12: Claims releases across all divisions
Claims releases across all divisions 220 200 14% 180 12% 160 10% 140 120 8% 100 6% $m 80 60 4% 40 2% 20 0 0% -20 -2% -40 -60 -4% 2015 2016 2017 2018 2019 2020 2021 CyEx Marine Market facilities PAC Property Reinsurance Specialty lines % of NEP 12
Slide 13: Reserve surplus
Reserve surplus Surplus in net held reserves 10.0% % above actuarial estimate 8.2% 8.2% 8.2% 7.9% 7.5% 7.4% 7.4% 6.9% 7.1% 6.7% 6.7% 6.8% 6.4% 6.6% 6.3% 6.4% 6.1% 5.6% 5.0% 5.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Financial year 13
Slide 14: Capital position remains strong
Capital position remains strong • Group capital requirement: Year ended Year ended 31 Dec 2021 31 Dec 2020 $m $m Lloyd’s economic capital requirement (ECR)* 2,225.3 2,116.5 Capital for US insurance company 247.8 246.3 2,473.1 2,362.8 • Our funding is made up of our own equity (on a Solvency II basis
Slide 15: Underwriting
Underwriting son SE
Slide 16: Broad range of specialty products
Broad range of specialty products Cyber & Executive Risk Specialty Lines 240% 240% 220% 220% 200% 200% 180% 180% 160% GWP 160% GWP 140% Rate Adjusted 140% Rate Adjusted 120% 120% 100% 100% 80% 80% 60% 60% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 • Growth driven by cyber until 2019 when D&O
Slide 17: Marine and PAC; Property and Reinsurance
Marine and PAC Property and Reinsurance 240% 240% 220% 220% 200% 200% 180% 180% 160% 160% GWP GWP 140% 140% Rate Adjusted 120% Rate Adjusted 120% 100% 100% 80% 80% 60% 60% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 • Reduction in 2020 caused by demand for event • Exposure reduction since 2017
Slide 18: Natural catastrophe risk appetite
Natural catastrophe risk appetite Risk appetite as % NEP 40% 35% 30% • As % of NEP, modeled loss 1:250 decreasing. 25% • Similar change on gross basis. • In absolute terms, 1:250 growing modestly, but 20% 1:10 has been shrinking since 2019. 15% • Reflects relative deterioration in risk reward and ac
Slide 19: Climate change: our approach to pricing
Climate change: our approach to pricing Reduce exposure Build capabilities Grow exposure Climate exposed • People & expertise Increased complexity classes de-commoditises e.g., strengthen gates • Predictive tools for critical cat zones • RDS’s • Engage clients 19
Slide 20: Cyber – increased premium, reduced exposure
Cyber – increased premium, reduced exposure • 20% ransomware frequency reduction per policy • 60% ransomware frequency reduction per premium 1,000 900 800 700 GWP (USD$m) 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Forecast Tech E&O BBR InfoSe
Slide 21: Cyber overview
Cyber overview 1. Downward claims frequency trend sustained in the second half of the year. 2. Market conditions favourable as demand for cyber insurance has continued to outweigh supply. 3. Ongoing, successful investments and updates to the Beazley Cyber Ecosystem. 4. Risk management-based approach
Slide 22: The outlook
The outlook 22
Slide 23: Continued profitable growth in 2022
Continued profitable growth in 2022 • Double digit growth supported by favorable rate environment in 2022. • Opportunities continue across both wholesale and domestic platforms. • We are growing in cyber whilst maintaining strongly diversified business overall. • Expected combined ratio around 90% f
Slide 24: Questions
Questions 24
Slide 25: Appendices
Appendices 25
Slide 26: Rate Change
Cumulative rate change since 2015 180% 170% 160% 150% Rate Change 140% 130% 120% 110% 100% 90% 80% 2015 2016 2017 2018 2019 2020 2021 Underwriting Year Marine Property Speciality lines CyEx Reinsurance PAC Market facilities All divisions 26
Slide 27: Performance by division
Performance by division Year ended 31 December 2021 Cyber & Market Specialty Marine PAC Property Reinsurance Executive Risk Facilities Lines Gross premiums written ($m) 1,515.6 376.5 198.2 322.8 586.5 226.1 1,393.2 Net premiums written ($m) 1,150.6 345.6 55.0 270.9 439.7 133.4 1,117.2 Result from op