Beazley Plc · LSE:BEZ
Beazley — FY2022 Earnings Presentation
31 slides from Beazley's earnings presentation, Mar 2, 2023
Slide 1: Results for the year ended 31st December 2022
Results for the year ended 31st December 2022 2nd March 2023
Slide 2: Adrian Cox, CEO; Sally Lake, CFO; Bob Quane, CUO
Adrian Cox, CEO Sally Lake, CFO Bob Quane, CUO
Slide 3: Contents
Contents 05 Highlights 2022 08 Platform strength 10 Capital raise update 12 Financial performance 20 Our underwriting 27 Outlook 29 Questions 30 Appendices 3
Slide 4: 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 5: Highlights 2022
Highlights 2022
Slide 6: Highlights 2022
Highlights 2022 • Excellent underwriting result - combined ratio of 89% (2021: 93%) and underwriting profit of $402.0m (2021: $216.3m) • Profit before tax $191.0m (2021: $369.2m) • Estimate for losses related to Russia-Ukraine unchanged • Rising interest rates result in mark to market investment los
Slide 7: Impact to growth in H2 2022
Impact to growth in H2 2022 • D&O market conditions prompted further de-risking • Cyber – Rate increases moderated on normalising loss ratio environment – Introduction of new war wordings 7
Slide 8: Platform strength
Platform strength rN
Slide 9: Platform strength delivers growth - as US passes $2 billion in 2022
Platform strength delivers growth - as US passes $2 billion in 2022 Growth Long-term growth typically Multi-decade Growth at same opportunity growth journey above market trend. rate as the market differs across Expect E&S business to increase platforms and 23% in 2022 13% in 2022 13% in 2022 geograp
Slide 10: Capital raise
Capital raise
Slide 11: Capital raise - $404 (£341) million Nov 2022
Capital raise - $404 (£341) million Nov 2022 Rationale • Opportunity - property reinsurance rate rises. 1/1 renewal delivered with up to 50% rate change • Strategy - long-term growth in our North American primary property business • Sustainability – Improve balance sheet resilience post extreme even
Slide 12: Financial performance
Financial | performance
Slide 13: Financial performance
Financial performance Year ended Year ended 31 December 2022 31 December 2021 % movement Gross premiums written ($m) 5,268.7 4,618.9 14% Net premiums written ($m) 3,876.2 3,512.4 10% Net earned premiums ($m) 3,614.2 3,147.3 15% Profit before income tax ($m) 191.0 369.2 (48%) Claims ratio 54% 58% Exp
Slide 14: Investment return
Difficult investment market conditions led to mark to market losses for the year 300.0 5.0% 4.0% 93.4 200.0 3.0% 104.1 2.0% 100.0 33.8 170.3 Investment return Investment result 1.0% 84.0 82.6 0.0 13.3 0.0% 2019 2020 2021 2022 (1.0%) (100.0) (193.0) (2.0%) (3.0%) (200.0) (4.0%) (300.0) (5.0%) 1st hal
Slide 15: Investment Portfolio
Investment Portfolio 60% 54% Portfolio: $8,998.1m (31 Dec 2021: $7,875.3m) 50% 40% 30% 23% 20% 10% 8% 6% 4% 3% 1% 1% 0% Sovereign Debt Investment Grade Debt Hedge Funds Cash and Cash High Yield Debt Equities Illiquid Credit Assets Other Equivalents Q4 2021 Q4 2022 15
Slide 16: Reserve releases
Reserve releases 250.00 8% 7% 200.00 6% 150.00 5% 4% Reserve release 100.00 % of NEP 3% 2% 50.00 1% 0.00 0% (1%) (50.00) (2%) (100.00) (3%) 2018 2019 2020 2021 2022 Cyber Risks Digital MAP Risks Property Risks Specialty Risks % of NEP 16
Slide 17: Reserve surplus maintained whilst preparing for future
Reserve surplus maintained whilst preparing for future 17
Slide 18: Transition to IFRS 17
Transition to IFRS 17 • Moving from a percentage over actuarial to a confidence level range going forward • Our new preferred range will be a 80-90th percentile level from 2023 • Our 5.3% margin at the end of 2022 would be towards the top end of preferred new range under IFRS 17 • IFRS 17 results wi
Slide 19: Capital position remains strong, above preferred range
Capital position remains strong, above preferred range Year ended Year ended • Group capital requirement: 31 Dec 2022 31 Dec 2021 $m $m Lloyd’s economic capital requirement (ECR)* 2,577.1 2,225.3 Capital for US insurance company 180.9 247.8 2,758.0 2,473.1 • Our surplus is 44% above Lloyd’s ECR* (in
Slide 20: Our underwriting
Our underwriting
Slide 21: Cyber Risks – Growing market leadership
Cyber Risks – Growing market leadership • Continued sustainable demand growth • Fast growing international build out - focused on North America, Europe domestic and London and Asia wholesale • Market leadership on cyber war wording and catastrophic language • Launched market first Cyber Catastrophe
Slide 22: Specialty Risks – balancing our portfolio
Specialty Risks – balancing our portfolio • Dynamic book - 20 product lines, multiple distribution methods and global footprint • Growth focused in niches – such as Environmental and M&A • D&O will be a lower share and reduced growth driver • Expertise and understanding market dynamics delivers prof
Slide 23: MAP Risks – Leveraging specialism
MAP Risks – Leveraging specialism • Profitable despite Ukraine war • Specialist underwriting is valuable to clients in time of geopolitical uncertainty • Increase monitoring tools for marine and aviation • Increasing war retentions in the market means our underwriting expertise comes to the fore 23
Slide 24: Property Risks – Harnessing opportunity
Property Risks – Harnessing opportunity • Hurricane Ian a turning point • January 1 in line with expectations and growth plan • Continue to embed climate learnings and tools into business • Multi-year opportunity to build property franchise 24
Slide 25: 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 25
Slide 26: 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 26
Slide 27: Outlook
Outlook
Slide 28: Outlook
Outlook • Guidance on IFRS 4 Basis • Expecting a combined ratio in the high 80s • Anticipating growth in the mid-teens for GWP and mid 20s for NWP – Smart tracker syndicate 5623 has become a stand alone syndicate – Increasing retention as buying less reinsurance – Shift to new cyber war and terroris
Slide 29: 29
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Slide 30: Appendices
Appendices
Slide 31: Agility as conditions change – maintaining balance
Agility as conditions change – maintaining balance 100% 90% 80% 70% 60% % OF NWP 50% 40% 30% 20% 10% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Specialty Risks Property Risks MAP Risks Digital Cyber Risks 31