Slide 1: Results for the year ended 31 Dec 2023
Results for the year ended st 31 Dec 2023 7th March 2024
Slide 2: Adrian Cox, Sally Lake, Bob Quane
Adrian Cox Chief Executive Officer Sally Lake Chief Financial Officer Bob Quane Chief Underwriting Officer 2
Slide 3: Contents
Contents 05 Highlights 08 Financial performance 17 Our underwriting 30 Long term performance 34 Outlook 36 Appendix 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
Highlights 2023 7th March 2024
Slide 6: Highlights 2023 – Record profit of $1.25bn
Highlights 2023 – Record profit of $1.25bn • Combined Ratio of 74% (Undiscounted)* • Strong performance in Property Risks • Demand-led growth in Cyber strong particularly in international markets • No unexpected development on prior year reserves for social inflation • Interim dividend of 14.2p to b
Slide 7: 2023 year-end capital return
2023 year-end capital return Capital strategy • Priority for surplus capital is to invest in sustainable profitable growth in a balanced, well diversified business • Manage peak tail risk to equity • Ambition to remain above SCR ratio of 170% • Surplus capital that cannot be profitably deployed will
Slide 8: Financial Performance
Financial Performance 7th March 2024
Slide 9: Financial performance
Financial performance Year Ended Year Ended 31 December 2023 31 December 2022 % movement Insurance contract written premiums ($m) 5,601.4 5,246.3 7% Net Insurance contract written premiums ($m) 4,696.2 3,772.4 24% Net Insurance revenue ($m) 4,315.1 3,883.0 Net Insurance service expense ($m) (3,064.1
Slide 10: Underwriting expertise and claims experience delivers record combined ratio
Underwriting expertise and claims experience delivers record combined ratio (3%) 10
Slide 11: Consistent reserve strength – within preferred range
Consistent reserve strength – 120.0 Prior Year Reserve Release (Net) within preferred range 100.0 80.0 Release • Reserve releases are 2.5% 60.0 Sm of Net Insurance Revenue. 40.0 • Preferred confidence level 20.0 is between the 80th to 0.0 90th percentile Strengthen Cyber Risks Cyber Risks Digital MA
Slide 12: Investment Portfolio – Optimised for current market conditions
Investment Portfolio – Optimised for current market conditions Portfolio: $10.5bn 60.0% (31 Dec 2022: $9.0bn) 55.6% 50.0% 42.6% 40.0% 34.1% 30.0% 22.8% 20.0% 10.0% 7.3% 7.8% 5.9% 5.6% 4.7% 3.4% 2.7% 2.4% 1.8% 2.1% 0.8% 0.4% 0.0% Sovereign Debt Investment Grade Hedge Funds Cash and Cash High Yield De
Slide 13: Investment income – Highest ever result
Investment income – Highest ever result 600.0 6.0% 500.0 5.0% 400.0 4.0% 336 Investment result 300.0 3.0% 93 200.0 2.0% 104 100.0 170 34 1.0% 144 84 83 13 0.0 0.0% 2019 2020 2021 2022 2023 (100.0) (193) -1.0% (200.0) -2.0% (300.0) -3.0% 1st half 2nd half Investment Return 13
Slide 14: Strong capital generation - Delivers return of additional capital
Strong capital generation - Delivers return of additional capital • The latest view of our group solvency capital ratio as at YE2023 is 218% after foreseeable distributions • Year-end position includes the following year business plan and hence is lower than the half year position 31 December 2023 $
Slide 15: Active Capital Utilisation
Active Capital Utilisation SCR Coverage ratio movements between 2022 Year End and 2023 Year End Increase Decrease Total * * *The final 2023 ratio is subject to review and audit and will be published in Group 2023 Solvency and Financial Condition Report (SFCR) 15
Slide 16: Resilient capital position - Able to withstand external shocks
Resilient capital position - Able to withstand external shocks SCR ratio estimate as at FY 2023 (including all foreseeable distributions) 218% • Coverage remains strong even with a simultaneous 1 in 250 event and a 50bps Illustrative scenario Impact on solvency decrease in interest rates capital rat
Slide 17: Our Underwriting
Our Underwriting 7th March 2024
Slide 18: Product cycle management in action
Product cycle management in action 2,500 2,000 1,500 IWP $m 1,000 500 0 Cyber Risks Digital MAP Risks Property Risks Specialty Risks 2022 2023 18
Slide 19: Platform strength – Ensuring access to risk
Platform strength – Ensuring access to risk Europe North America Global Wholesale Via Lloyd’s Long term Multi decade Long-term growth typically Growth at same rate trajectory growth journey above market trend as the market Fast growing, in cyber where penetration Size of property opportunity makes F
Slide 20: Property Risks – A standout year
Property Risks – A standout year • IWP $1,351.9m (2022: $823.2m) • Undiscounted COR 67% (2022: 95%) • Rate change 22% (2022: 11%) • Result demonstrates the value of specialty underwriting • Long-term opportunity as changing conditions lead to more complexity in US property risks 20
Slide 21: Property risks – North America drives growth
Property risks – North America drives growth Europe North America Global Wholesale Via Lloyd’s 39% % premium share 2% 0% 100% 59% Admitted business Non admitted business Growth YE23 v YE22 2% 85% 44% 21
Slide 22: Volatility continued to reduce as property business grew in 2023
Volatility continued to reduce as property business grew in 2023 1 in 250 risk appetite as percentage 1 in 10 year event as a percentage of shareholder equity of expected earnings 60% 90% 80% 50% 70% 40% 60% 50% 30% 40% 20% 30% 20% 10% 10% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 23: Cyber Risks – Demand-led growth
Cyber Risks – Demand-led growth • IWP $1,184.3m (2022 $1,157.8m) • Undiscounted COR 72% (2022 68%) • Rate change: (5%) (2022: 40%) • Increasing frequency of ransomware has not impacted our book • International markets show strong demand-led growth • Market’s first cyber catastrophe bond • Beazley Se
Slide 24: Cyber rate adequacy
Cyber rate adequacy Cyber Risks cumulative rate change 300.0% 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% 2018 2019 2020 2021 2022 2023 Cumulative Cyber Rate 24
Slide 25: Cyber Risks – Strong growth in Europe
Cyber Risks – Strong growth in Europe Europe North America Global Wholesale Via Lloyd’s 52% % premium share 12% 24% 76% 36% Admitted business Non admitted business Growth YE23 v YE22 27% (6)% 10% 25
Slide 26: Specialty Risks – Active cycle management
Specialty Risks – Active cycle management • IWP $1,873.3m (2022: $1,918.4m) • Undiscounted COR 78% (2022: 86%) • Rate change (1)% (2022: 2%) • D&O will continue be a lower share and reduced growth driver • Focus is on growing areas of the book where there are more favourable conditions 26
Slide 27: Specialty Risks – Underwriting discipline continues
Specialty Risks – Underwriting discipline continues Europe North America Global Wholesale Via Lloyd’s 43% % premium share 7% 43% 57% 50% Admitted business Non admitted business Growth YE23 v YE22 (4)% 3% (6)% 27
Slide 28: MAP Risks – The power of expertise
MAP Risks – The power of expertise • IWP $964.3m (2022: $1,115.2m) • Undiscounted COR 79% (2022: 80%) • Rate change 6% (2022: 4%) • Continued demand for our specialist products e.g. marine, aviation, war, contingency, political risks & violence • The rating environment remains positive offering oppo
Slide 29: MAP Risks - Platform premium split
MAP Risks - Platform premium split Europe North America Global Wholesale Via Lloyd’s 11% % premium share 2% 48% 52% 87% Admitted business Non admitted business Growth YE23 v YE22 37% 4% (16)%* *Gross premium has reduced due to the portfolio underwriting business now being written by syndicate 5623 w
Slide 30: Long term Performance
Long term Performance 7th March 2024 30
Slide 31: Beazley is successfully compounding value over time
Beazley is successfully compounding value over time 900% 850% NAV target range NAV growth (RFR +10% p.a. to (Including dividends) 800% RFR +15% p.a.) 750% 700% 650% 600% 550% 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 31 December 2014 31 December 2015 31 December 2016 31 December 2017 31 De
Slide 32: Total shareholder returns v U.S. specialty
Total shareholder returns v U.S. specialty 300% BEZ US Peer Group Average 250% +237% 200% +200% 150% 100% 50% - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Note: (1) US peer group: Arch, AIG, Argo, Axis, Chubb, CNA, Fairfax, James River, Markel, Everest Re, RLI, Renaissance RE, W.R Berkle
Slide 33: Outlook
Outlook 7th March 2024 beazley 33
Slide 34: Opportunity in 2024 and beyond
Opportunity in 2024 and beyond Era of accelerating We have a diversified Property business Cyber will continue risk calls for portfolio with the right will see long-term to see demand-led underwriting and people in the right growth – focus is growth, particularly claims expertise place to gain best
Slide 35: Questions
Questions 7th March 2024 35
Slide 36: Appendices
Appendices 7th March 2024 36
Slide 37: CSM
CSM 1 2 3 4 1 2 3 4 1 CSM recognised of $691.4m within the Insurance Revenue (“IR”) and ($290.8m) within 3 New CSM generated for business written during the year. Some of this will have been Allocation of Reinsurance Premium for exposure earned during the period. released to the P&L within the ISR a
Slide 38: Insurance Finance Expense
Insurance Finance Expense • $153.4m Insurance Finance Expense is split between:- ⎻ $294.7m Discount unwind (Expense) ⎻ Offset by $141.3m Change in financial assumptions (Income) • Change in discount rates is reasonably flat due to increasing yields Q2 – Q3 offset by drop in yields at Q4 • The $139.4
Slide 39: Other Key Information
Other Key Information Discount rates & Liability Mean Terms • Risk Free Rates derived using Moody’s government bond yields • Undiscounted mean terms in years as at YE23 are shown by currency (USD/CAD/GBP/EUR/CHF) below. These are on an ultimate basis and include all claim • Illiquidity premium also