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Slide 2: Results for the six months ended 30 June 2012
Cover Results for the six months ended 30 June 2012 Friday, 20 July 2012 2
Slide 3: Disclaimer notice
Disclaimer notice Certain statements in the presentation, are or may constitute “forward looking statements”. Such forward looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be mate
Slide 4: Contents
Contents Page No. Overview 4-5 Business update 6 Financials Performance 8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus Broker Relations 14-20 Underwriting review and outlook 21-23 Appendix 24-34 4
Slide 5: Overview
Generic title white Overview
Slide 6: Overview – a successful half year
Overview – a successful half year • Profit before income tax of $112.9m (2011 loss: $24.2m) • Gross written premiums increased 10% to $1,013.1m (2011: $924.8m) • Combined ratio 91% (2011: 108%) • Rate change on renewal business 3% (2011: 0%) • Prior year reserve releases of $47.6m (2011: $88.6m) • I
Slide 7: Business update
Business update • Continued to expand Specialty lines product range and geographical scope • Announced plans to extend capabilities of Marine division into aviation and kidnap & ransom insurance • Began underwriting Accident and health business in the US through our admitted carrier • Launched a num
Slide 8: Financials
Generic title white Financials
Slide 9: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase 30 June 2012 30 June 2011 Gross written premiums ($m) 1,013.1 924.8 10% Net written premiums ($m) 650.8 635.5 2% Net earned premiums ($m) 703.3 670.5 5% Profit/(loss) before tax ($m) 112.9 (24.2) Earnings/(loss) per share 12.5
Slide 10: Improved investment returns
Improved investment returns 120.0 7.0% 100.0 6.0% 52.0 80.0 5.0% 46.9 4.0% 60.0 Annualised Investment Return 3.0% Investment Return 40.0 16.8 2.0% US$ 52.5 43.5 29.0 20.0 36.1 1.0% 21.3 22.5 8.5 0.0 0.0% -1.0% -20.0 -62.8 -2.0% -40.0 -3.0% -60.0 -4.0% -80.0 -5.0% 2007 2008 2009 2010 2011 2012 HY 2nd
Slide 11: Conservative portfolio but with increased credit and duration
Conservative portfolio but with increased credit and duration Jun-12 Dec-11 Capital Growth Cash and Cash Capital Growth Assets, 10.7% Equivalents, Assets, 10.3% Cash and Cash Equivalents, 14.9% Other Credit, Other Credit, 16.2% 2.0% 2.1% Investment Grade Credit, 6.0% Investment Grade Credit, 24.5% F
Slide 12: Prior year reserve releases derived mainly from non-cat classes
Prior year reserve releases derived mainly from non-cat classes 16.0% 210 190 14.0% 170 12.0% 150 10.0% 130 110 8.0% 90 6.0% 70 50 4.0% 30 2.0% 10 -10 2007 2008 2009 2010 2011 2011 HY 2012 HY 0.0% Specialty lines Political risks and contingency Life accident and health Marine Property Reinsurance %
Slide 13: Whole account reserve surplus remains in our corridor
Whole account reserve surplus remains in our corridor Surplus in net held reserves 10 % above actuarial estimate 8.2% 7.9% 7.7% 7.5% 7.4% 7.4% 6.7% 6.7% 6.4% 6.1% 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (HY) Financial year 13
Slide 14: Strong capital position and active management
Strong capital position and active management Sources of funds 2012 HY 2011 FY Shareholders funds 1,129.2 1,071.0 Debt 206.4 249.0 1,335.6 1,320.0 Uses of funds Lloyd’s underwriting 757.3 742.9 US Insurance Company 107.7 107.7 865.0 850.6 Surplus 470.6 469.4 Unavailable surplus (293.0) (267.3) Avail
Slide 15: In Focus – Broker Relations
Generic title white In Focus – Broker Relations
Slide 16: Beazley's approach to broker relationships
Beazley’s approach to broker relationships • Beazley sells 100% of its products through brokers • We reach brokers through three coordinated channels: o Personal relationships maintained by underwriters o For small U.S. Professional Liability business, regional Territory Managers o The corporate Bro
Slide 17: Broker Relations locations
Broker Relations locations • 6 Relationship Managers plus support team of 4 17
Slide 18: Why Broker Relations are important
Why Broker Relations are important • We recognised an opportunity to drive additional revenue through regular interaction and mutually agreed objectives with key brokers • Our largest producing brokers are significantly changing their business model, and we have needed to adapt in response • Communi
Slide 19: Beazley's 2011 GWP by broker segment
Beazley’s 2011 GWP by broker segment Small brokers/ Consolidators Global brokers 41% (Aon/Marsh/ Willis) 43% Managed London independents 11% Managed US independents 5% The BR team “manages” producer relationships on 59% of our business 19
Slide 20: Broker Relations: key objectives
Broker Relations: key objectives • Driving growth initiatives agreed with brokers’ senior management o Coordinate/host meetings o Track results • Broker office visits o Maintain Beazley visibility/profile o Educate brokers on Beazley product USPs, especially new products o Uncover new areas of oppor
Slide 21: Broker Relations: key objectives (contd.)
Broker Relations: key objectives (contd.) • Broker appointment management o Keep pressure on appointed intermediaries to produce acceptable submission volumes within our underwriting appetite o Communicate and monitor key metrics such as submission-to-bind ratio o Screen new broker appointees and co
Slide 22: Underwriting review and outlook
Underwriting review and outlook 22
Slide 23: Cumulative rate change since 2001
Cumulative rate change since 2001 220% 200% 180% Rate Change 160% 140% 120% 100% 80% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 HY Underwriting Year Life, Accident & Health Marine Political Risk & Contingency Property Reinsurance Specialty Lines All Depts. 23
Slide 24: Outlook
Outlook Continued growth • Economic outlook is uncertain, but our past investment in the business – including new products – should continue to drive premium growth in the second half Premium rates rising • In the first half, rates rose across our Specialty lines (management and professional liabili
Slide 25: Any questions?
Questions? Any questions?
Slide 26: Appendix
Generic title white Appendix
Slide 27: Life, accident & health
Life, accident & health 6 months ended 30 June 2012 2011 Gross premiums written ($m) 49.7 39.6 Net premiums written ($m) 45.3 34.9 • Growth in premiums due to our Net earned premiums ($m) 43.7 34.1 Australian business • Beazley is now open for business in Claims ratio 60% 52% the Life, accident & he
Slide 28: Marine
Marine 6 months ended 30 June 2012 2011 Gross premiums written ($m) 184.6 154.1 Net premiums written ($m) 156.8 127.3 • Strong growth in energy and war account Net earned premiums ($m) 135.9 110.8 • Secured underwriters for aviation and kidnap & ransom insurance expansion Claims ratio 47% 43% Rate c
Slide 29: Political risks and contingency
Political risks and contingency 6 months ended 30 June 2012 2011 Gross premiums written ($m) 71.9 48.8 • Significant growth in political book Net premiums written ($m) 58.2 34.4 Net earned premiums ($m) 49.8 38.5 • Positive prior year developments on political claims, with no deterioration in Libya
Slide 30: Property
Property 6 months ended 30 June 2012 2011 Gross premiums written ($m) 201.5 195.4 Net premiums written ($m) 98.7 111.2 • Achieving positive rating in line with Net earned premiums ($m) 130.2 140.4 expectations • Benign claims experience in H1 2012 Claims ratio 50% 54% Rate change on renewals 7% 2% P
Slide 31: Reinsurance
Reinsurance 6 months ended 30 June 2012 2011 Gross premiums written ($m) 139.8 135.6 • No adverse deterioration in large loss Net premiums written ($m) 96.7 89.2 estimates Net earned premiums ($m) 59.6 55.1 • Return to normal levels of loss activity Claims ratio 51% 217% • Rates reaching the highest
Slide 32: Specialty lines
Specialty lines 6 months ended 30 June 2012 2011 Gross premiums written ($m) 365.6 351.3 Net premiums written ($m) 195.1 238.5 • Prior years continue to develop in line with expectations Net earned premiums ($m) 284.1 291.6 • Continue to expand Specialty lines product range Claims ratio 63% 61% • We
Slide 33: Specialty lines incurred claims remain encouraging
Specialty lines incurred claims remain encouraging 140% Net incurred loss ratio at each development year 120% 114% 100% Net incurred loss ratio 84% 80% 74% 57% 56% 60% 51% 45% 41% 42% 41% 38% 40% 26% 20% 8% 0% 1993- 1997- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1996 2000 Underwriting
Slide 34: US originated business $179m for HY 2012
US originated business $179m for HY 2012 GWP by Product 150 140 130 120 110 100 90 80 70 $m 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 HY Architects and Engineers Technology and Media Management Liability Healthcare and Lawyers High Value Homeowners Other Property Commercial Property Politica
Slide 35: Diversified portfolio achieves consistent combined ratio through market cycles
Diversified portfolio achieves consistent combined ratio through market cycles 160% 140% 120% 100% 80% 60% 40% 2006 2007 2008 2009 2010 2011 2012HY Year 35