Slide 1: Results for the six months ended 30 June 2013
Cover Results for the six months ended 30 June 2013 Tuesday, 23 July 2013 1
Slide 2: 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 3: Contents
Contents Pages Overview 5 Business update 6 Financials Performance 8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus Property 14-19 Underwriting review and outlook 20-22 Appendix 24-34 3
Slide 4: Overview
Generic title white Overview
Slide 5: Overview – Strong underwriting performance in an increasingly competitive market
Overview – Strong underwriting performance in an increasingly competitive market • Profit before income tax of $82.3m (2012 profit: $112.9m) • Gross written premiums increased 5% to $1,066.7m (2012: $1,013.1m) • Combined ratio 89% (2012: 91%) • Rate change on renewal business 1% (2012: 3%) • Prior y
Slide 6: Business update
Business update • Continue to achieve rate increases in specialty lines • Changes made to property group to enhance performance • Aviation business progressing well • European floods are covered in our reserves (maximum loss would be $30m retention) • Challenging investment markets in Q2 6
Slide 7: Financials
Generic title white Financials
Slide 8: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase 30 June 2013 30 June 2012 Gross written premiums ($m) 1,066.7 1,013.1 5% Net written premiums ($m) 758.0 650.8 16% Net earned premiums ($m) 758.8 703.3 8% Profit before tax ($m) 82.3 112.9 (27%) Earnings per share (pence) 9.3
Slide 9: Portfolio delivers a nil return during H1 2013
Portfolio delivers a nil return during H1 2013 100.0 7.0% 80.0 6.0% 46.9 5.0% 60.0 46.5 4.0% Investment Return 40.0 3.0% Annualised Investment Return 16.8 2.0% 43.5 29.0 ($m) 20.0 36.1 21.3 22.5 1.0% 8.5 0.3 0.0 0.0% -1.0% -20.0 -2.0% (62.8) -40.0 -3.0% -4.0% -60.0 -5.0% -80.0 -6.0% 2008 2009 2010 2
Slide 10: Conservative portfolio maintained
Conservative portfolio maintained Jun-13 Dec-12 Other Credit, Other Credit, Capital Growth 2.0% Capital Growth 2.3% Assets, 11.4% Assets, 9.7% Cash and Cash Cash and Cash Equivalents, Equivalents, 14.7% 14.7% Investment Grade Credit, 23.9% Sovereign and Sovereign and Supranational, Supranational, 47
Slide 11: Prior year reserve releases remain stable
Prior year reserve releases remain stable 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 2008 2009 2010 2011 2012 2012 HY 2013 HY 0.0% Specialty lines Political risks and contingency Life accident and health Marine Property Reinsurance % of NEP 11
Slide 12: Whole account reserve strength within our target range
Whole account reserve strength within our target range Preferred upper end 8.2% 7.9% % above actuarial estimate 7.5% 7.4% 7.4% 7.1% 6.9% 6.7% 6.7% 6.4% 6.1% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (HY) Financial year 12
Slide 13: Strong capital position
Strong capital position Sources of funds 2013 HY 2012 FY Shareholders funds ($m) 1,157.6 1,204.5 Subordinated debt ($m) 133.5 184.3 Retail bond ($m) 114.0 122.3 1,405.1 1,511.1 Uses of funds Lloyd’s underwriting ($m) 876.0 876.0 US Insurance Company ($m) 107.7 107.7 983.7 983.7 Surplus ($m) 421.4 52
Slide 14: In Focus – Property
Generic title white In Focus – Property
Slide 15: Covering:
Covering: Key themes • Team Structure • Continuity in leadership • Product Mix • Increased margins Performance • • Growth where appropriate • Favourable trading conditions • 15
Slide 16: Property Group
Property Group “To become and be recognised as the highest performing specialist property insurer” Team/Location Products Access Large Risks Construction London • Commercial Property Lloyd’s broker & Engineering and Singapore Team/Location London, Singapore, US Middle market Products Risk Large risk
Slide 17: Where we underwrite
Where we underwrite Where our business Split by team comes from Large Property Europe Medium Market Property Worldwide Small Business USA Construction and Engineering 17
Slide 18: Property Group – 5 year summary
Property Group – 5 year summary GWP $m 18
Slide 19: Favourable market conditions
Favourable market conditions 150.0% 100.0% 50.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 HY Rate changes of Beazley Property Group 19
Slide 20: Underwriting review and outlook
Underwriting review and outlook 20
Slide 21: Cumulative rate change since 2001
Cumulative rate change since 2001 250% 200% Rate Change 150% 100% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 HY Underwriting Year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 21
Slide 22: Outlook
Outlook • Increasing competitive headwinds • New capital entering the reinsurance market • Entrants to US surplus lines markets • Broker led initiatives increasing capacity in London • Beazley’s balanced portfolio is well positioned for these headwinds and thanks to specialty lines, we are planning
Slide 23: Any questions?
Questions? Any questions?
Slide 24: Appendix
Generic title white Appendix
Slide 25: US interest rates
US interest rates 3.50% US Government Bond Yields 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 30/06/2011 30/09/2011 31/12/2011 31/03/2012 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 US 10 Year Index US 5 Year Index US 2 Year Index 25
Slide 26: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations Net incurred loss ratio at each development year Development Year 6 140% 5 4 3 120% 113% 2 ULR 100% 84% Net incurred loss ratio 80% 74% 62% 62% 60% 56% 45% 46% 47% 41% 42% 41% 40% 26% 20% 5% 0% 1993- 1997- 2001 2002 2003 2004 2005 2006
Slide 27: US originated business $208m for HY 2013
US originated business $208m for HY 2013 GWP by Product 150 140 130 120 110 100 90 80 $m 70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 HY Architects and Engineers Technology and Media Professional Liability Healthcare and Lawyers High Value Homeowners Other Property Commercial Property Politi
Slide 28: Diversified portfolio achieves consistent combined ratio through market cycles
Diversified portfolio achieves consistent combined ratio through market cycles 160 % 140% 120% 100% 80% 60% 40% 2008 2009 2010 2011 2012 2013HY Year 28
Slide 29: Life, accident & health
Life, accident & health 6 months ended 30 June 2013 2012 Gross premiums written ($m) 56.4 49.7 Net premiums written ($m) 39.0 45.3 • Reserves strengthened on our Net earned premiums ($m) 45.4 43.7 Australian business • US admitted open for business Claims ratio 76% 60% Rate change on renewals (1%) (
Slide 30: Marine
Marine 6 months ended 30 June 2013 2012 Gross premiums written ($m) 197.1 184.6 Net premiums written ($m) 165.2 156.8 • 7% growth in gross premiums with aviation team delivering Net earned premiums ($m) 131.5 135.9 against plan • Developing marine liability Claims ratio 43% 47% account Rate change o
Slide 31: Political risks and contingency
Political risks and contingency 6 months ended 30 June 2013 2012 Gross premiums written ($m) 63.3 71.9 • Reduction in gross premiums due to Net premiums written ($m) 46.0 58.2 increased competition in political risks Net earned premiums ($m) 46.3 49.8 • Prior year reserve releases of $10.2m (2012: $
Slide 32: Property
Property 6 months ended 30 June 2013 2012 Gross premiums written ($m) 199.0 201.5 Net premiums written ($m) 130.1 98.7 • 33% growth in net premiums Net earned premiums ($m) 150.2 130.2 written as a result of consolidation in reinsurance purchased Claims ratio 52% 50% • Expense ratio improved to 39%
Slide 33: Reinsurance
Reinsurance 6 months ended 30 June 2013 2012 Gross premiums written ($m) 170.3 139.8 • 22% increase in gross premiums Net premiums written ($m) 121.1 96.7 with growth across the account Net earned premiums ($m) 70.8 59.6 • Prior year reserve releases of $14.9m (2012: $1.6m) Claims ratio 24% 51% • In
Slide 34: Specialty lines
Specialty lines 6 months ended 30 June 2013 2012 Gross premiums written ($m) 380.6 365.6 Net premiums written ($m) 256.6 195.1 • Continue to grow premiums in the technology and media Net earned premiums ($m) 314.6 284.1 product range • Prior year reserve releases of Claims ratio 62% 63% $17.9m (2012