Beazley Plc · LSE:BEZ
Beazley — H1 2024 Earnings Presentation
32 slides from Beazley's earnings presentation, Aug 8, 2024
Slide 1: Results for the period ended 30th June 2024
Results for the period ended 30th June 2024 8th August 2024
Slide 2: Adrian Cox and Barbara Plucnar Jensen
Adrian Cox Chief Executive Officer Barbara Plucnar Jensen Chief Financial Officer 2
Slide 3: Contents
Contents 05 Highlights 07 Financial performance 18 Underwriting 24 Outlook 27 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 2024 HY
Highlights 2024 HY 8th August 2024
Slide 6: Highlights H1 2024
Highlights H1 2024 Record H1 profit Excellent Long-term E&S platform $729m underwriting investment in successful launch – performance and Property Risks more relevance to strong division delivers 25% clients and brokers investment result growth Cyber innovation and Experience and Cyber catastrophe S
Slide 7: Financial Performance
Financial Performance 8th August 2024
Slide 8: Exceptionally strong H1 result
Exceptionally strong H1 result HY 2024 HY 2023 % movement Insurance contract written premium ($m) 3,123.3 2,921.1 7% Net Insurance contract written premium ($m) 2,586.5 2,349.6 10% Net Insurance revenue ($m) 2,395.3 2,089.5 Net Insurance service expense ($m) (1,837.3) (1,747.3) Insurance Service Res
Slide 9: Consistent reserve strength
Consistent reserve strength Risk Adjustment Percentile • Preferred confidence level is 92% between the 80th to 90% 90th percentile. • Risk Adjustment represents both 88% earned and unearned risk. 86% 84% 82% 80% 78% 76% 74% HY22 YE22 HY23 YE23 HY24 9
Slide 10: Investment result
Strong H1 investment income 600.0 6.0% 500.0 5.0% 400.0 4.0% Investment result 300.0 336 3.0% 93 200.0 2.0% 104 252 100.0 170 34 1.0% 144 84 83 0.0 13 0.0% 2019 2020 2021 2022 2023 2024 (100.0) (193) -1.0% (200.0) -2.0% (300.0) -3.0% 1st half 2nd half Annualised Investment Return % 10
Slide 11: Diversified and growing portfolio drives delivery
Diversified and growing portfolio drives delivery Portfolio: $10.7bn 45.0% (31 Dec 2023: $10.5bn) 42.6% 40.0% 39.0% 35.0% 34.1% 33.6% 30.0% 25.0% 20.0% 15.0% 10.0% 8.9% 7.8% 5.6% 6.1% 5.9% 4.7% 4.1% 5.0% 2.7% 2.1% 2.0% 0.4% 0.4% 0.0% Sovereign Debt Investment Grade Hedge Funds Cash and Cash High Yie
Slide 12: Insurance Finance Income
Insurance Finance Income • Yields increased in H1 2024 and hence we see Increase Decrease Total an income from the update in yield curves. 60.0 106.2 37.5 • $37.5m Insurance Finance Income is split 40.0 between:- 20.0 ⎻ $133.3m Discount unwind (Expense) 0.0 ⎻ Offset by (20.0) (40.0) ⎻ $64.6m impact
Slide 13: Our capital position is resilient
Our capital position is resilient • The latest view of our group solvency capital ratio as at HY2024 is 245% after the remaining share buyback • Half year position does not include the following years business plan and hence year end position is expected to be lower than the half year position when
Slide 14: Resilient capital position - Able to withstand external shocks
Resilient capital position - Able to withstand external shocks Solvency Ratio illustrative sensitivities • Coverage remains strong 300% even with a simultaneous 1 in 250 event and a 50bps 250% 245% decrease in interest rates 214% 219% 204% 209% 200% (based on estimated Solvency Capital Ratio as at 3
Slide 15: Beazley approach to capital
Beazley approach to capital Capital strategy • Our ambition is to remain above SCR ratio of 170% • Our priority is to invest in sustainable, profitable growth in a balanced, well diversified business • We factor in growth for the year ahead and opportunities which may emerge in subsequent 1-2 years
Slide 16: Our Underwriting
Our Underwriting 8th August 2024
Slide 17: Cyber Risks – Demand-led growth continues
Cyber Risks – Demand-led growth continues • IWP $577.8m (2023HY $541.4m) • Undiscounted COR 73% (2023HY 78%) • Rate change: (6%) (2023HY: (3%)) • Stable and sustainable rating environment • Increased frequency in ransomware activity has not materially impacted our book 17
Slide 18: CrowdStrike – Comparison against other systemic events
CrowdStrike – Comparison against other systemic events • 179 notifications to date • The majority of notifications arise within the first two weeks of an incident • To date CrowdStrike notifications are lower than other systemic cyber events HY24 Total notifications Change Health cyber attack 2024 5
Slide 19: Property Risks – Continued momentum
Property Risks – Continued momentum • IWP $1,008.4m (2023HY: $805.2m) • Undiscounted COR 81% (2023HY: 84%) • Rate change 3% (2023HY: 22%) • Long-term opportunity as changing conditions lead to more complexity in US property risks • Catastrophes in H1 are well within margins held • Active management
Slide 20: Specialty Risks – Active cycle management
Specialty Risks – Active cycle management • IWP $903.4m (2023HY: $941.3m) • Undiscounted COR 98% (2023HY: 91%) • Rate change 1% (2023HY: (1)%) • Growth is focused on diverse businesses area such as environmental liability, programs and Safeguard 20
Slide 21: MAP Risks – The power of expertise
MAP Risks – The power of expertise • IWP $506.9m (2023HY: $522.4m) • Undiscounted COR 64% (2023HY: 102%) • Rate change 2% (2023HY: 6%) • Demand remains strong and we are confident of continuing growth prospects • Continuing the favourable claims environment that was seen from the second half of 2023
Slide 22: Outlook
Outlook 8' August 2024 beazley 22
Slide 23: Outlook for remainder of 2024 and beyond
Outlook for remainder of 2024 and beyond Continuing era of We have a diversified Property business Cyber will continue accelerating risk portfolio with the right will see long-term to see demand-led calls for underwriting people in the right growth – focus is growth, particularly and claims expertis
Slide 24: Questions
Questions 8th August 2024 24
Slide 25: Appendices
Appendices 8th August 2024 25
Slide 26: Other Key Information: Undiscounted Combined Ratios
Other Key Information Undiscounted Combined Ratios HY 24 HY23 YE23 Cyber Risks 73% 78% 72% Digital Risks 74% 82% 70% MAP 64% 102% 79% Property Risks 81% 84% 67% Specialty Risks 98% 91% 78% Total 81% 88% 74% 26
Slide 27: IFRS 17 Deepdive - Insurance Finance Income
IFRS 17 Deepdive - Insurance Finance Income Item Factors that will impact Direction Discount unwind • Size of net liabilities • Increase in net liabilities leads to higher discount unwind (Expense) • Interest rates at the start of the period • A higher opening yield curve will lead to a higher disco
Slide 28: Other Key Information: Discount rates & Liability Mean Terms
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 HY24 are shown by currency (USD/CAD/GBP/EUR) below. These are on an ultimate basis and include all claim • Illiquidity premium also sour
Slide 29: Other Key Information: Capital Seasonality
Other Key Information Capital Seasonality Illustrative example of SCR ratio movements between HY and FY • Strong underwriting and investment 26% performance drives significant own funds generation – delivering positive HY SCR • We typically expect HY SCR ratio to be 219% 245% higher than FY SCR as H
Slide 30: Other Key Information: Scenario sensitivity analysis
Other Key Information Scenario sensitivity analysis Illustrative scenario Impact on solvency capital ratio Details on modelling Cyber 1-in-250 Cyber scenario (31%) • Based on cyber probabilistic model Nat Cat 1-in-250 Combined (26%) • Net natural catastrophe risk appetite scenario 50 bps decrease in
Slide 31: Cyber pricing - rate adequacy
Cyber pricing - 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 2024 HY Cumulative Cyber Rate 31
Slide 32: Thank you
beazley Thank you 8t August 2024