Slide 1: Results for the six months ended 30 June 2015
Cover Results for the six months ended 30 June 2015 Friday, 24 July 2015 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 4-5 Business update 6 Financials Performance 7-8 Investments 9-10 Reserves 11-12 Capital position 13 In Focus: TMB – Technology and data breach solutions 14-21 The Outlook 22-25 Appendix 26-35 3
Slide 4: Overview
Generic title white Overview
Slide 5: Overview – strong results in a competitive market
Overview – strong results in a competitive market • Profit before income tax of $154.5m (2014: $132.9m) • Gross premiums written increased 2% to $1,099.7m (2014: $1,077.7m) • Combined ratio 86% (2014: 90%) • Rate change on renewal business -2% (2014: -1%) • Prior year reserve releases of $74.5m (201
Slide 6: Business update
Business update • Growth in US premium and operations o Opened LA office o Growth in our accident & health business o Focus on small business lines • Continued rate pressure on short tail lines of business • The favourable claims environment continues • Entered into a strategic partnership with Kore
Slide 7: Financials
Generic title white Financials
Slide 8: Six months financial performance
Six months financial performance 6 months ended 6 months ended % increase/ 30 June 2015 30 June 2014 decrease Gross premiums written ($m) 1,099.7 1,077.7 2% Net premiums written ($m) 879.2 889.2 (1%) Net earned premiums ($m) 857.7 804.5 7% Profit before income tax ($m) 154.5 132.9 16% Earnings per s
Slide 9: Good return in low rate environment
Good return in low rate environment 100.0 7.0% 90.0 6.0% 80.0 Annualised Investment Return 5.0% 70.0 Investment Return ($m) 36.2 60.0 46.5 4.0% 50.0 3.0% 40.0 30.0 16.8 2.0% 46.8 43.0 43.5 20.0 36.1 1.0% 10.0 22.5 0.3 0.0 0.0% 2011 2012 2013 2014 2015 1st half 2nd half Return 9
Slide 10: No material changes to the portfolio
No material changes to the portfolio June 15 Dec 14 Cash and cash Cash and cash Equivalents, 10.1% equivalents, 8.2% Illiquid credit Illiquid credit assets, 1.8% assets, 1.0% Hedge funds/ uncorrelated Hedge funds/ strategies, 8.3% uncorrelated strategies, 8.1% Equity linked funds, 3.3% Equity linked
Slide 11: Stable prior year reserve releases
Stable prior year reserve releases 220 22.0% 200 20.0% 180 18.0% 160 16.0% 140 14.0% 120 12.0% $m % of NEP 100 10.0% 80 8.0% 60 6.0% 40 4.0% 20 2.0% 0 0.0% 2010 2011 2012 2013 2014 2014 HY 2015 HY -20 -2.0% Specialty lines Political risks and contingency Life accident and health Marine Property Rein
Slide 12: Whole account reserve strength within our target range
Whole account reserve strength within our target range Preferred upper end 10.0% 8.8% 8.2% 8.2% 7.9% 7.5% 7.4% 7.4% 7.1% 6.9% % above actuarial estimate 6.7% 6.7% 6.4% 6.1% 5.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (HY) Financial Year 12
Slide 13: Updated capital position remains strong
Updated capital position remains strong • Group capital requirement: Period ended Year ended 30 June 2015 31 December 2014 $m $m Lloyd’s economic capital requirement (ECR) 1,370.3 1,319.1 Capital for US insurance company 107.7 107.7 1,478.0 1,426.8 • Our funding is made up of our own equity (on a So
Slide 14: In Focus – TMB
Generic title white In Focus – TMB Technology and Data Breach Solutions
Slide 15: TMB focus group – technology, media and business services
TMB focus group – technology, media and business services • Middle market and large accounts (insurance for organisations over $35m in revenue) • Main products: • Technology E&O – on the Beazley Media Tech form since 2000 • Errors and omissions insurance for technology companies and service provider
Slide 16: TMB growth 2007 to 2015
TMB growth 2007 to 2015 300.0 250.0 200.0 GWP ($m) 150.0 100.0 50.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 E&O BBR Info Sec 16
Slide 17: TMB underwriting and BBR Services team
TMB underwriting and BBR Services team San Francisco Farmington, CT 5 Underwriters 1 BBR Services Manager 5 Underwriters London New York 10 Underwriters 5 Underwriters 1 BBR Services Manager Chicago Philadelphia 3 Underwriters 3 BBR Services Managers Los Angeles 1 Underwriter Texas 3 Underwriters At
Slide 18: Focus on BBR and BBR Services
Focus on BBR and BBR Services • Launched in 2009 over 9,000 policies currently in force • Healthcare largest segment followed by retail and hospitality, higher education and financial institutions (mainly credit unions) • BBR Services team has handled over 2,500 breaches • Breach activity arises fro
Slide 19: How Beazley Breach Response works
How Beazley Breach Response works • BBR Services, a business dedicated to breach response, co-ordinates the services clients require through a network of specialist external vendors • BBR Services also provides clients with extensive advice on risk management and breach preparedness 19
Slide 20: Controlling risk
Controlling risk • Diversified portfolio across industry segments • Large majority of risks in middle market and small account segments • BBR Services and claims team track breach trends and threats • Short tail nature of claims allows for rapid portfolio adjustment • Reliance on technical experts f
Slide 21: BBR differentiators / Opportunities for further growth
BBR differentiators • Focus on services proposition to provide added value to customers and control breach costs and reputational damage • Early mover in the segment and have stayed ahead of the curve • Increasing investment in pre-breach services for clients • BBR brand differentiates Beazley from
Slide 22: The Outlook
Generic title white The Outlook
Slide 23: 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 2014 2015 HY Underwriting Year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 23
Slide 24: Outlook
Outlook • Competitive pressures are building: • Returns should be expected to reduce • Rate pressure, particularly on short tail catastrophe exposed lines • We see more attractive opportunities in small business lines • Continue to grow our locally underwritten US business • M&A creates an opportuni
Slide 25: Any questions?
Questions? Any questions?
Slide 26: Appendix
Generic title white Appendix
Slide 27: US interest rates
US interest rates 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% US 10 Year Index US 5 Year Index US 2 Year Index 27
Slide 28: Specialty lines incurred claims remain in line with expectations
Specialty lines incurred claims remain in line with expectations 140% 6 to latest Net incurred loss ratio at each development year 6 5 120% 114% 4 3 2 ULR 100% Net incurred loss ratio (%) 89% 80% 74% 72% 73% 65% 64% 62% 60% 56% 52% 48% 48% 44% 37% 40% 23% 20% 5% 0% 1993- 1997- 2001 2002 2003 2004 20
Slide 29: Diversified portfolio achieves consistent combined ratio through market cycles
Diversified portfolio achieves consistent combined ratio through market cycles 160 140 120 Combined ratio (%) 100 80 60 40 2010 2011 2012 2013 2014 2015 HY Year 29
Slide 30: Life, accident & health
Life, accident & health 6 months ended 30 June 2015 2014 Gross premiums written ($m) 79.7 81.5 • Growth in US admitted business Net premiums written ($m) 67.1 62.9 to $13.8m (2014: $1.2m) Net earned premiums ($m) 56.3 42.9 • Improving combined ratio drops to 103% (2014: 108%) Claims ratio 60% 62% Ra
Slide 31: Marine
Marine 6 months ended 30 June 2015 2014 Gross premiums written ($m) 162.1 196.7 • Combined ratio of 76% Net premiums written ($m) 131.4 163.1 (2014: 76%) Net earned premiums ($m) 144.2 143.9 • Prior year reserve releases of $18.0m (2014: $21.3m) Claims ratio 38% 36% Rate change on renewals (8%) (5%)
Slide 32: Political risks and contingency
Political risks and contingency 6 months ended 30 June 2015 2014 Gross premiums written ($m) 67.9 60.4 • Growth in gross premiums Net premiums written ($m) 55.4 47.7 written of 12% Net earned premiums ($m) 50.7 42.8 • Growth in net earned premiums of 18% Claims ratio 46% 35% Rate change on renewals
Slide 33: Property
Property 6 months ended 30 June 2015 2014 Gross premiums written ($m) 188.6 190.7 • Prior year releases of Net premiums written ($m) 151.2 151.8 $18.8m (2014: $14.8m) Net earned premiums ($m) 147.0 145.9 • Combined ratio of 81% (2014: 88%) Claims ratio 38% 47% • Contribution to group Rate change on
Slide 34: Reinsurance
Reinsurance 6 months ended 30 June 2015 2014 Gross premiums written ($m) 159.5 163.1 • Significant downward Net premiums written ($m) 109.3 124.8 pressure on rates Net earned premiums ($m) 70.4 80.1 • Prior year reserve releases of $17.7m (2014: $10.1m) Claims ratio 25% 45% • Contribution to group R
Slide 35: Specialty lines
Specialty lines 6 months ended 30 June 2015 2014 Gross premiums written ($m) 441.9 385.3 • 15% growth in gross Net premiums written ($m) 364.8 338.9 premiums written Net earned premiums ($m) 389.1 348.9 • 2% rate increase on renewal business Claims ratio 60% 61% • Prior year reserve releases Rate ch