Slide 1: Results for the year ended 31 December 2012
Generic title white Results for the year ended 31 December 2012 Thursday, 7 February 2013
Slide 2: 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 3: Contents
Contents Pages Overview of 2012 4-9 Financials Performance 11 Investments 12-13 Reserves 14-15 Capital 16-17 Underwriting review 18-22 Outlook 23 Appendix 25-36 3
Slide 4: Overview of 2012
Generic title white Overview of 2012
Slide 5: Strong growth and record profits
Strong growth and record profits • Profit before income tax of $251.2m (2011: $62.7m) • Return on equity of 19% (2011: 6%) • Gross written premiums increased by 11% to $1,895.9m (2011: $1,712.5m) • Combined ratio of 91% (2011: 99%) • Rate increase on renewal portfolio of 3% (2011: 1% increase) • Pri
Slide 6: Sustained high performance
Sustained Cover high performance Gross premiums written ($m) 125% Combined ratio (%) 2000 1800 99% 100% 90% 90% 88% 91% 1600 1400 37% 75% 34% 35% 1200 36% 38% 1000 1,895.9 1,751.3 1,741.6 1,712.5 50% 800 1,620.0 600 56% 62% 25% 55% 52% 53% 400 200 0 0% 2008 2009 2010 2011 2012 2008 2009 2010 2011 20
Slide 7: A year of significant achievement
A year of significant achievement • We achieved rate increases across a broad cross section of our portfolio including specialty lines • Our innovation continues to add top line growth • New product lines launched including kidnap and ransom and aviation in marine • Had a successful year of attracti
Slide 8: Excellent total shareholder return (TSR) and NAV growth
Excellent total shareholder return (TSR) and NAV growth 125% 100% 75% 50% 25% 0% 31 December 2009 31 December 2010 31 December 2011 31 December 2012 LTIP vesting range NAV per share growth TSR growth (Including dividends) (1 month average) 8
Slide 9: Board and Executive changes
Board and Executive changes Angela Crawford-Ingle joins the Beazley Board, replacing Gordon Hamilton as a non-executive director. Angela Crawford-Ingle is a founding partner of Ambre Partners, providing business, financial and operational expertise to private equity and other institutional investors
Slide 10: Financials
Generic title white Financials
Slide 11: Maintaining our track record of profitability
Maintaining our track record of profitability Year ended Year ended % increase 31 Dec 2012 31 Dec 2011 Gross premiums written ($m) 1,895.9 1,712.5 11% Net premiums written ($m) 1,542.7 1,374.0 12% Net earned premiums ($m) 1,478.5 1,385.0 7% Profit before income tax ($m) 251.2 62.7 301% Earnings per
Slide 12: Portfolio delivers 2.0% return in 2012
Portfolio delivers 2.0% return in 2012 120.0 7.0% 100.0 6.0% 52.0 80.0 5.0% 46.9 4.0% 60.0 46.5 3.0% Annualised Investment Return Investment Return 40.0 16.8 2.0% 52.5 43.5 29.0 $m 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 2
Slide 13: Conservative portfolio but with increased credit and duration
Conservative portfolio but with increased credit and duration Dec-12 Dec-11 Capital Growth Capital Growth Credit Portfolio Cash and Cash Credit Portfolio Assets, 10.3% Assets, 9.7% - Non Equivalents, – Non Cash and Cash Investment 14.7% Investment Equivalents, Grade Credit, Grade Credit, 16.2% 1.7%
Slide 14: Continuing prior year reserve releases
Continuing prior year reserve releases 16.0% 210 190 14.0% 170 12.0% 150 10.0% 130 $m 110 8.0% 90 6.0% 70 50 4.0% 30 2.0% 10 -10 2008 2009 2010 2011 2012 0.0% Specialty lines Political risks and contingency Life accident and health Marine Property Reinsurance % of NEP 14
Slide 15: Whole account reserve strength within our target range
Whole account reserve strength within our target range Surplus in net held reserves Preferred upper end 8.2% 7.9% 7.5% % above actuarial estimate 7.4% 7.4% 6.9% 6.7% 6.7% 6.4% 6.1% Preferred lower end 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Financial year 15
Slide 16: Active and innovative capital management continues
Active and innovative capital management continues • Special dividend of 8.4p declared will generate £42.1m of capital returned to shareholders • Issued a retail bond (£75m for 7 years at 5.375% coupon) • Debt buy-back in 2012 generated a profit of $12.9m • Offer to acquire remaining 2016 subordinat
Slide 17: Strong capital position
Strong capital position Sources of funds Year ended 31 Dec 2012 Year ended 31 Dec 2011 Shareholders funds ($m) 1,211.7 1,071.0 Subordinated debt ($m) 184.3 249.0 Retail bond ($m) 122.3 Total Sources of Funds 1,518.3 1,320.0 Uses of funds Lloyd’s underwriting ($m) 876.0 742.9 US Insurance Company ($m
Slide 18: Underwriting review
Generic title white Underwriting review
Slide 19: Underwriting review – 2012 achievements
Underwriting review – 2012 achievements • Gross premiums written achieved 11% growth in 2012 • 2012 rate increase on renewals of 3% • Superstorm Sandy reserved at $90m net of reinsurance • We continue to reserve consistently, maintaining our surplus over actuarial estimate between 5-10% • Combined r
Slide 20: Underwriting review
Underwriting review Year Ended 31 Dec 2012 Year Ended 31 Dec 2011 Gross premiums written ($m) 1,895.9 1,712.5 Net premiums written ($m) 1,542.7 1,374.0 Net earned premiums ($m) 1,478.5 1,385.0 Expenses ratio 38% 37% Claims ratio 53% 62% Combined ratio 91% 99% Rate change on renewals 3% 1% 20
Slide 21: Rate Change
Cumulative rate changes since 2001 250% 200% Rate Change 150% 100% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Underwriting year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 21
Slide 22: Underwriting review – 2013 plans
Underwriting review – 2013 plans • Market conditions expected to be largely unchanged • Continued opportunity for measured growth • Aviation • Reinsurance • Beazley Breach Response 22
Slide 23: Outlook
Outlook • Seeing positive rate movements in aggregate • Premium growth of 5-10% is planned again in 2013 • We continue to identify growth opportunities • We will maintain an active capital management strategy 23
Slide 24: Any questions?
Questions? Any questions?
Slide 25: Appendix
Generic title white Appendix
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 5 140% 4 3 120% 113% 2 ULR 100% Net incurred loss ratio 85% 80% 74% 62% 59% 57% 60% 45% 45% 41% 42% 41% 38% 40% 16% 20% 0% 1993- 1997- 2001 2002 2003 2004 2005 2006 20
Slide 27: US originated business delivers $386.2m
US originated business delivers $386.2m GWP by Product 150 140 130 120 110 100 90 80 $m 70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 Architects and Engineers Technology and Media Professional Liability Healthcare and Lawyers High Value Homeowners Other Property Commercial Property Political risk
Slide 28: Zoom on rate changes since 2008
Zoom on rate changes since 2008 120% 115% 110% Rate Change 105% 100% 95% 90% 2008 2009 2010 2011 2012 Underwriting year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions 28
Slide 29: Portfolio management achieves consistent combined ratio through market cycles
Portfolio management achieves consistent combined ratio through market cycles 160 Combined Ratio % 140 120 100 80 60 40 2008 2009 2010 2011 2012 Year 29
Slide 30: Beazley’s ratings
Beazley’s ratings Syndicates Best A Excellent Lloyd's 4 Minus 623 /2623 / Syndicate "Stable Syndicate "Stable 3622 / 3623 Rating Outlook” Assessment Outlook” Lloyd’s Market Rating Lloyd's A Excellent Lloyd's A+ Strong (applies to all Market "Stable Market "Stable managed Rating Outlook” Rating Outlo
Slide 31: Life accident & health
Life accident & health Year ended 31 December 2012 2011 Gross premiums written ($m) 94.4 86.9 Net premiums written ($m) 75.3 80.3 • Growth of 9% in gross premiums with flat rate change on renewal business Net earned premiums ($m) 80.3 74.0 • Continuing to invest in this division’s international oper
Slide 32: Marine
Marine Year ended 31 December 2012 2011 Gross premiums written ($m) 311.2 274.2 Net premiums written ($m) 283.1 245.1 • Gross premiums increased by 13% due to growth in energy book Net earned premiums ($m) 279.6 231.7 • Combined ratio of 75% consistent with historic performance • Prior year reserve
Slide 33: Political risks and contingency
Political risks and contingency Year ended 31 December 2012 2011 Gross premiums written ($m) 116.6 102.5 Net premiums written ($m) 102.3 85.2 • Growth in gross premiums of 14% due to development in our contingency and Net earned premiums ($m) 98.1 84.3 political books • Combined ratio of 52% (2011:
Slide 34: Property
Property Year ended 31 December 2012 2011 Gross premiums written ($m) 376.7 359.4 Net premiums written ($m) 275.7 273.9 • Increase in gross premiums of 5% • Rate change on renewals of 6% Net earned premiums ($m) 266.4 283.7 (positive across all areas) • Combined ratio of 101% includes the impact of
Slide 35: Reinsurance
Reinsurance Year ended 31 December 2012 2011 Gross premiums written ($m) 188.6 178.3 Net premiums written ($m) 146.7 130.4 • Return to profitability in 2012 despite superstorm Sandy Net earned premiums ($m) 139.0 131.7 • Rate increase on renewal business of 5% (2011: 3%) • Increase in 6107 capacity
Slide 36: Specialty lines
Specialty lines Year ended 31 December 2012 2011 Gross premiums written ($m) 808.4 711.2 Net premiums written ($m) 659.6 559.1 • Positive rate change on renewals of 3%, the first rate increase since 2006 Net earned premiums ($m) 615.1 579.6 • 14% increase in gross premiums written • Prior year reser