Beazley 2020 Interim Results

Posted 23/07/2020 – Insights

Beazley plc, the owner of Beazley Furlonge Ltd (managing agent of syndicates 623, 6107 & 5623), has announced its half year 2020 annualised results.

Andrew Horton, Chief Executive Officer, said:

“Beazley achieved strong premium growth of 12% in the first half of 2020, with three of our seven divisions achieving double digit growth. Rates on renewals continue to increase across the market with average rate increases of 11% seen across our business as a whole. Our investments returned 1.4% for the first six months against the backdrop of a volatile investment market.”

“The first half of 2020 was defined by COVID-19 and claims arising from the pandemic have driven the combined ratio to 107%, with Beazley recording a loss before tax of $13.8m. Despite this we expect a combined ratio of around 100% should be achievable for the full year.”

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Alpha comment

Though reporting a small loss for the first six months of the year, these interim results represent a creditable performance given the unprecedented challenges of COVID-19. The investment community seems to agree, with Beazley’s share price rise reacting positively to the news. No doubt this was helped by the announcement that its pandemic-related loss estimate of $170m net of reinsurance has held steady. CEO, Andrew Horton, spoke of the possibility of a break-even underwriting result for the full calendar year. Should this be achieved, much of the credit will rest with Beazley’s success in taking advantage of improving premium rates in all divisions, most notably property (+15%), marine (+15%), market facilities (+13%) and cyber & executive risk (+13%). Despite this welcome trajectory, the 2020 North Atlantic hurricane season has three months yet to run and, as ever, possesses the potential to produce major claims. Furthermore, the continuation and effects of the global lockdown remain highly uncertain, though we take comfort from Beazley’s purchase of clash reinsurance to help mitigate the potential for systemic multi-line losses and its implementation of underwriting controls in 2019 to manage its exposure to a recession.

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