Forecasts & Results
Beazley reports encouraging FY21 results and a positive outlook
Posted 10/02/2022 – Quick takes
Beazley plc released its group results this morning for the financial year to 31st December 2021. The company announced pre-tax profits of US$369.2m (vs. a 2020 pre-tax loss of US$50.4m), despite on-going uncertainties arising from the global COVID-19 pandemic. Beazley continues to “optimise risk & return” by taking advantage of on-going rate improvements across most lines of business.
Group gross written premiums rose by c30% to US$4,618.9m (vs. US$3,563.8m in 2020), with GWP up across all areas of business, but markedly in Cyber & Executive Risk and Market Facilities. Adrian Cox, Beazley CEO, thinks the sharp increase in demand for cyber insurance will continue for the next few years and the combined ratio for the Cyber & Executive Risk division improved from 101% in 2020 to 93% in 2021. Cox also highlighted the success of the Beazley Smart Tracker syndicate 5623, which reported a 49% increase in GWP to US$198.2m and achieved a combined ratio of 98% in 2021, compared to 106% in 2020 which is good news for our members.
The group’s annualised combined ratio improved by 16 percentage points, after a 15 percentage points reduction in the claims ratio, mainly due to lower COVID claims. Beazley’s total COVID-19 claims remain steady at US$340m.
Growth growth across the group was c24%, up from 15% in 2020.
Prior-year reserve releases totalled US$209.8m (vs. US$93.1m in 2020), or 6.7% of earned premiums. This was the highest release ever in dollar terms, but subdued as a percentage of earned premium due to the high rate of premium growth in 2021. The group’s investment return was 1.6%, down from 3.0% in 2020.
Beazley’s CEO, Adrian Cox, said: “We saw good growth across all our lines of business but were particularly encouraged by the opportunities in the cyber market, where we continue to see significant rate improvement … We are confident in delivering continued double-digit growth in 2022, and our strong capital levels support both our growth prospects …”
Alpha Comment
The small fall in Beazley’s share price today is more reflective of profit taking after a strong run, rather than overall disappointment in either the results or the outlook. The growth in areas like Cyber and Market Facilities is fully supported by Alpha and are where we believe that Beazley is ahead of its peers. Investment returns were a little disappointing, but reflect a change in market dynamics during the second half of 2021 so came as no surprise. The continuing positive rate environment and the focus upon improved underwriting performance is to be applauded. We believe that the results bode well for our members who support syndicates 623, 5623 & 6107.
