Forecasts & Results

Beazley H1 2023 trading statement

Posted 03/08/2023 – Quick takes

Beazley plc has released a trading statement for H1 2023 ending 30th June 2023

Main highlights from the statement:

  • Gross premiums written increased by 13% to $2,894.1m (H1 2022: $2,554.9m)
  • Net premiums written increased 28% to $2,290.2m (H1 2022: $1,795.9m)
  • Premium rates on renewal business increased by 5% (H1 2022: 18%)
  • Net income from investments of $143.8m or 1.5% as at 30 June 2023 (H1 2022: loss of $193.0m)
  • Growth guidance of mid-teens gross premiums written and mid 20s net premiums written remains for 2023 full year

Adrian Cox, Chief Executive Officer, said: 

“The excellent conditions in the property market persisted into the second quarter and we continued to take advantage of those, delivering a strong performance on growth for the group in the first half of 2023.

With premium written in line with our expectations, we are confident of delivering our growth guidance for the year.”

The group’s GWP and rate changes in H1 2023 are as follows:

Cyber Risks has performed well year to date with 14% growth in the first half of 2023, despite a slight reduction in rates.  The headwinds experienced in the first half of the year relating to war wordings are beginning to recede, although the market remains competitive.  Beazley is confident in the long term growth prospects for cyber, particularly in Europe which provides a significant opportunity and continued to perform well in the first half of the year.

MAP Risks has performed in line with expectations.  Gross premium has reduced due to the portfolio underwriting business now being written by syndicate 5623 (previously written in 623 and quota shared to 5623) which is backed predominantly by third party capital.  This has the effect of reducing year on year gross premium growth in the division. Net premium growth is not materially affected.

The growth in Property Risks is significant at 66% for the first half of the year. Beazley continues to take advantage of the conditions in the property market with property reinsurance growing as expected and property insurance slightly better than planned for.  The hardening of the reinsurance market has driven rate increases in the primary market more quickly than anticipated.

In Specialty Risks the very challenging conditions continue in D&O.  Beazley remains focused on areas which are less exposed to social inflation and work to diversify the mix of business within the division.

The investments returned $143.8m, or 1.5% in the first half of 2023. Yields on our fixed income investments are higher than for many years and this has supported returns in the period. However, risk-free yields remain volatile and have continued to rise in recent months, reducing fixed income returns below initial expectations. The fixed income portfolio yield is 5.3% at 30 June 2023.

Alpha comment

The growth in the property division is inline with the plan previously reported. The Beazley property division includes insurance and reinsurance writings which in aggregate is seeing rate increases of 22% year to date, within which the property treaty rates are far in excess of this level. Cyber growth takes the cyber writings to almost 20% of the Group’s income and despite reports of increased cyber losses in the press, Beazley reported to members’ agents that their own book had not seen any increase in frequency or severity of cyber claims. Indeed, claims have been suppressed since the start of the war in Ukraine. Specialty risks, the largest division, is seeing a slight reduction in premium, year on year, despite significant rate reductions particularly in D&O, with growth in other areas such as US employers’ liability and international healthcare. MAP rates are running ahead of plan particularly on the marine liability side. Overall, these half year figures refer only to growth of the business, which look at or just above plan, with no reference to performance. This trading statement is now under the new International Financial Reporting Standards 17 (IFRS17) which appears to no longer include combined ratios at this stage.

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