Forecasts & Results

Beazley H1 2023 results

Posted 08/09/2023 – Quick takes

Beazley plc has released it H1 2023 results for the period ending 30th June 2023.

Main highlights from the statement:

  • Insurance written premiums have increased by 13% to $2921.1m (H1 2022: $2,574.3m)
  • Insurance service result (or underwriting profits) decreased by 37% to $342.2m (H1 2022: $540.6m)
  • Positive investment return of $143.9m (H1 2022: loss of $193m)
  • Profit before tax increased marginally to $366.4m (H1 2022: $364.9m)
  • Combined ratio deterioration to 88% (H1 2022: 74%) primarily driven by seasonality of earnings and increased risk adjustment on property which is expected to normalise by year end
  • Reserving confidence level increased to 89th percentile (H1 2022: 85th percentile)
  • Return on equity of 18% (H1 2022: 26%)

Adrian Cox, Chief Executive Officer, said:

“We have had a successful first half of the year, achieving record profits of $366.4m. Key highlights include significant growth in our North American property business and momentum in cyber across Europe. Our platform strategy and capital position have been important drivers in delivering our ambitious growth targets. Looking ahead, I am confident we are on track to deliver the guidance we set out at the start of the year.”

 

Cyber Risks

Cyber risks performed well in the year-to-date with 14% growth, despite a slight reduction in rates. The headwinds around war wordings began to recede, although the market remains competitive. Beazley continue to view cyber as having exciting long-term growth prospects, particularly in Europe, where performance was strong in the first half of 2023.

Digital

Digital remained broadly stable for the first half, as Beazley continued the build out of their specialty insurance offering for small businesses around the world.

Marine, Accident and Political (“MAP”) Risks

MAP risks continues to grow in line with expectations. As expected, insurance written premiums reduced as a result of syndicate 5623 becoming a standalone syndicate, where Beazley now only take a circa 18% share of its underwriting.

Property Risks

There was significant growth in property risks (65% in the first half), as Beazley continued to take advantage of the excellent market conditions. As expected, property reinsurance performed well in the first six months, while the property insurance book of business delivered stronger than anticipated growth, as the hardening reinsurance market drove increases in the primary market.

Specialty Risks

In specialty risks the very challenging conditions continued in Directors and Officers (“D&O”). Beazley remained focused on areas which are less exposed to social inflation, such as environmental liability and programs business, as underwriters continued the work to diversify the division’s mix of business.

Alpha comment

Whilst Beazley have produced their highest profit to date at $366m, it is noticeable that their combined ratio has deteriorated to 88% (2022-74%). They put this down to the seasonality of their earnings.

Although H1 2023’s underwriting has not been able to record such a good combined ratio, the underwriting result is still very positive. Beazley’s investments are much improved from H1 2022 and the current outlook looks like the annual returns should be strongly positive for 2023. These investments should help to compensate for the underwriting, which is currently forecast to be less profitable. Furthermore, Beazley seems to be capitalizing on the hard market conditions by growing its overall premium income both in Cyber and in Property, where in both direct and reinsurance the rating environment has been particularly strong. It is also encouraging to see Beazley’s reserving confidence level improving. Overall, these are positive results and the metrics are shown in the positive open year forecasts at this stage.

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