Generic title white
Results for the year ended 31 December 2015
Thursday, 4 February 2016
Disclaimer notice
2
Certain statements made in this presentation, both oral and written, are or may constitute “forward lo...
Contents
Overview of 2015 4-8
Financials
Performance 10
Investments 11-12
Reserves 13-14
Capital 15-16
Proposed new holdin...
Generic title white
Overview of 2015
Increased premiums, profits and dividends
• Profit before income tax of $284.0m (2014: $261.9m)
• Return on equity of 19% ...
• Investment in our teams:
 People – ranked in top quartile for employee engagement
 We passed the 1,000 employee landma...
Cover
7
Sustained high performance
1,712.5
1,895.9 1,970.2 2,021.8 2,080.9
0
500
1,000
1,500
2,000
2,500
2011 2012 2013 20...
Excellent total shareholder return - TSR 33.5% per annum since 31.12.09
8
Shareholderreturn(%)
* Average NAV growth (inclu...
Generic title white
Financials
Strong performance across all metrics
Year ended
31 December 2015
Year ended
31 December 2014
% Increase /
(Decrease)
Gros...
Portfolio delivered 1.3% annualised return
11
Investmentreturn($m)
AnnualisedInvestmentReturn
22.5
36.1
46.8
43.5
16.8
46....
Cash and Cash
Equivalents
15.0%
Government
Quasi
Government &
Supranational
41.1%
Investment
Grade
Credit
27.2%
Other Cred...
Continued prior year reserve releases
13
Reservereleases($m)
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%...
6.1%
6.7%
6.4%
6.7%
7.5% 7.4%
8.2%
7.9%
7.4%
6.9%
8.2%
7.1%
8.2%
0.0%
5.0%
10.0%
2003 2004 2005 2006 2007 2008 2009 2010 2...
Capital management discipline continues
• We have returned capital of $952m in the past 7 years
• This represents 144% of ...
Updated capital position remains strong
16
Year ended
31 December 2015
$m
Year ended
31 December 2014
$m
Lloyd’s economic ...
Proposed new holding company
17
• Change will allow group management to be from the UK from the end of April
• Timetable i...
Generic title white
Underwriting review
Underwriting review – 2015 achievements
19
• Combined ratio of 87%, with improved combined ratio achieved by all divisions...
Underwriting review
Year Ended
31 December 2015
Year Ended
31 December 2014
% Increase/
(Decrease)
Gross premiums written ...
Cumulative rate changes since 2008Ratechange(%)
21
80%
85%
90%
95%
100%
105%
110%
115%
120%
2008 2009 2010 2011 2012 2013 ...
2016 underwriting outlook
22
• Competitive market conditions expected to continue
• Well diversified portfolio will allow ...
Our vision and strategic priorities
To become, and be recognised as,
the highest performing
specialist insurer
GrowthinSME...
Outlook for 2016 – our 30th year
• Continue our organic growth strategy
• Premium rates expected to decline across portfol...
Questions?
Any questions?
Generic title white
Appendix
73%
114%
88%
61%
49%
44%
48% 51%
73% 75%
68% 66%
60%
44%
29%
14%
0%
20%
40%
60%
80%
100%
120%
140%
1993-
1996
1997-
2000
2...
US gross premium over 11 years
28
USgrosspremiums($m)
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 201...
Cumulative rate changes since 2001
29
Cumulativeratechange(%)
50%
100%
150%
200%
250%
2001 2002 2003 2004 2005 2006 2007 2...
30
Portfolio management achieves consistent combined ratio through market cyclesCombinedratio(%)
40
60
80
100
120
140
160
...
Life accident & health
• Profit of $0.4m
• Combined ratio improved to 103%
(2014: 107%)
Year ended 31 December
2015 2014
G...
Marine
• Improved combined ratio of 77%
(2014: 78%)
• Second largest divisional contribution
to group’s profitability in 2...
Political risks and contingency
Year ended 31 December
2015 2014
Gross premiums written ($m) 123.6 123.2
Net premiums writ...
Property
Year ended 31 December
2015 2014
Gross premiums written ($m) 353.1 344.7
Net premiums written ($m) 304.8 297.6
Ne...
Reinsurance
• Combined ratio of 57% (2014: 69%)
• Market over supplied with capacity
Year ended 31 December
2015 2014
Gros...
Specialty lines
• Highest divisional contribution to
group’s profitability with $77.0m
• Combined ratio of 96% (2014: 98%)...
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Beazley results2016

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Beazley plc Results 2016

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Beazley results2016

  1. 1. Generic title white Results for the year ended 31 December 2015 Thursday, 4 February 2016
  2. 2. Disclaimer notice 2 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 facts but rather reflect current beliefs and expectations regarding future events and results. Such forward looking statements can be identified from words such as “anticipates”, “may”, “will”, “believes”, “expects”, “intends”, “could”, “should”, “estimates”, “predict” and similar expressions in such statements or the negative thereof, or other variations thereof or comparable terminology. These forward looking statements appear in a number of places throughout this document and involve significant inherent risks, uncertainties and other factors, known or unknown, which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Given these uncertainties, such forward looking statements should not be read as guarantees of future performance or results and no undue reliance should be placed on such forward looking statements. A number of factors could cause actual results to differ materially from the results discussed in these forward looking statements. The information and opinions contained in this presentation, including any forward looking statements, are provided, and reflect knowledge and information available, as at the date of this presentation and are subject to change without notice. There is no intention, nor is any duty or obligation assumed by the Company, the Group or the Directors to supplement, amend, update or revise any of the information, including any forward looking statements, contained in this presentation. All subsequent written and oral forward looking statements attributable to the Company and/or the Group or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this document.
  3. 3. Contents Overview of 2015 4-8 Financials Performance 10 Investments 11-12 Reserves 13-14 Capital 15-16 Proposed new holding company 17 Underwriting review 18-22 Our vision and strategy 23 Outlook for 2016 24 Appendix 25-36 3 Pages
  4. 4. Generic title white Overview of 2015
  5. 5. Increased premiums, profits and dividends • Profit before income tax of $284.0m (2014: $261.9m) • Return on equity of 19% (2014: 17%) • Gross premiums written increased by 3% to $2,080.9m (2014: $2,021.8m) • Combined ratio of 87% (2014: 89%) • Rate reduction of 2% on renewal portfolio (2014: reduction of 2%) • Prior year reserve releases of $176.3m (2014: $158.1m) • Net investment income of $57.6m (2014: $83.0m) • Second interim dividend of 6.6p (2014: 6.2p) taking full year dividend to 9.9p (2014: Full year 9.3p). Special dividend of 18.4p (2014: 11.8p) 5
  6. 6. • Investment in our teams:  People – ranked in top quartile for employee engagement  We passed the 1,000 employee landmark  We continue to attract talent • We grew 21% in the US and opened our Los Angeles office • Started our Korean Re partnership • Strong balance sheet and active capital management maintained • Received our Solvency II Internal Model approval from the CBI • We propose to establish a new UK tax resident group holding company Continued progress with our strategic initiatives 6
  7. 7. Cover 7 Sustained high performance 1,712.5 1,895.9 1,970.2 2,021.8 2,080.9 0 500 1,000 1,500 2,000 2,500 2011 2012 2013 2014 2015 Gross premiums written ($m) 62% 53% 45% 49% 48% 37% 38% 39% 40% 39% 99% 91% 84% 89% 87% 0% 25% 50% 75% 100% 125% 2011 2012 2013 2014 2015 Combined ratio* (%) Expense ratio Claims ratio 7.9 8.3 8.8 9.3 9.9 8.4 16.1 11.8 18.4 0.0 5.0 10.0 15.0 20.0 25.0 30.0 2011 2012 2013 2014 2015 Dividends per share (p) Special Interim and second interim 6% 19% 21% 17% 19% 0% 5% 10% 15% 20% 25% 2011 2012 2013 2014 2015 Return on equity (%)
  8. 8. Excellent total shareholder return - TSR 33.5% per annum since 31.12.09 8 Shareholderreturn(%) * Average NAV growth (including dividends) over the past 6 years of 17.3% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% 250% 275% 300% 325% 350% 375% 400% 31 December 2009 31 December 2010 31 December 2011 31 December 2012 31 December 2013 31 December 2014 31 December 2015 NAV target range (RFR +10% p.a. to RFR +15% p.a.) NAV growth (Including dividends) TSR growth (1 month average)
  9. 9. Generic title white Financials
  10. 10. Strong performance across all metrics Year ended 31 December 2015 Year ended 31 December 2014 % Increase / (Decrease) Gross premiums written ($m) 2,080.9 2,021.8 3% Net premiums written ($m) 1,713.1 1,732.7 (1%) Net earned premiums ($m) 1,698.7 1,658.9 2% Profit before income tax ($m) 284.0 261.9 8% Earnings per share (pence) 31.9 26.1 Dividend per share (pence) 9.9 9.3 Special dividend (pence) 18.4 11.8 Net assets per share (pence) 186.5 170.3 Net tangible assets per share (pence) 174.8 158.3 10
  11. 11. Portfolio delivered 1.3% annualised return 11 Investmentreturn($m) AnnualisedInvestmentReturn 22.5 36.1 46.8 43.5 16.8 46.5 43.3 36.2 14.1 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0 10 20 30 40 50 60 70 80 90 100 2011 2012 2013 2014 2015 1st half 2nd half Return
  12. 12. Cash and Cash Equivalents 15.0% Government Quasi Government & Supranational 41.1% Investment Grade Credit 27.2% Other Credit 1.6% Senior Secured Loans 2.5% Equity Linked funds 3.3% Hedge Funds (Uncorrelated Strategies) 7.3% Illiquid Credit Assets 2.0% Minor changes to portfolio mix 12 31 December 2015 31 December 2014 Cash and Cash Equivalents, 8.2% Government Quasi Government Supranational 41.6%Investment Grade Credit 33.5% Other Credit, 1.8% Senior Secured Loans 2.3% Equity Linked funds, 3.3% Hedge Funds (Uncorrelated Strategies) 8.3% Illiquid Credit Assets, 1.0%
  13. 13. Continued prior year reserve releases 13 Reservereleases($m) -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% -15 0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 2011 2012 2013 2014 2015 Specialty lines Political risks and contingency Life accident and health Marine Property Reinsurance % of NEP
  14. 14. 6.1% 6.7% 6.4% 6.7% 7.5% 7.4% 8.2% 7.9% 7.4% 6.9% 8.2% 7.1% 8.2% 0.0% 5.0% 10.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Financial year Surplus in net held reserves Whole account reserve strength within our target range 14 Aboveactuarialestimate(%)
  15. 15. Capital management discipline continues • We have returned capital of $952m in the past 7 years • This represents 144% of our 2009 post rights-issue market capitalisation 15 Fundsreturnedtoshareholders($m) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% 160% 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 2009 2010 2011 2012 2013 2014 2015 Percentageofmarketcapitalisationat2009rightsissue Interim and final dividends Special dividend Share buybacks % of market capital
  16. 16. Updated capital position remains strong 16 Year ended 31 December 2015 $m Year ended 31 December 2014 $m Lloyd’s economic capital requirement (ECR) 1,326.9 1,359.0 Capital for US insurance company 107.7 107.7 1,434.6 1,466.7 • Group capital requirement: • Our funding is made up of our own equity (on a Solvency II basis) plus $247.2m of debt and an undrawn banking facility of $225.0m • At 31 December 2015 we have surplus capital of 49% of ECR, including Solvency II adjustments • We will be paying a special dividend of 18.4p, reducing the surplus to 35%, above our target 15-25% range
  17. 17. Proposed new holding company 17 • Change will allow group management to be from the UK from the end of April • Timetable is for a shareholder vote in March • No change to the operating structure, expected profits or tax rates of the group • Beazley plc will be retained as the name for our top company
  18. 18. Generic title white Underwriting review
  19. 19. Underwriting review – 2015 achievements 19 • Combined ratio of 87%, with improved combined ratio achieved by all divisions • Growth in gross premiums written of 3% to $2,080.9m  Specialty lines, our largest division, achieved growth of 13%  21% growth in locally underwritten US premium • Rate reductions of 2% across portfolio as a whole • Favourable claims experience including lower than average catastrophe activity • We continue to reserve consistently, maintaining our surplus over actuarial estimate between 5-10%
  20. 20. Underwriting review Year Ended 31 December 2015 Year Ended 31 December 2014 % Increase/ (Decrease) Gross premiums written ($m) 2,080.9 2,021.8 3% Net premiums written ($m) 1,713.1 1,732.7 (1%) Net earned premiums ($m) 1,698.7 1,658.9 2% Expense ratio 39% 40% Claims ratio 48% 49% Combined ratio 87% 89% Rate change on renewals (2%) (2%) 20
  21. 21. Cumulative rate changes since 2008Ratechange(%) 21 80% 85% 90% 95% 100% 105% 110% 115% 120% 2008 2009 2010 2011 2012 2013 2014 2015 Underwriting year Life, accident & health Marine Political risks & contingency Property Specialty lines Reinsurance All divisions
  22. 22. 2016 underwriting outlook 22 • Competitive market conditions expected to continue • Well diversified portfolio will allow efficient cycle management • Disciplined underwriting in areas where competition is greatest • We see opportunities for moderate growth in 2016  US underwritten premium  US ‘gap protection’ medical cover  Cyber demand continues to increase  Improved distribution channels for SME business
  23. 23. Our vision and strategic priorities To become, and be recognised as, the highest performing specialist insurer GrowthinSME SalesandService GrowthinAsia Pacific GrowthinUS Innovationand ProductDevelopment GrowthinEurope 23 New in 2015
  24. 24. Outlook for 2016 – our 30th year • Continue our organic growth strategy • Premium rates expected to decline across portfolio as a whole • Continued growth opportunities in US • Market consolidation offers opportunities to attract talent • Pursue our refreshed strategic initiatives • New corporate structure to enable us to run the group from the UK 24
  25. 25. Questions? Any questions?
  26. 26. Generic title white Appendix
  27. 27. 73% 114% 88% 61% 49% 44% 48% 51% 73% 75% 68% 66% 60% 44% 29% 14% 0% 20% 40% 60% 80% 100% 120% 140% 1993- 1996 1997- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Underwriting year Specialty lines net incurred loss ratio at each development year 6 to latest 6 5 4 3 2 ULR Specialty lines incurred claims remain in line with expectations Net ultimate premium $m 27 Netincurredlossratio(%) 77 107 52 91 262 313 332 345 419 453 418 434 425 454 476 517
  28. 28. US gross premium over 11 years 28 USgrosspremiums($m) 0 100 200 300 400 500 600 700 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Architects and engineers professional indemnity Technology, media and business services Other specialty lines Property PCG & Marine Accident and health
  29. 29. Cumulative rate changes since 2001 29 Cumulativeratechange(%) 50% 100% 150% 200% 250% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Underwriting year Life, accident & health Marine Political risks & contingency Property Reinsurance Specialty lines All divisions
  30. 30. 30 Portfolio management achieves consistent combined ratio through market cyclesCombinedratio(%) 40 60 80 100 120 140 160 2011 2012 2013 2014 2015 Year
  31. 31. Life accident & health • Profit of $0.4m • Combined ratio improved to 103% (2014: 107%) Year ended 31 December 2015 2014 Gross premiums written ($m) 119.8 132.2 Net premiums written ($m) 106.6 113.7 Net earned premiums ($m) 110.8 103.0 Claims ratio 58% 60% Rate change on renewals (1%) 9% Percentage of business led 68% 68% 31
  32. 32. Marine • Improved combined ratio of 77% (2014: 78%) • Second largest divisional contribution to group’s profitability in 2015 Year ended 31 December 2015 2014 Gross premiums written ($m) 269.3 325.2 Net premiums written ($m) 239.5 289.9 Net earned premiums ($m) 258.2 282.6 Claims ratio 38% 38% Rate change on renewals (8%) (6%) Percentage of business led 46% 43% 32
  33. 33. Political risks and contingency Year ended 31 December 2015 2014 Gross premiums written ($m) 123.6 123.2 Net premiums written ($m) 105.0 101.2 Net earned premiums ($m) 106.4 96.9 Claims ratio 29% 27% Rate change on renewals (6%) (2%) Percentage of business led 68% 70% 33 • Combined ratio of 76% (2014: 78%) • Net earned premiums increased by 10%
  34. 34. Property Year ended 31 December 2015 2014 Gross premiums written ($m) 353.1 344.7 Net premiums written ($m) 304.8 297.6 Net earned premiums ($m) 297.8 287.9 Claims ratio 39% 42% Rate change on renewals (4%) (1%) Percentage of business led 75% 75% 34 • Improved combined ratio of 84% (2014: 86%) • Strong performance across all teams • Net earned premiums increased by 3%
  35. 35. Reinsurance • Combined ratio of 57% (2014: 69%) • Market over supplied with capacity Year ended 31 December 2015 2014 Gross premiums written ($m) 199.9 200.8 Net premiums written ($m) 132.0 153.8 Net earned premiums ($m) 133.8 160.1 Claims ratio 22% 37% Rate change on renewals (7%) (10%) Percentage of business led 40% 39% 35
  36. 36. Specialty lines • Highest divisional contribution to group’s profitability with $77.0m • Combined ratio of 96% (2014: 98%) • Growth for a third consecutive year Year ended 31 December 2015 2014 Gross premiums written ($m) 1,015.2 895.7 Net premiums written ($m) 825.2 776.5 Net earned premiums ($m) 791.7 728.5 Claims ratio 60% 61% Rate change on renewals 2% - Percentage of business led 97% 96% 36

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