Beazley plc has today released results for the six months to 30 June 2017. Although conditions remain competitive and rates continue to go down, the group has recorded an increased profit (up 6% to US$159m) on an increased premium volume (up 2% to US$1,149m). The combined ratio held steady at 90%, assisted by a release from reserves of $83m and an increased investment performance.

Headline numbers are as follows:

 

 

6 months to 30/6/17

6 months to 30/6/16

% Change

Gross written premium

US$1,149.3m

US$1,124.1m

+2%

Net Earned Premiums

US$886.7m

US$861.4m

+3%

Combined ratio

90%

90%

-

Given the current market conditions, with rates reported to be declining in each of the five main product groups, opportunities are limited in in the London market. The group is therefore focusing on exploiting attractive opportunities for specialty lines business. Demand for the cyber product is high and likely to be enhanced by the tightening of regulations for handling data breaches. The group also sees potential for growth in healthcare and environmental risks in the USA and financial institutions in the non-US sphere.

Although continental Europe is currently a small part of the overall business, accounting for just 5% of the whole, Beazley has positioned itself to grow this by seeking and gaining approval for its Dublin based reinsurance company to transact direct insurance business. Beazley also anticipates writing business through the recently announced Lloyd’s initiative to form an insurance company in Brussels.

Investment performance was up modestly at 1.7% on assets for the period compared with 1.4% in the same period in 2016. The average duration of the fixed income portfolio was 2 years, up from 1.2 years at the end of 2016.

Prior year releases are stable, although an increasing proportion of these emanate from the specialty lines sector. There has been a slight weakening of the reserve strength. Beazley maintains a target range for reserves to exceed actuarial estimates by at least 5% but no more than 10%. This measure has fallen to 6.3%, down from 6.6% at the year end and the lowest that this measure has been since 2003.

The full results can be found here and the analysts’ presentation slides here. A chart of rating levels in the five business divisions can be found here