Beazley plc has released an Interim Management Statement giving details of premium volumes, material claims and investment performance in the year to 31 March 2014. There is no formal profit and loss account or balance sheet, but Beazley reports that premium volumes are only very slightly below those for 2013 at a similar point. Despite widely publicised rate reductions in the treaty reinsurance sphere, Beazley says that average rate reductions across its book were just 2%, with both direct property and specialty lines recording average rate increases. The report is reproduced in full below.

 Overview

 · Overall premium rates on renewal business unchanged

· Gross written premium of $516m (2013: $518m)

· Annualised investment yield of 2.1%

 Andrew Horton, Chief Executive Officer, said  "We were able to achieve rate increases in specialty lines, our largest business, and maintain flat rate overall in spite of increased competitive pressures, particularly in relation to short tail, catastrophe exposed, classes.

 We also achieved a good top line performance with gross written premiums in the first quarter flat compared to Q1 2013 and we still expect to achieve moderate full year growth."

 

 

 

31-Mar-14

31-Mar-13

% increase/
(decrease)

Gross premiums written ($m)

516

518

-

Investments and cash ($m)

4,280

4,219

1%

Investment return - annualised (%)

2.10%

2.60%

-0.50%

Rate increase

-

2%

-2%

 Premiums

 Our largest division, specialty lines, wrote $190m in Q1 2014 which represents growth of 3% relative to the same period in the previous year.  The premium drop of 22% in our life, accident and health ("LAH") division was driven by the phasing of a significant renewal which happened in the second quarter. Our reinsurance division, which is operating in an increasingly competitive market with falling rates, wrote an increased portion of its business at the start of the year which has resulted in 3% growth compared to Q1 2013.

 Below is an extract of our performance to the end of March 2014 by business division:

 

 

Gross premiums written

Gross premiums written

increase 

Q1 2014 Rate change

 

31-Mar-14

31-Mar-13

   
 

$m

$m

%

%

         

Life, accident and health

28

36

-22

-2

Marine

89

93

-4

-3

Political risk and contingency

35

29

21

-3

Property

80

84

-5

1

Reinsurance

94

91

3

-7

Specialty lines

190

185

3

3

OVERALL

516

518

-

-

 Rates on renewal business were flat across the portfolio as a whole. Our two largest divisions, specialty lines and property, experienced rate increases of 3% and 1% respectively. As expected, we continue to experience pressure on rates on short-tail, catastrophe exposed classes of business. 

Busines Update

While Latin America has not historically been a major source of business for Beazley, our recently appointed head of business development in Latin America, Ricardo Ortega, is assisting us in creating opportunities for the company through the Lloyd's Brazil platform.  In conjunction with Paul Felfle, our reinsurance underwriter focused on Latin America, Ricardo led Beazley participation at the third Reinsurance Conference in Rio de Janeiro.

 We continue to look for opportunities to expand profitably into new areas and in January 2014 we announced the appointment of Denis Bensoussan to establish a satellite insurance capability within the company. We have also broadened our US healthcare capabilities with the establishment of a life sciences team in Chicago, focusing on areas such as clinical trials and certain biotech and non-invasive medical products liability exposures.

 Claims update

 The level of claims notifications during the first quarter of 2013 is in line with our expectations.

 Investments

 Investment income for the three months to 31 March 2014 was $22.3m.

As at the end of March our portfolio allocation was as follows:

 

 

31-Mar-14

31-Mar-13

 

  Assets

Allocation

Assets

Allocation

 

$m

%

$m

%

Cash and cash equivalents

389

9.1

308

7.3

Fixed income: sovereign and supranational

1,918

44.8

2,017

47.8

Investment grade credit

1,359

31.8

1,311

31.1

Other credit

101

2.3

96

2.3

Core portfolio

3,767

88

3,732

88.5

Capital growth assets

513

12

487

11.5

Overall investments

4,280

100

4,219

100

 The annualised investment return for the period was 2.1% (2013: 2.6%). The weighted average duration of the core portfolio was 19 months at 31 March 2014 (31 December 2013: 21 months). Our current target is to achieve a 2% investment yield for the full year.